The impact of Federal Communications Commission practices on communication policy making 2001-2004: an investigation of the policy shift from public service idealism to market forces pragmatism

This study examines the conflicts, contradictions, and assumptions of policy-makers who tried to reconcile the transformation of U.S. communications policy from a theoretical paradigm that included public service idealism and social aspiration to a regulatory regime that came to be dominated by market forces pragmatism. Although there has never been a universally accepted articulation of broadcasters' obligations to the public that has remained consistent over time, the struggle over this contested terrain came to dominate the controversy over media ownership regulations during Federal Communications Commission (FCC) Chairman Michael Powell's tenure from 2001-2004. Powell's emphasis on economic competition as a means to serve the public interest in broadcasting did not resonate with the interpretive communities whose support was needed to forward his agenda. This study investigates the gulf between Powell's interpretation of the public interest and that of other stakeholders groups in the policy-making process. The data examined for this project include several types of primary sources: official FCC policy memoranda and orders, statements, research reports, the text; of speeches made by FCC commissioners, as well as transcripts of public hearings conducted throughout the period of study. Additional data were gathered from Congressional hearings and testimony, legal documents and decisions, and research reports conducted by public service organizations. Secondary sources were used to provide context;. Trade journals, academic journals, newspapers, other periodicals produced by interested parties are included in this category. This study grouped policy stakeholders into relatively discrete interpretive communities so that the perspectives of each could be examined. Although the FCC, Congress, the courts, industry groups, and the public have varying degrees of influence over policy decisions, each of these groups had unique perspectives that contributed to policy-making process during the FCC's Third Biennial Review procedures. This study finds that despite the comprehensive reappraisal of communications policy that was ushered in after the enactment of the Telecommunication Act of 1996, the focus of the FCC on pragmatic market considerations did not diminish the desire of some stakeholders to perpetuate communications policy that includes a measure of social aspiration and public service.

THE IMPACT OF FEDERAL COMMUNICATIONS COMMISSION PRACTICES ON COMMUNICATION POLICY MAKING 2001-2004: AN INVESTIGATION OF THE POLICY SHIFT FROM PUBLIC SERVICE IDEALISM TO MARKET FORCES PRAGMATISM by Beth Caron Fratkin A dissertation submitted to the faculty of The University of Utah in partial fulfillment of the requirements for the degree of Doctor of Philosophy Department of Communication University of Utah May 2011 Copyright © Beth Caron Fratkin 2011 All Rights Reserved The Unive rs i ty of Utah Graduat e School STATEMENT OF DISSERTATION APPROVAL The dissertation of Beth Caron Fratkin has been approved by the following supervisory committee members: Robert K. Avery , Chair May 6, 2010 Date Approved Tim Larson , Member May 6, 2010 Date Approved Nickieann Fleener , Member May 6, 2010 Date Approved David Vergobbi , Member May 6, 2010 Date Approved Robert Mayer , Member May 6, 2010 Date Approved and by Ann Darling , Chair of the Department of Communication Department and by Charles A. Wight, Dean of The Graduate School. ABSTRACT This study examines the conflicts, contradictions, and assumptions of policy-makers who tried to reconcile the transformation of U.S. communications policy from a theoretical paradigm that included public service idealism and social aspiration to a regulatory regime that came to be dominated by market forces pragmatism. Although there has never been a universally accepted articulation of broadcasters' obligations to the public that has remained consistent over time, the struggle over this contested terrain came to dominate the controversy over media ownership regulations during Federal Communications Commission (FCC) Chairman Michael Powell's tenure from 2001-2004. Powell's emphasis on economic competition as a means to serve the public interest in broadcasting did not resonate with the interpretive communities whose support was needed to forward his agenda. This study investigates the gulf between Powell's interpretation of the public interest and that of other stakeholders groups in the policy-making process. The data examined for this project include several types of primary sources: official FCC policy memoranda and orders, statements, research reports, the text of speeches made by FCC commissioners, as well as transcripts of public hearings conducted throughout the period of study. Additional data were gathered from Congressional hearings and testimony, legal documents and decisions, and research reports conducted by public service organizations. Secondary sources were used to provide context. Trade journals, academic iv journals, newspapers, other periodicals produced by interested parties are included in this category. This study grouped policy stakeholders into relatively discrete interpretive communities so that the perspectives of each could be examined. Although the FCC, Congress, the courts, industry groups, and the public have varying degrees of influence over policy decisions, each of these groups had unique perspectives that contributed to policy-making process during the FCC's Third Biennial Review procedures. This study finds that despite the comprehensive reappraisal of communications policy that was ushered in after the enactment of the Telecommunication Act of 1996, the focus of the FCC on pragmatic market considerations did not diminish the desire of some stakeholders to perpetuate communications policy that includes a measure of social aspiration and public service. For Robert K. Avery my hero, my inspiration, and my friend TABLE OF CONTENTS Page ABSTRACT............................................................................................................................iii ACKNOWLEDGMENTS........................................................................................................x Chapter 1. INTRODUCTION.........................................................................................................1 Background to the Study................................................................................................2 Public Interest Theory....................................................................................................3 Deregulation...................................................................................................................4 Genesis and Justification of the Problem.......................................................................8 Statement of the Problem...............................................................................................9 Survey of the Literature...............................................................................................10 Methodology................................................................................................................17 Evidence and Procedures.............................................................................................22 Organization of the Dissertation..................................................................................23 2. THE HISTORICAL CONTEXT FOR MEDIA REGULATIONS.............................26 Shifting Paradigms.......................................................................................................27 The Railroads...............................................................................................................30 The Telegraph..............................................................................................................34 Wireless and Beyond...................................................................................................36 The Radio Act of 1927.................................................................................................41 The Marketplace of Ideas.............................................................................................47 Station Ownership Limits............................................................................................50 Public Participation......................................................................................................55 The Romance of Cable.................................................................................................58 Fowler and Friends......................................................................................................60 Summary......................................................................................................................64 3. CONSUMER INTEREST, CORPORATE CONVENIENCE, AND LEGISLATIVE NECESSITY................................................................................................................67 The Debates.................................................................................................................68 vii Competition as the Public Interest...............................................................................73 The Staff Biennial Review...........................................................................................84 Summary.......................................................................................................................84 4. ECONOMIC EMPIRICISM: THE LONE RATIONALE..........................................88 The Commissioners.....................................................................................................89 Senate Hearings...........................................................................................................98 The Fox/Chris-Craft Merger......................................................................................101 Fox v. FCC Argued....................................................................................................105 Roundtable Discussion on Media Ownership............................................................107 Summary....................................................................................................................122 5. THE FOUNDATIONS OF A MOVEMENT............................................................125 Public Interest Organizations.....................................................................................125 The Micro-Radio Movement.....................................................................................133 Congress Steps In.......................................................................................................139 Dissatisfaction Festers...............................................................................................142 The Prometheus Radio Project...................................................................................143 Summary....................................................................................................................146 6. POWELL PLOWS AHEAD.....................................................................................148 Sinclair v. FCC..........................................................................................................148 Fox Decided............................................................. .................................................151 Sinclair Decided.........................................................................................................154 Powell's Turn.............................................................................................................156 Notice of Proposed Rulemaking................................................................................158 Summary....................................................................................................................160 7. THE MEDIA OWNERSHIP WORKING GROUP STUDIES................................165 MOWG Studies Released..........................................................................................165 Study #1.....................................................................................................................167 Study #2.....................................................................................................................168 Study #3.....................................................................................................................172 Study #4.....................................................................................................................176 Study #5.....................................................................................................................178 Study #6.....................................................................................................................180 Study #7.....................................................................................................................182 Study #8.....................................................................................................................185 Study #9.....................................................................................................................188 Study #10 ..................................................................................................................191 Study #11...................................................................................................................192 Study #12...................................................................................................................195 viii Summary....................................................................................................................199 8. OPPOSITION MOUNTS..........................................................................................200 Copps Alarmed and Disappointed.............................................................................201 Competition Issues in the Telecommunications Industry..........................................203 The Columbia Forum.................................................................................................209 Senate Radio Hearing................................................................................................215 Summary....................................................................................................................220 9. THE PUBLIC WEIGHS IN.......................................................................................222 Richmond...................................................................................................................222 The Panelists..............................................................................................................226 The Audience Interprets the Rules.............................................................................235 Summary....................................................................................................................240 10. CONFLICTING COMMUNITIES OF INTEREST..................................................242 Copps Hits the Road..................................................................................................243 Coalitions Merge........................................................................................................250 The Diversity Index...................................................................................................256 The Fur Flies..............................................................................................................259 Out With the Old, In With the New...........................................................................262 National Television Ownership Limits......................................................................263 Dual Network Rule....................................................................................................265 Local Television Ownership Rule.............................................................................265 Local Radio Ownership Rule.....................................................................................269 Cross-Media Limits...................................................................................................273 Diversity Index and Market Concentration................................................................278 Summary....................................................................................................................281 11. REGULATORY REVERSAL...................................................................................284 Heated Reactions.......................................................................................................285 Senate Confrontation.................................................................................................288 Committee Consensus................................................................................................293 The Sleeping Giant Awakes.......................................................................................294 Prometheus Radio Project and the Media Access Project.........................................297 Philly Court Retains Case..........................................................................................301 Oral Arguments..........................................................................................................305 The Court's Opinion..................................................................................................308 Local Television Triopoly Rule.................................................................................316 Local Radio Ownership Rule.....................................................................................318 Summary....................................................................................................................319 ix 12. SUMMARY, CONCLUSIONS, AND RECOMMENDATIONS......................321 Summary..............................................................................................................321 Conclusions..........................................................................................................325 Interpretive Communities and Conflicting Values..............................................343 Recommendation for Future Research.................................................................349 Policy Implications..............................................................................................350 Epilogue...............................................................................................................357 REFERENCES............................................................................................................... 360 ACKNOWLEDGMENTS I could not have completed this project if I had not been invited to join a community of scholars who embody the Utah difference. Although I am particularly indebted to the members of my graduate committee, I also owe a debt of gratitude to all of the members of the communication department who contributed to my outstanding graduate school experience. Thank you Ann Darling for encouraging me to pursue my education, and thank you for encouraging me to aim for excellence. No student could hope for a better role model, and no student could appreciate your support more than I do. Members of my graduate committee contributed their own considerable scholarly expertise to this project. This dissertation is a far better document than it would have been without the perspective offered by David Vergobbi, Nickieann Fleener, Tim Larson, and Rob Mayer. It is impossible to express the level of appreciation, respect, and gratitude that I hold for my Committee Chair Robert K. Avery. His intellectual curiosity, his unending patience, and his unwavering support made this project possible. I am also thankful to the Marriner S. Eccles Foundation for providing me with partial financial support for this project. CHAPTER 1 INTRODUCTION This study examines the conflicts, contradictions, and assumptions of stakeholders in the policy-making process that tried to reconcile the transformation of U.S. communications policy from a theoretical paradigm that included public service idealism and democratic theory to a regulatory regime that came to be dominated by market forces pragmatism. Both those who study broadcast policy and those who make it have been struggling to define the parameters of the public service obligations of broadcasters since the passage of the Radio Act of 1927 (Barnouw, 1966, 1968, 1970; McChesney, 1993). Even though there has never been a universally accepted articulation of broadcasters' obligations to the public that has remained consistent over time, the assumption that mass communication policy is an essential component of a functioning democracy has persisted (Avery & Stavitsky, 2003; Napoli, 2001a). Even so, the definition of what actually constitutes the public's interest has been undergoing a radical transformation since at least as far back as the Reagan administration (Aufderheide, 1999; Krasnow, Longley, & Terry, 1982; McChesney, 1999, 2004b; Streeter, 1996). As the shift from maintaining a robust marketplace of ideas in broadcasting gave way to the promotion of a competitive economic marketplace, Federal Communications Commission (FCC) policy moved inexorably toward deregulatory policies. By the time that Congress passed the Telecommunications Act of 1996, complete with its provision 2 requiring a biennial review and justification for any remaining regulatory restrictions on broadcast ownership policies, deregulation had become the dominant ideology by the end of the 20st century (Conrad, 1989; Johnson, 1998; Price & Duffy, 1997). This study is focused on the question of why FCC Chairman Michael Powell failed to enact his deregulatory agenda during his tenure despite enjoying the support of most of the interested stakeholders in the policy-making process (Ahrens, 2005; Labaton, 2005). This project makes an important contribution to our understanding of shifting conceptions of the public service responsibilities of broadcasters during this crucial transition from an analog to digital media environment that is characterized by the appearance of greater consumer choice, technological convergence, and ownership consolidation. Although many scholars have studied the telecommunications policies created by the FCC, there is no comprehensive interpretation of the controversial decisions rendered by this agency during the Powell years. Background to the Study When Congress passed the Telecommunications Act of 1996 the intent was to update the regulations that had governed the fastest growing sector of our economy to allow for the growth and diffusion of new technological innovations and to better serve the public in the a new media environment. However, Congress never addressed the contradictions inherent in the regulatory regime, nor did it reconcile those inconsistencies in the Telecommunications Act of 1996, which contained the following clause: The Commission shall review its rules adopted pursuant to this section and all of its ownership rules biennially as part of its regulatory reform review under section 11 of the Communications Act of 1934 and shall determine whether any of such rules are necessary in the public interest as the result of competition. The Commission shall repeal or modify any regulation it determines to be no longer in 3 the public interest. (Telecommunications Act of 1996, §202(h), pp.111-12) This small section of a long and complicated bill exacerbated the tension between differing conceptions of what constituted the public interest in broadcasting. When FCC Chairman Powell attempted to further deregulate media ownership as part of the biennial review process in 2003, the agency was inundated by objections to the proposed rules by citizen groups from across the political spectrum. The FCC received approximately 2.5 million letters and comments from citizens and public service organizations with the vast majority opposed to the proposed changes (Fallows, 2003; Hickey, 2003b). Despite the record number of comments filed imploring the FCC to reconsider the redefinition of the public service responsibilities of broadcast companies, Powell held only one public hearing. Shortly thereafter, the FCC passed the new rules by a highly contentious 3-2 vote divided along party lines. Subsequently, Congress passed legislation that allowed for a more moderate relaxation of the number of stations that a media corporation could control nationally (Labaton, 2004). After the passage of the new rules, a coalition of citizen's groups challenged the new regulations (Prometheus Radio Project v. FCC, 2004). Eventually, the Third District Court in Philadelphia remanded the rules back to the FCC, saying that they were arbitrary and capricious. On January 28, 2005, the Justice Department announced that it would not petition the Supreme Court for certiorari to support an appeal for this case (Ahrens, 2005; Labaton, 2005). Public Interest Theory The theory that broadcasters have service obligations to the public was first advanced during the radio conferences held in the 1920s, and then again in the Radio Act 4 of 1927 (Benjamin, 1998; Douglas, 1987; Engelman, 1996; McChesney, 1993). This Act established the Federal Radio Commission (FRC) and gave it authority to regulate the growing broadcast industry. The Commission was charged with allocating licenses and protecting the technical integrity of the electromagnetic spectrum. Equally important was the provision that broadcasters were obligated to provide programming that met the "public interest, convenience, or necessity." Congress renewed the authority of the Commission for 1 year in 1928 and then again for the duration of the law. In 1934, Congress passed the Communications Act that permanently established the FCC and kept most of the provisions of the Radio Act largely intact, including the public interest, convenience, or necessity clause. The two acts also placed limits on the number of stations one entity could own in a given location. The theoretical foundation was that diversity of ownership would lead to a more diverse array of programming perspectives that were available to the public. Therefore, the number of outlets any one entity could own was limited.1 Although the caps were gradually relaxed over the years, media ownership rules represent a classically liberal theory of the First Amendment, in that they were created to encourage competition as a means in which an abundant marketplace of ideas could function within the electromagnetic spectrum (Bunker, 2001; Pember & Calvert, 2008-2009). 1 In its 2002 Biennial Regulatory Review, the FCC defined five types of diversity; viewpoint, outlet, program, source, and minority and female ownership. In the same document, the FCC described localism as a broadcaster's obligation to be responsive to the needs and interests of local communities. In describing its policy objective of achieving competition, the FCC stated that the Telecommunications Act of 1996 embodied the philosophy that competition is the most effective means of producing the marketplace results that best serve the public interest (FCC, 2003i, p. 19). 5 Deregulation By the late 1970s, the media environment, as well as the political environment, began to shift toward deregulatory practices (Krasnow et al., 1982). Instead of focusing on broadcasting and the public interest, regulators began to emphasize the technical aspects of regulation. As satellite, cable, and other new delivery systems became more widespread, the spectrum scarcity doctrine that had provided the rationale for regulation of broadcasting appeared to be an anachronism. When President Reagan came into office in 1980, the administration pushed aggressively for deregulation across many industries. In the appointment of Mark Fowler to the top post at the FCC, Reagan appointed a leader who believed that economic efficiency and competition in the marketplace would best serve the public's interest (Fowler & Brenner, 1982). In the early 1990s, most Americans were able to access a vast array of media services (Aufderheide, 1999; Meyerson, 1997; Price & Duffy, 1997). Consequently, following the lead of the FCC, legislators reasoned that the structure of the contemporary media environment no longer required a regulatory regime supported by the spectrum scarcity rationale. When Senator Lott introduced the Telecommunications Competition and Deregulation Act in 1995, he said: Most telecommunications policy and regulation in America is based upon theNew Deal era Communications Act of 1934. Tight government control over spectrum-based services was justified on a scarcity theory. Neither theory for big government regulation holds true today, if it ever did. (Telecommunications Competition and Deregulations Act, 1995, p. 7881) By the mid-1990s, it was assumed that the public interest, convenience, or necessity would best be served by allowing a competitive marketplace to dictate the structure of broadcasting. This redefinition of the public interest was partially due to the 6 perceived promise of new technologies. In his speech introducing Senate Bill 652, Senator Pressler said: The future of America's economy and society is inextricably linked to the universe of telecommunications and computer technology. Telecommunications and computer technology is a potent force for progress and freedom, more powerful than Gutenberg's invention of the printing press five centuries ago, or Bell's telephone and Marconi's radio in the last century. This force has helped us reach today's historic turning point in America. (Telecommunications Competition and Deregulations Act, 1995, p. 7881) The following year, Senator Pressler presented a conference report that proposed a compromise to reconcile differences between the House and Senate version of the legislation that would become the Telecommunications Act of 1996. Competition, not regulation, is the best way to spur innovation and the development of new services. A competitive marketplace is the most efficient way to lower prices and increase value for consumers. More competitive American telecommunications markets will promote United States technological advances, domestic job and investment opportunities, national competitiveness, sustained economic development, and improved quality of American life more effectively than regulation. (S. Rpt. No. 686, 1996, p. 42) The 1996 rewrite of the Communications Act of 1934 was designed to create a regulatory environment that would knock down the old barriers between the different sectors of telecommunications (Aufderheide, 1999; Meyerson, 1997). Traditional regulatory definitions of mass media, computing, and telephony were seen as artificial restraints that were no longer relevant. Therefore, it was reasoned that the public interest would be served by meeting the needs of consumers who would benefit from the availability of new, inexpensive, information delivery systems. When the Telecommunications Act finally passed, it contained provisions that further loosened the already eroding media ownership restrictions that had been in place. 7 While President Clinton's administration supported the passage of the act, there was increasing concern over the issue of media consolidation during the later years of Clinton's presidency (Napoli, 2001a; Smith, 2003). Clinton appointed FCC Chairman William Kennard supported the few existing limits on ownership, created incentives to encourage diversity of ownership by minority broadcasters, and attempted to create a new low-power noncommercial radio service designed to promote community broadcasting (Stavitsky, Avery, & Vanhala, 2001). Although Kennard's agenda to encourage public service broadcasting through innovation of services was supported by many members of the public from across the political spectrum, Congress did not support his efforts. Subsequently, under pressure from Congress, in 1999 the FCC voted to allow duopolies under limited conditions and voted to further relax limits on cross-ownership of television and radio stations (Cooper, 2003; McChesney, 2004b). Broadcasters argued that the media ownership rules were arbitrary and capricious and were an impediment to doing business in an era of dwindling viewership for broadcast television. Fox Broadcasting Company contended that the caps provided by the National Television Station Ownership Rule (35%) and the Cable/Broadcasting Cross-Ownership Rule were invalid (Fox v. FCC, 2002). The District of Columbia Court of Appeals struck down the FCC's ban on cross-ownership but said that a national ownership cap was constitutional in general. However, the court also ordered the FCC to show why the cap of 35 % was not arbitrary and capricious. In other words, the Court ordered the FCC to provide empirical evidence to support its claim that the existing ownership rules did in fact preserve diversity and the public's interest (Cooper, 2003; McChesney, 2004b). 8 Genesis and Justification of the Problem Clearly, public dissatisfaction with the content, form, and function of broadcast media is nothing new. However, given the number of objections to policy changes that have an enormous impact on the nature of how and where Americans receive information, the public outcry denouncing increased media consolidation is especially important. The years between 2001-2005, the years of Powell's tenure as Chairman of the FCC, represent a period of significant public backlash against policies favoring deregulation of the telecommunications industry as a whole. When President Bush appointed Michael Powell to head the Commission in 2001, one of the first things he did after taking the helm was to commission 12 research studies designed to provide empirical data to address the very issues that were before the courts (Huntemann, 2004; Smith, 2003). The White House clearly supported a deregulatory agenda, as did Powell. When the court issued its opinion in Fox v. FCC, Powell saw it as the perfect opportunity to relax ownership rules (Smith, 2003). He was quoted as saying on many occasions that the court had ordered the FCC to reexamine the rules based on the Telecommunications Act provision for biennial reviews (Hickey, 2003a). The FCC solicited public comments on the issue, and the public responded in droves. The FCC received more public comments from individuals and public interest groups across the political spectrum than it had received about any other matter in the entire history of broadcast regulation. Despite evidence that the vast majority of the comments the FCC received were opposed to any relaxation of media ownership restrictions, Powell held only one public hearing on the issue in Richmond, Virginia. 9 As Hickey (2003a) reported in the Columbia Journalism Review, "Soon, groups who had been only peripherally involved in the loose coalition became increasingly angered by Powell's intransigence" (Hickey, p. 26). The two Democratic Commissioners at the FCC, Copps and Adelstein, were also outraged (Labaton, 2005). In fact, the Commissioners were so opposed to Powell's position that they held a series of unofficial public hearings across the country. Record crowds turned up at all of these hearings, and the overwhelming consensus was opposed to further consolidation in the broadcast industry. On June 2, 2003, the Commission ignored the public outcry and voted along party lines to relax ownership restrictions across the board. Several weeks later, the Senate responded to public pressure with a compromise bill limiting the national ownership cap to 39%, down from the 45% cap that was passed by the FCC. In April 2004, the Philadelphia District Court remanded the new rules back to the FCC saying that the data commissioned by the FCC were grossly flawed and were therefore arbitrary and capricious. Powell was widely criticized for his actions on the matter, and for months there were rumors of his departure. The White House backed off of its support of Powell, and finally, in January of 2005, Powell announced that President Bush had accepted his resignation (Powell, 2005). Statement of the Problem The purpose of this study is fourfold. The objectives are (a) to situate the communications policy environment from 2001-2004 against the historical background of broadcast regulation in the face of growing media consolidation, (b) to analyze the specific policy implementation practices of the FCC during the 4-year period under consideration, (c) to analyze the arguments of citizen groups opposed to the 10 communications policies enacted by the FCC, and (d) to compare and contrast the public interest arguments generated by the FCC and citizens groups in order to provide a critical analysis of FCC performance, 2001-2004. The research questions derived from this statement of the problem are as follows: 1. How did the competing public interest definitions advanced by FCC Commissioners contribute to the formulation of broadcast ownership policy procedures and practices during this period? 2. How did the Telecommunications Act of 1996 reframe the communications environment? 3. To what extent did the competing interpretations extant during this time period contribute to the specific procedures for generating public response to proposed rulemaking? 4. To what extent did the range of public comments contribute to subsequent policy-making during these years? 5. What are the competing values embodied in the FCC's rulemaking, the public response to that policy decision, and in the Court's response to those decisions in Prometheus Radio Project v. FCC? Survey of the Literature Although this study was focused primarily on the time period of Chairman Powell's tenure at the helm of the FCC, it is necessary to understand the historical evolution of broadcast regulation in order to interpret how the definition of public service broadcasting has evolved. Many historical works were consulted during the process of conducting this study. Horowitz (1989) traces the origins of the public interest in broadcasting to the early 19th century when the nation was developing government-sponsored infrastructure projects. States and municipalities entered into public-private partnerships and began to grant charters of incorporation to private developers if they worked on projects that were "affected with a public interest." During this era, 11 corporations were granted access to public resources if they were perceived to provide a communal service. As the century progressed, the classic liberal legal paradigm that governed our early history expanded to include a corporativst perspective. However, as the telegraph developed in midcentury, there were those who felt that the structure of the communications infrastructure should be a public resource. The theory that the telegraph could provide a service that was in the public interest was endorsed by Samuel Morse himself. Yet, Czitrom (1982) describes the tension between regulators who envisioned the utopian possibilities of the new technology and the tension between the more pragmatic concerns of politicians and corporations who understood the economic and ideological power the telegraph represented. Additionally, Czitrom's discussion of the challenges and opportunities presented by the telegraph is particularly insightful as it demonstrates how the potential for advancing a more participatory democracy through the use of technology was seen as a lost opportunity after Western Union gained its monopoly over the industry. Since most serious broadcast policy analysts agree that the concept of public interest broadcasting is closely related to theories of self-government, democracy, and freedom of the press, it is reasonable to assume that early policy-makers were influenced by theorists such as Zachariah Chaffee, who wrote passionately about the social interest contained in the First Amendment. In 1919, the same year that Oliver Wendell Holmes made his famous declaration that the truth should be able to compete in a robust marketplace of ideas, Chaffee (1919) discussed the importance of maintaining "a social interest in the attainment of truth, so that the country may not only adopt the wisest course of action, but carry it out in the wisest way" (p. 985). Thirty years later 12 Meiklejohn (1948) discussed his theory of free speech and wrote, "the unabridged freedom of public discussion is the rock on which this government stands" (p. 86). While Dewey (1991) was not a legal theorist, his discussions of community and broadcasting surely influenced the intellectuals of his day. Contemporary First Amendment scholars such as Sunstein (1995), Bollinger (1986), and Bunker (2001) have also written about how the social intent of the First Amendment can be used to inform public interest policy decisions in the media. As wireless telegraphy and radio appeared on the scene, legislators struggled over how to structure the nascent broadcasting industry. Sterling and Kittross (1990), Barnouw (1966), and McChesney (1993) argue that after World War I there was a growing sense that regulators had made a mistake when they allowed the telegraph to become a strictly commercial and mostly unregulated service. Douglas' (1987) history of the years between Marconi's first demonstrations of wireless telegraphy until the radio conferences of the 1920s explains how an estimated 250,000 amateur radio operators advanced the argument that a diversity of voices in broadcasting defined, at least in part, the public interest. As Engelman (1996) also demonstrates in his history of public radio and television in America, many educators argued that national resources such as the public airwaves should be employed in service to the public. Educators, particularly those from the large land-grant universities, sought to extend their educational missions to the electronic spectrum and created distance-learning opportunities for the public. McChesney's (1993) history of the broadcast reform movement, 1927-1935, demonstrates that there was a highly contested struggle during those years regarding who would get to define the public interest in broadcasting. The majority of Congress 13 rationalized that a commercial system of broadcasting was preferable to one dominated by noncommercial broadcasters because corporations had more resources and therefore could develop a national service. However, a substantial minority of Congress and the general public favored a system that would provide for a diversity of voices, viewpoints, and owners across the spectrum. Streeter's (1996) critical theory of corporate liberalism is perhaps the most encompassing explanation for how the regulatory structure that was developed early in the last century came into being. Inevitably, the contemporary structure of broadcasting evolved to become a system dominated by fewer and fewer multinational corporations. According to Streeter, broadcasting could not have developed any other way because the principles of corporate liberalism that were established at the beginning of the 19th century were already firmly established before radio appeared on the scene. Streeter argues that predominant American values such as faith in professional expertise, functionalism, and faith in technology as an instrument for achieving social goals, made it predictable that corporations would end up "owning" the airwaves. There was simply no way that regulators could trust amateurs, teachers, or hobbyists to preserve or promote the public interest. Streeter, McChesney (1993), and Blakely (1979) make a convincing case that an overriding belief in the infallibility of corporate liberalism resulted in a lack of critical assessment of the failures of capitalism. The public interest in broadcasting was not the highest priority for regulators. Baughman (1981) and Armstrong (2002) examined the policy failures of the FCC during the period after World War II when utopian hopes for television were soaring. Baughman's thesis is that since the FCC was never an independent regulatory agency but 14 was in fact dependent on Congressional and Presidential support for its power to regulate, it was precluded from preventing television from becoming a "vast wasteland." Therefore, when the agency attempted to enforce public interest standards, it never had enough power on its own to face off against competing commercial and political interests. This perspective conforms to Howowitz's (1989) theory of regulatory capture. Armstrong's study of localism, how it was defined, enforced, and extended, illustrates how ambivalent the agency itself was over the definition of public service broadcasting. The assumption that the public would somehow be served well if there were live, local programming, produced by broadcasters with roots in the communities they served, was given much lip service. However, due to the FCC's vacillating policy statements and sporadic attempts to enforce the standards they could define, the competing values of media corporations won out over even the most broad interpretations of public interest broadcasting. As the hopes that many had for a television service that could create a public forum for the exchange of ideas seemed to fade, educators stepped up to the plate and lobbied for a noncommercial service that could offer an alternative (Witherspoon, Kovitz, Avery, & Stavitsky, 2000). After the Public Broadcasting Act of 1967 passed, Avery and Pepper (1974) documented the problems and concerns raised by creating an institution that was never fully funded and never fully insulated from the vagaries of political trends. Many other scholars have continued to criticize the policies that resulted in a grand experiment that was to produce and define public interest programming on a public broadcasting network, one that has never been fully realized (Brown, 1971; Day, 1995; Engelman, 1995; Hoynes, 1994; Ledbetter, 1997b; Stavitsky, 1995). 15 When Bagdikian first published his seminal work on media monopolies in 1983, he raised the issue of whether media consolidation was harmful to democracy. Other critical scholars have since advanced his work (see, for example, Chester, 2005; Cooper, 2005; Klinenberg, 2007; McChesney, 1999, 2004a, 2004b). Aufderheide's (1999) analysis of the Telecommunications Act of 1996 looks at the long-reaching economic, political, technological, and public service ramifications of the act. Her assertion that legislators retained the public service components of broadcast regulation, even while they redefined its very meaning, is particularly instructive. Meyerson (1997) and Price and Duffy (1997) suggest that despite all of the deregulatory rhetoric espoused by Congress during the process that led to the passage of the Telecommunications Act, many of the same regulatory divisions that existed prior to the act were retained. Consequently, a less competitive marketplace exists in many discrete segments of telecommunications regulation. Thus, despite regulatory reliance on competition as a means to meet the public interest in broadcasting, increased consolidation in media spurred on by deregulatory practice has decreased public service. Other articles published in academic and law journals show that deregulation, in one form or another, has weakened specific measures designed to meet the public interest in broadcasting (Chang & Ki, 2004; Petros, 1999; Singleton, 2003). Convention papers and journal articles that discuss the specific problem of media cross-ownership policy during Powell's tenure include the quantitative work of Huntemann (2004), Smith's (2003) analysis of studies conducted by the FCC, Cooper's (2003) critique of those same studies, and the working papers of the FCC itself (see, for example, Bush 2002). 16 This category of literature also includes essays published in law journals that either attempt to either support or refute the FCC's legal and technical arguments for deregulating broadcasting. Singleton's (2003) article in Communication Law and Policy is representative in that he argues that when the FCC liberalized radio-television duopoly restrictions in the 50 largest media markets in 1999 it resulted in fewer regularly scheduled local news or public affairs programs in those markets. Consequently, Singleton (2003) asserts that the FCC is violating its own rules. Another article written by Chester (2004), director of the Center for Media Education, accuses Chairman Powell of being biased in favor of a market-oriented approach to media regulation and favoring the First Amendment rights of broadcasters over those of the public. Pritchard (2001) examines the legal definition of diverse and antagonistic sources and the effects of reducing them on local newspaper/broadcast cross-ownership policies. Many of the studies are quantitative studies that interrogate the statistical analysis that led the FCC to conclude that the public interest would best be served by deregulating broadcast ownership restrictions. For example, Lin (2004) published his report that argues that "the idea of dual concept and Simpson's D, as a statistical method, are superior to other techniques designed to measure economic diversity" and would therefore be a better model for the FCC to use than the methods they are currently using (p.1). Journalism & Mass Communication Quarterly published a study by Petros (1999) that purports to show that the range of opinions to which the consumer-citizen has access is being limited by broadcasting media market structures on both sides of the Atlantic. Hakanen (2002) published a report of a study he conducted in the Journal of Communication Inquiry that measured programming in three selected media markets in 17 1976, 1985, and in 1997, that demonstrates that public affairs programming and other forms of local production have declined since 1976. Another example of scholarship in this category includes Chambers' (2003) analysis of the structural changes in small media markets that were a result of the relaxation of ownership restrictions in radio regulations after the passage of the Telecommunications Act of 1996. A final category of literature consulted for this study includes literature generated by the FCC and reports contained in the popular and trade press and newspapers. These materials provide a record of the day-to-day developments that motivated the public, the FCC, and Congress to come to the decisions that they did during this crucial period of transition. For example, there have been numerous articles that have appeared in the New York Times and the Washington Post (see, for example, Ahrens, 2005; Labaton, 2005). Several magazine articles that were particularly instructive include the histories of the controversies during Powell's tenure written by Fallows (2003) in the Atlantic Monthly and by Hinckley (2003a, 2003b) in the Columbia Journalism Review, and an article that appeared in the Economist ("The politics," 2003). Many articles like the one written by Trigoboff (2003) for Broadcasting and Cable were also reviewed. Methodology This study is a critical examination of historical and contemporary discourse surrounding media ownership regulations during a specific time period when the public became engaged in the process of constructing and deconstructing communications policy. It is critical in the sense that it investigates, interprets, and reinterprets the contexts in which these events transpired, and it is critical in the sense that this study examines the points when the knowledge structures of various interpretive communities 18 intersect and diverge. Further, this study critically interprets the conclusions reached by stakeholders in the policy-making process. If "the law is a set of lived social relations" as critical legal theorists suggest, then law and policy are always open to interpretation and are therefore contingent on the changing conditions of hegemonic and counterhegemonic forces in society (Streeter, 1996, p. 15). In other words, law and policy, like the culture they are situated within, are never static, and therefore the interpretation and application of law and policy are always in a state of transformation dependent on shifting values and definitions. If the meaning of any regulation derives from its interpretation, the social relations that constitute individuals within a given interpretive community constrain and limit the ways in which a regulation can be criticized. Fish (1980) first coined the term "interpretive communities" to describe not so much a group of individuals who shared a point of view, but a point of view or way of organizing experience that shared individuals in a sense that that its assumed distinctions, categories of understanding, and stipulations of relevance and irrelevance were the content of the consciousness of community members who were therefore no longer individuals, but insofar as they were embedded in the community's enterprise, community property. (Fish, 1989, p.141) Interpretive communities that share common assumptions about the nature of meaning will therefore tend to share common interpretive strategies. Members are inescapably bound by "the modes of thought made available by interpretive communities" (Bunker, 2001, p. 70). Zelizer (1993) applied this concept as an alternative way of conceptualizing the shared values of journalists, and posited that the construction of knowledge within interpretative communities implies certain patterns of authority, communication, and memory. According to Zelizer (1993), interpretive communities 19 arise less from formal frames of professions than from informal associations that are built around shared interpretations. At its core, this dissertation is a study of how separate, yet overlapping, interpretive communities struggled to define the meaning of the public interest with regard to media ownership policies. In the case of this study, the stakeholders in the policy-making process assume the characteristics of interpretive communities. Krasnow et al. (1982) named the FCC, Congress, the broadcast industry, the public, the courts, and the White House as the six major groups that drive the direction of policy decisions. Their argument was that in order to understand how the process works, one has to be able to understand how the groups interact with each other. Therefore, one must look at the policy-making process as a permeable system with six major actors who are constantly responding to outside pressures, internal interpretations, and historical precedent. Since conditions outside of the system are always in a state of flux, the six groups are always responding, reinterpreting, and reacting to changing contingencies. In other words, the regulatory process is one that is essentially an act of communication (Brahman, 2003). As such, Carey's proposition that "communication is a symbolic process whereby reality is produced, maintained, repaired, and transformed" applies to the policy-making process as well (Carey, 1988, p.23). Consequently, this study starts with the six stakeholders named by Krasnow et al. and identifies outside influences on the system as well as internal interactions from within the system. Napoli's (2001a) study assumed a similar approach. He began with the stakeholder groups identified by Krasnow et al. (1982) and expanded his analysis to include seven core values that are associated with communications policy. There are (a) 20 the First Amendment, (b) the public interest, (c) the marketplace of ideas, (d) diversity, (e) competition, (f) universal service, and (g) localism. According to Napoli, …communications policy decisions are a product of a potential process in which multiple interested stakeholders, each with potentially conflicting interests and different influence tools available to them, attempt to affect policy outcomes. In some instances, they are primarily economic, in others, they are primarily political, wherein in others they are motivated by a combination of factors. (p. 226) Napoli (2001a) argues that the literature is full of studies that have sought to evaluate broadcasting policy based on economic models. Although he acknowledges that economic criteria and principles are vital components of communications policy analysis, these quantifiable studies, on their own, do not provide a comprehensive understanding of the social values that are equally important to consider in broadcasting policy. This dissertation contributes to our understanding of the conflict between regulators' perceptions of the public interest in broadcasting and the public's perceptions of what the public interest entails, precisely since it takes into account those social values that cannot be counted. In a very real sense, this particular public policy controversy, one that is ostensibly a contestation over the validity of relaxing media ownership restrictions, is, at a more basic level, a contest over conflicting social values that simply cannot be quantified. Napoli's model of the foundation principles of broadcast regulation is a systematic approach to analyzing the social values contained in the definition of the public interest in broadcasting. Napoli argues that unless one understands how much of a role each of these values or principles plays in specific policy decisions, any analysis of those discussions will only be superficial. All scholars must have an interpretive framework. This study adapts and extends Sillars' (1991) model of value analysis to the model developed by Napoli (2001a). Value 21 analysis is a form of textual analysis that allows a researcher to identify common and conflicting values (Armstrong, 2002; Sillars, 1991). In this case, value analysis helps identify the common and conflicting values that define issues that the six major stakeholder groups must agree on in order to create successful public policy that will benefit citizens and allow the companies that serve them to remain profitable. Sillars' (1991) approach begins with the assumption that all texts contain both explicit and implicit expressions of the values of the individual or organization that produced it. Accordingly, within any given text, it is possible to identify a system of values. Sillars and Gronbeck (2001) recommend a systematic approach to value analysis, one that has been used successfully by researchers such as Avery and Stavitsky (2003) in their critique of telecommunications policy-making, by Conduit and Lucaities (1993) who studied the changing definitions of equality over several historical periods, and by Armstrong (2002) who used value analysis to deconstruct the concept of localism in broadcast policy. Whether discussing legal value systems or FCC regulatory principles, it is important to acknowledge that the researcher must interpret texts and discourse. Streeter (1987) speaks extensively of a discourse of technology that influenced regulators to radically revise their approach to cable television. He explains that the discourse of technology created "a terrain for collective action while simultaneously obscuring underlying conflicts…" (p.174). The discourse of technology can be summarized as that familiar song that posits that new technologies will enable us to achieve a utopian, democratic communication environment once and for all. This continuing refrain allows constituents from very different perspectives to be united by the supposed promise of 22 new technologies that exist in the present and in the future. This has certainly been the case with the discourse surrounding media ownership policies. While different interest groups or interpretive communities may not always agree on many aspects of a new policy proposal, they will, according to Streeter (1987), compromise accordingly if they are sufficiently enamored of the new technology under discussion. While Streeter was using the phrase discourse of technology, to refer to the development of the cable television industry during the 1970s, this conception is equally relevant to subsequent discussions of the discourse(s) of broadcast deregulation, especially in regard to the Telecommunications Act of 1996. Powell's reliance on the discourse of technology simply failed, finally, to unite the stakeholders in the debate over the public interest in broadcasting. To summarize, this study is a critical examination of the texts produced by the relevant stakeholders in the contest to define the parameters of the public's interest in broadcasting. This study is also a textual analysis of the values that are part of the regulatory structure of broadcasting. Evidence and Procedures This study focused on the examination of broad categories of primary documents. Many of these data came from FCC policy statements, memoranda and orders, press releases, studies, transcripts of speeches given by the commissioners, and roundtable discussions that were conducted by the agency and accessed via the FCC's website. Data from the Congressional Record and other legislative evidence were obtained from LexisNexis. This same database was used to access court decisions and other legal materials. Another category of primary sources came from the websites of public interest 23 and media advocacy groups. Transcripts of unofficial public hearings conducted by Commissioners Adelstein and Copps were obtained from those sources. Historic and analytic treatises by scholars working in the realm of economics, cultural studies, political science, sociology, and policy studies were consulted for this study. Additionally, this investigation made use of many secondary sources published in trade journals, newspapers, and magazines. These sources often provided the only daily record of political discourse about media ownership during this time period. Organization of the Dissertation The findings of this study are presented in a chronological narrative that begins within the 19th century when the first federal regulations were established and ends with a discussion of Prometheus Radio Project v. FCC in 2004. Chapter 2 traces the development of the national transportation infrastructure and compares it to the development of the communications infrastructure. This chapter explains how the broadcasting industry was structured by stakeholders in the process and how key decisions were influenced by outside forces. An overview of the history of media regulations is provided here until the 1980s, when deregulatory practices began to appear on the agenda of many federal agencies. Chapter 3 includes an analysis of the issues that led to passage of the Telecommunications Act of 1996. Next, this section examines the regulatory climate after the restructuring of the regulatory regime that had been in place since the FCC was established. It discusses the outcome of the first biennial review conducted by the FCC in 1998, complete with the documentation of the conflicting perspectives of individual commissioners, industry observers, and other interested stakeholders. 24 Chapter 4 describes how momentum for the further deregulation of media ownership policies gained traction during Powell's tenure. This chapter describes how the perspectives of each commissioner influenced the policy-making process and how Congress, industry representatives, public interest activists, and academics helped shape the discourse about media ownership policies. Chapter 5 focuses on public interest groups and media activists. It documents the beginning of a movement opposing deregulatory practices. It provides the background for understanding the dissatisfaction of those who opposed further relaxation of media ownership policies. Chapter 6 analyzes the issues and decisions rendered by the court in the Sinclair v. FCC and Fox v. FCC decisions that resulted from the agency's decisions on the biennial reviews. It examines the regulatory problems that arose from these decisions and Powell's assertion that the Court was forcing the FCC to abolish its media ownership policies. This chapter dissects Powell's reasoning and offers an alternative perspective Chapter 7 evaluates 12 studies commissioned by the FCC to provide empirical evidence to support the agency's rulings in court. The evidence demonstrates that in many cases, researchers used flawed methodology and reached unsupported conclusions. Chapter 8 considers the growing opposition to the policy direction taken by the FCC. It identifies the issues under dispute, and it analyzes the dissenting opinions of stakeholders in the process. Chapter 9 examines the comments of citizens and other stakeholders who showed up at public hearings to express their points of view on the issue. 25 Chapter 10 discusses opposition to the FCC's proposed policy changes. Here, criticisms of the proposed changes are examined and Powell's position is challenged. This chapter examines the decision. Chapter 11 studies the reaction to the rule changes, and the events that led to the court challenge to the new regulations. The decision of the court in Prometheus Radio Project v. FCC is analyzed and compared to the FCC's Report and Order. Chapter 12 summarizes and evaluates the empirical findings of the project. It answers the research questions posed at the beginning of this study and provides recommendations for future research. This section discusses the implications of this study for future policy decisions. CHAPTER 2 THE HISTORICAL CONTEXT FOR MEDIA REGULATIONS Americans often speak of their style of democracy as if it were a collectively agreed on set of objective assumptions about how the government should be run and what it means for us as individual citizens (Sillars & Gronbeck, 2001). Although there are certain core beliefs have persisted throughout the course of our country's history, those values, and how they are defined, have always been subjective and contested. While the U.S. Constitution, a quintessential expression of classical liberalism, created the architecture for government and expressed a loosely stated set of principles that Americans still embrace, it did not create a blueprint for solving the problems of governance in the 21st century. This chapter demonstrates how classical liberal thought and the theory of democracy adapted to accommodate an industrial economy that produced large shifts in population patterns and technological development that would have been unthinkable at the beginning of the 1800s (Bruchey, 1968; Dale, 2004; Schlesinger, 1951; Wiebe, 1967). This chapter also provides evidence to support the proposition that by the time the issue of regulating broadcasting was raised, statutory law and the economic order created to regulate commerce had already served to establish the foundation for the structure of broadcasting (McChesney, 1993; Streeter, 1996). During the period that classical liberal thought was expanding, revising, and reinterpreting its principle tenets, remnants of an 27 older paradigm remained and influenced the legislature that created the Federal Radio Commission (Hawley, 1974; Horowitz, 1989). The paradox embodied in the first attempts to regulate commerce led to a Janus-like approach to the regulation of broadcasting that surfaced during the controversy over media ownership in 2003. This chapter will trace the discursive threads that evolved during the 19th and 20th century that led to public and interagency discussions that attempted to define what exactly constituted the public interest in the 21st century. Finally, this chapter discusses the emergence of interest groups that developed explanatory strategies that became the foundation for the formation of interpretive communities that participated in the debate over media ownership during the next century. Shifting Paradigms At the turn of the 19th century, most American's were united by an agrarian life-style that was supported by a classical liberal orientation that structured and organized legal thought, political habits, and the organization of society (Horowitz, 1989; Tedlow, 1985). Regardless of how one feels about overarching theories and general statements, certain ways of perceiving the world, and one's place in the world, guide the way society is imagined and structured (Fish, 1980; Hall, 1993; Streeter, 1996; Williams, 1998). Individuals and organizations share values and ways of constructing the world that influence the development of institutions and belief systems. For the majority of the 19th century, the assumption that there was a natural right to own private property, that liberty was perceived as an absence of restraints against individuals, and that individuals were rational and acted on their own self-interest, prevailed as the dominant organizing principles for society (Lustig, 1982; Wetlaufer, 1999). These classical liberal values 28 were celebrated in the Constitution. Although the contradictions inherent in elevating individual rights over the rights of a collective society were never resolved, most people believed these assumptions were self-evident. The natural right of an individual to own private property also coincided with the belief that entrepreneurship in the free market should be highly lauded (Horowitz, 1989; Lustig, 1982; Wetlaufer, 1999). People subscribed to the notion that a clever individual producing a superior product in a competitive market would always succeed in the marketplace. The classical liberal free market was, if nothing else, a so-called rational belief that American ingenuity would always be rewarded. The Age of Reason also brought forth assumptions about progress (Postman, 1999). The almost religious faith in science as a means to achieve a not-so-distant future where the ills of humanity would be cured through innovation and inventiveness, was also characteristic of the era that produced these habits of thought (Czitrom, 1982; Horowitz, 1989). This consciousness was discernible in the jurisprudence of the legal formalists who assumed that the task of a jurist was to merely apply found law, or natural law, to conflicts between parties rationally and objectively (Wetlaufer, 1999). Accordingly, there emerged the belief that the law should be above political concerns as politics is by nature subjective, whereas the rules of law are governed by the proposition that its purpose is to mediate or transcend the vagaries of men. In the early years of the 19th century, as the migration westward progressed and the economy began to expand, municipalities and states began to grant charters of incorporation to quasi-public organizations that pledged to build roads, expand water projects, and develop public resources (Bruchey, 1968; Colten, 1995). In exchange, these 29 quasi-public corporations enjoyed many privileges that unincorporated businesses did not. The corporations were granted the right to raise capital through the sale of stock, were granted monopolies to right of ways for their projects, and were granted the right of eminent domain. Additionally, these corporations were granted tax exemptions and the right to engage in banking operations. When states began to grant charters of incorporation to private entities in order to facilitate the growth of the nation's infrastructure, they sanctioned the development of monopolies in industries that were "affected with a public interest," a legal principle that preceded the concept of common carriers (Colten, 1995; Horowitz, 1989; Munn v. Illinois, 1876). As other commercial interests across many sectors of the economy demanded the right to incorporate, they created a business environment that gave rise to the growth of large centralized corporations whether they were affected with a public interest or not. After the Civil War, industrial corporations emerged that controlled production and distribution channels, thus giving them enormous power over the development of public and private resources (Schlesinger, 1951; Tedlow, 1985; Wiebe, 1967). During this same period, jurists from the legal formalist school were expanding the rights of private property owners and extending those rights to corporations (Monsma, 2006; Wetlaufer, 1999). The dilemma for the legal formalists was how to reconcile the paramount rights of an individual, in an era when citizens were becoming increasingly dependent on corporations for their livelihood and well-being. Since the formalists professed the belief that individual liberty and autonomy were vital to the foundational principles of the law, they had no choice but to expand the legal definition of an 30 individual to encompass the rights of individual corporations. In essence, the corporation, and the rights ascribed to it, became analogous to the rights of an individual. The Railroads As with the FCC during the New Deal era, the first federal regulatory agency arose to bring order to an industry dominated by chaos, and like the FCC, the Interstate Commerce Commission (ICC) developed as a result of pleas for regulation by the industry itself (Chandler, 1968; Horowitz, 1989). By midcentury, the contradictory assumptions that obscured many of the dominant features of classical liberalism were beginning to emerge. The growth of the railroad industry brought many of these problems to the surface. The idea that a competitive marketplace could produce an economically efficient environment that would benefit entrepreneurs, producers, citizens, and manufacturers was looked at with increasing suspicion (Schlesinger, 1951; Tedlow, 1985; Wiebe, 1967; Zinn, 1985). The railroad industry was an excellent example of the malfunctions that occurred in an unrestricted free market. In its early stages, small, undercapitalized companies dominated the railroad industry and there was fierce competition among the players (Chandler, 1968; Horowitz, 1989; Schlesinger, 1951; Tedlow, 1985). There were duplications of service on the most profitable lines and nonexistent service in rural areas. Since the fixed costs of operation were so high, there was enormous pressure on individual lines to increase traffic. As the industry expanded westward, the railroads entered into pool agreements and cartels to try to offset the costs of expansion. However, these agreements were unenforceable and sometimes illegal, and many lines provided secret rebates to favored customers. There was also the problem of individual owners not honoring the limits of the pool 31 arrangement, lines that classified freight illegally, and lines that neglected to contribute their share to the pools at all. Clearly, the free market could not accommodate the problems of developing this critical component of the nation's infrastructure unless the legal precedents and concomitant values of classical liberalism could be modified to adjust to the pragmatic limitations of capital-intensive industries. Despite and because of these problems, the railroads had enormous power (Schlesinger, 1951). A town that was not served by the railroads was essentially doomed to oblivion. Since the industry was so ruthlessly competitive, it was common practice to give much more favorable rates to the largest customers who needed to haul their freight over the longest distances. Farmers and small producers who wanted to ship their goods over shorter routes paid the highest rates and were sometimes frozen out altogether. The Granger Laws, passed in the 1870s, were enacted as a result of discriminatory rate structures in the Midwest. These laws attempted to impose state regulations on the railroads to eliminate these disparities. The railroads argued that the Granger Laws interfered with interstate commerce, and since they were private corporations, the courts could not interfere with their right to conduct business (Munn v. Illinois, 1876). The majority opinion in Munn rejected those arguments and found a legal rationale for state regulation in the common law doctrine of "affectation with a public interest," the rationale that was used to allow businesses to incorporate earlier in the century. If a business was providing a service that was essential to the public, that enterprise was entitled to certain privileges by virtue of its function, provided the business offered equal access to its services. Over time, the Supreme Court also found an expanded rationale for affirmative regulation of industry in the public 32 interest in the Commerce Clause of the Constitution (Horowitz, 1989; Wetlaufer, 1999). However, this decision required a major discursive turn to reconcile the classical liberal principle that granted autonomy to individuals or, in this case corporations, and required the law to modify the definition of the free market. There were other reasons that the Munn decision was important. First, the decision provided the trajectory that resulted in the first federal regulation of commerce (Chandler, 1968; Tedlow, 1985). Second, the decision formed the basis for regulating common carriers and provided the basis for the authority to regulate in favor of the public interest. While the public interest has been defined legally in many ways across numerous different regulatory agencies since then, the common usage of the term is what lies beneath much of the ideology that supports the authority to regulate commerce, particularly in the case of broadcast regulations. However, by elevating the rights of corporations that presumably provided a valuable communal service, the individual right to autonomy that had previously been one of the bedrocks on which American jurisprudence rested had to be modified to reflect a new hierarchy of values. Nine years after the courts decided that railroads were common carriers, the Supreme Court abolished the state's right to regulate railroads on the basis that those regulations were interfering with interstate commerce (Wabash, St. Louis and Pacific Railway Company v. Illinois, 1886). The higher courts had been gradually expanding the power of the federal government to supersede state rights, and the Wabash decision reflected this trend (Horowitz, 1989). The decision created the legal authority for federal regulation of interstate commerce. After Wabash, there was a nearly unanimous consensus that Congress needed to step in to rectify the problems in the railroad industry. 33 By this point, the railroad market could at best be characterized as an oligarchy, and the premise that the free market required unrestrained competition to promote an equitable economic environment was less important than serving the public's interest in equitable rate structures and access and the orderly growth of the industry. When the antimonopoly and proagrarian contingent argued that legislation was needed to ban pooling agreements and discriminatory rate structures in the railroad industry, prorailroad forces argued that Congress should create an independent commission that would decide each case on an individual basis (Horowitz, 1989; Schlesinger, 1951; Tedlow, 1983). Congress passed the Act to Regulate Interstate Commerce and the Interstate Commerce Commission was created in 1887. The Interstate Commerce Act of 1887 prohibited unreasonable rates, pooling arrangements, rebates, and rate discrimination. The act also gave the ICC the authority to investigate violations of these rules (Schlesinger, 1951; Tedlow, 1983). The Commission consisted of five members who were appointed by the president to serve 5-year staggered terms. Only three Commissioners could come from any one political party, and each member had to be confirmed by Congress. However, the charter for the Commission was vague, and Congress set up the ICC as a fact-finding body without direct regulatory authority. The only way the Commission could enforce the rules was by taking a railroad company to court. However, the courts consistently struck down repeated attempts by the Commission to create administrative law unless it could show a direct link to the Interstate Commerce Act (McCraw, 1980; Wetlaufer, 1999). The legal formalists on the Court were strongly inclined to favor private common law over public and statutory law, and it was not until Congress added to the authority of the Commission 34 and broadened its jurisdiction in 1903 with the Mann-Elkins Act, that the ICC had any real enforcement power (Mann-Elkins Act, 1917). In spite of the Commission's inconsistent mandate, it did succeed in bringing a modicum of economic rationality to the railroad industry (Horowitz, 1989; Tedlow, 1983). The industry became increasingly consolidated, and by the turn of the century, six large corporations owned more than half of the nation's railroad lines. However, rates fell considerably and gross rate discrimination was eliminated (Schlesinger, 1951). Although it could be argued that consolidation had done more to revive the economic health of the industry than did the ICC, the precedent of establishing a federally mandated administrative agency to regulate national commerce that served a public interest was firmly established as a legitimate method of maintaining checks on corporate control of vital industries. The new Commission thus represented a transformation in the classical liberal paradigm. The acknowledgment that a classic free market approach to economic regulation had ill served the railroad industry, its clients, and the public was in fact a larger reaction to the innumerable problems that could not be rectified by allowing a theoretically purer form of capitalism to go unchecked. As Congress, the courts, and the ICC began to clarify a new form of corporate liberalism, the rationale that had led them to regulate interstate commerce on the railroads did not encompass the growing communications industry until the turn of the century. The Telegraph Streeter (1996) asserts that the social construction of the broadcast industry required the creation of property rights on the electromagnetic spectrum where it took an 35 act of collective imagination to create them from the ether. However, in the case of telegraphy, individuals and corporations owned something more tangible, the wires that made communication possible. The formalists could not, or would not, imagine the right to communicate as anything more than the right to pay for the privilege of using privately owned telegraph lines (Horowitz, 1989; Wetlaufer, 1999). Given the context of the times, there could be no rationale offered for the federal regulation of the telegraph. However, as telegraphy advanced, and developing technology enabled communication without wires, the economic pattern that began in the railroad industry repeated itself (Czitrom, 1982; Engelman, 1996; Horowitz). When Samuel Morse was granted a patent for his version of the telegraph after receiving government subsidies to develop his experimental telegraph line, many people, including Morse himself, envisioned the telegraph as a revolutionary communications tool that had the potential to further participatory democracy. However, the courts did not embrace this discourse of technology-a set of assumptions about the promise of a new tool to unite the continent through its ability to facilitate faster communication. Consequently, when Morse offered his patent to the government, the offer was declined (Barnouw, 1966). After the government rejected his patent offer, Morse and his investors began to license small, geographically dispersed companies to develop telegraph lines (Horowitz). By 1849, there were three competitive lines on the Boston to Washington and New York to Buffalo routes. Aside from indirect government subsidies in the form of access to right-of-ways and timber, it was the demand from business that spurred the development of the telegraph. Corporations embraced essential parts of Morse's visions about the new technology, but they had different motivations for supporting the growth of the telegraph. 36 The telegraph enabled the growth of corporations because it lowered transaction costs and allowed for centralized management (Tedlow, 1985). The telegraph also enabled distant companies to compete in local markets, increasing competition regionally, while encouraging the tendency toward the growth of corporate monopolies (Czitrom, 1982; Engelman, 1996; Horowitz, 1989). Additionally, during the period between 1845 and 1854, when telegraph lines were rapidly expanding, seven major commodities exchanges were founded that made it easier to capitalize the expansion of the lines. By 1852, there were over 23,000 miles of telegraph wire in use. By 1866, Western Union controlled 75,000 miles of wire. Unlike with the railroads, neither the courts nor Congress was willing to assign a common carrier status to the telegraph; apparently, the telegraph was not affected with a public interest. By 1909, when American Telephone & Telegraph (AT&T) acquired Western Union, reformers bemoaned the state of the medium. "Behind the various political proposals for telegraph reform lay a sense of betrayal of the telegraph's original promise to be the common carrier of public intelligence" ( p. 12). However, by that time, experiments with wireless telegraphy caught the attention of the public, and the contradictions between allowing one or a few corporations to control the transmission of information in a supposedly free market economy were not resolved. Wireless and Beyond By the time Guglielmo Marconi and his wireless telegraphy apparatus appeared on the scene in America in the early 1900s, he had already convinced investors in Great Britain that wireless telegraphy could be used on ships to communicate in places where no wires could be laid (Archer 1938; Douglas, 1987). After a series of accidents at sea, 37 Congress passed the Wireless Ship Act in 1910 (Barnouw, 1968; Sterling & Kittross, 1990). This legislation required all ocean-going U.S. ships with 50 passengers or more to carry a radio apparatus capable of reaching at least 100 miles and to have a skilled radio operator on board at all times. Marconi's company was well established to take advantage of the new regulation, and he had a corner on the shipping market. However, by this time, the airwaves were becoming increasingly crowded with messages from amateur operators, and the Navy claimed that its own messages were being drowned out by interference. The U.S. Navy claimed that the amateurs were endangering national security. This was seen as a technological problem that needed to be addressed. When radio's popularity became too dramatic to ignore, both AT&T and General Electric (GE) employed a defensive strategy of buying as many patents as they could to protect their dominance in electronic communication (Barnouw, 1968; Engelman, 1996; Sterling & Kittross, 1990; Streeter, 1996). AT&T began to see radio as a possible competitive threat to their telephone business. GE also began experiments to improve the technology. When the United States entered the fighting in WWI in 1917, the Navy seized control of all radio stations for military use (Barnouw, 1966; Sterling & Kittross, 1990). Assistant Secretary of the Navy Franklin D. Roosevelt suspended all patent claims for the duration of the war so that all of the major distributors of radio technology could work together to supply the military with vacuum tubes, transmitters, and receivers. A massive effort to supply the military's needs would require the use of all available patents. GE and Westinghouse, the two major producers of light bulbs, were now enlisted to manufacture vacuum tubes. By the end of the war, GE, Westinghouse, AT&T, and 38 American Marconi owned all the major patents in radio technology. The corporations and the Navy, aided by civilians who had experimented with radio as amateurs, developed technological innovations that would fuel a radio boom. When the war ended, the military argued that it should retain control of the airwaves, and a bill was introduced in Congress that would allow the government to compete with private commercial interests in the acquisition of radio stations (Engelman, 1996; Sterling & Kittross, 1990). The Alexander Bill allowed for a potential government controlled network of stations. The amateurs and the Secretary of the Navy supported the bill. There were legislators who believed that it had been a mistake to allow private companies to gain a monopoly over the telegraph and telephone industries, and many other countries decided to fund radio publicly. Some members of Congress considered a monopoly in radio to be inevitable, so they felt that adopting the bill was merely pragmatic (Barnouw, 1966). Opponents to the bill argued that radio should be treated as a natural monopoly, similar to telephony, and that the issue was not whether there would be a radio monopoly in the first place, but whether the government should retain control of it. Still others noted the use of propaganda over the air during the war, and they were leery of ceding that much power to the military. The Marconi Company and AT&T were opposed to the Alexander Bill and pressured Congress to kill it, which they did in 1918, thereby continuing the precedent of allowing commercial interests to dominate access to communications technology. In mid-1919, the government lifted the ban on private radio stations, and when the military personnel who helped develop radio technology for the radio returned home, they resumed their experimentation with a vengeance. 39 Marconi approached GE with a proposal to buy several of the high-powered transmitters that it manufactured for the Navy during the war and promised to continue purchasing transmitters in the future. If the deal went through, Marconi would have been the only corporation to own the transmitters (Sterling & Kittross, 1990). In exchange for the transmitters, Marconi agreed that GE would retain the exclusive right to manufacture them in the future. However, in a shrewd political move, General Electric forwarded the details of the agreement to the Secretary of the Navy before the contract was signed. This set off a chain of events when the military strongly suggested that it would be against the national interest to allow a foreign company to obtain a complete monopoly in the radio industry. Meetings were held with GE's board of directors and all agreed that the deal would create an untenable situation. Consequently, GE approved the formation of a new corporation, the Radio Corporation of America (RCA), and its articles of incorporation prohibited foreign citizens from becoming officers. It also limited foreign stockholders to less than 20% of the company's holdings (Barnouw, 1966). Almost all of Marconi's terrestrial stations were still in the hands of the Navy, making it unlikely that the government would return control to a foreign-owned corporation. Thus, Marconi decided to sell the assets of American Marconi to the new corporation. The government sanctioned the sale and agreed that RCA would be the chosen instrument of the government in meeting America's overseas communication needs (Sterling & Kittross, 1990; Witherspoon et. al., 2000). After RCA absorbed the assets of American Marconi in 1919, all government-held land stations were transferred to the new corporation. RCA quickly established an international monopoly in commercial wireless transactions (Barnouw, 1966; Sterling & 40 Kittross). That same year, RCA entered into an agreement with AT&T and its subsidiary Western Electric. In exchange for stock in RCA, AT&T and GE agreed to pool their competing patents. Westinghouse, which had built an experimental broadcast station in Pittsburgh, joined forces with RCA as well. GE and Westinghouse agreed to manufacture radio sets and supply them to RCA. RCA would sell GE and Westinghouse receivers and would continue its international business. AT&T could then sell radio receivers and lease its lines for radiotelephony. The government sanctioned this agreement, which effectively created an environment that encouraged American corporate control of the airwaves. RCA would be allowed to obtain a "natural monopoly" in the radio industry. As more stations began to broadcast regularly scheduled programs and as more members of the public purchased radio receivers in the early 1920s, radio became more popular (Douglas, 1987; Engelman, 1996; Streeter, 1996; Witherspoon et al., 2000). There were many public discussions about the potential of radio. The discourse of technology that Morse had first applied to the telegraph gained more adherents when it came to radio. Magazine articles heralded radio as a tool for uniting the nation. There was a great deal of discussion about how radio could be used to advance education and cultivate a more participatory democracy, and many thought radio would eliminate class distinctions by providing universal access to information (Witherspoon et al., 2000). However, radio was merely a technology that permitted transmission of information across distances. None of the utopian visions for how it could be used could be realized without the production of the content that could achieve these laudatory goals. The technology itself could only transmit signals through the electromagnetic spectrum. 41 Nonetheless, the nation was captivated by broadcasting's imagined potential (Barnouw, 1966; Douglas, 1987). During this period, department stores broadcast live performances as a way to lure in shoppers and provide positive publicity for their stores. Newspapers, such as the Detroit News started broadcasting because they viewed radio as an electronic extension of their news-gathering operations (Barnouw; Streeter, 1996). Educators went on the air to publicize their schools and offer classes over the air, unions and socialists took to the air, and churches' began broadcasting religious programming. The Radio Act of 1927 By the 1920s, there was a growing recognition that some regulation of radio would be necessary (Barnouw, 1966; Sterling & Kittross, 1990; Witherspoon et al., 2000). At this point, the U.S. economy had undergone the transformation from an agrarian-based system that included the classical liberal free market and all that it entailed to one dominated by corporations (McChesney, 1993; Streeter, 1996). The social, political, and legal assumptions that provided the rationale for government policy during the previous century had to undergo a transformation, even if some of the assumptions of the earlier eras remained. However, the political climate of the country had changed by the time broadcasting appeared on the nation's consciousness (Schlesinger, 1951; Wiebe, 1967). The Progressives at the turn of the century demanded reform in industries that had come to be dominated by monopolies. President Theodore Roosevelt was associated with the trust-busting movement, and like the ICC, other regulatory agencies that arose during the early years of the 20th century were created to bring stability to industries buffeted by the extremes of a laissez-fair policy run amok. By creating so-called natural monopolies in the transportation and communications 42 industries, regulators protected the capital investments of corporations such as Western Union, AT&T, and the railroads so that development of services would proceed smoothly and would be available to a large proportion of the public at reasonable rates. Many historians and communication scholars have described the period between the 1880s and 1920s as a transitional period where the classically liberal way of imagining American government, its institutions, its economy, and the structure of society gave way to a new order that resulted from the fundamental restructuring of American life (Horowitz, 1989; Lustig, 1982; Streeter, 1996; Tedlow, 1985). One of the basic characteristics of this new order was that the courts, the legislature, and industry leaders began to shift their orientation from a focus on the right of an individual to engage in commerce free from restrictions to an outlook that allowed industry to consolidate. The transformation assumed that large capital investment could further progress for all and serve a more populous nation more efficiently in the new era. By the time Secretary of Commerce Herbert Hoover assumed his post in 1922, his view of how commerce should be structured was common (Benjamin, 1998; Hawley, 1974; Sarno, 1969). He, like the legal formalists at the turn of the century, believed that the market was the best regulator. This was in keeping with his larger vision of how society should be organized, and that vision profoundly affected the way that the business of broadcasting came to be structured. Hoover was the quintessential corporate liberal, and along with other government and corporate leaders, he believed that organized cooperative associations between business and government could best serve society. Hoover [in 1921] saw himself as a protagonist of a new and superior synthesis between the old industrialism and the new way whereby America could benefit from scientific rationalization and social engineering without sacrificing the 43 energy inherent in individual effort, ‘grassroots' involvement, and private industry. (Hawley, 1969, p. 117) In other words, Hoover believed that if scientific and corporate expertise could be organized properly on a voluntary basis, governmental regulations and legal coercion could be avoided (Hawley, 1969). He believed that business and government could work together to solve their mutual problems informally by forming mutually beneficial interpretive communities. The cooperative organizations that he envisioned took the form of trade associations. These private organizations would serve the public. Hoover believed that the expertise of corporate managers, combined with the scientific knowledge produced by private enterprise, would allow corporations to govern their own businesses according to standards that would serve the public interest. These associations were to create codes of ethics and standards of practices for their members. Hoover believed that political conflict could be avoided by taking an objective engineering approach to social problems. Hoover believed that most political controversies could be abated by focusing on the technical solutions to problems that could be solved by men of talent, vision, and expertise. Accordingly, when Hoover called the first in a series of radio conferences to order, he saw radio as a scientific problem that could be solved by employing technical expertise to create order in a chaotic environment (Barnouw, 1966; Benjamin, 1998; Hawley, 1974; Sarno, 1969; Streeter, 1996). Order in the industry would provide a public service. This assumption that the problem of radio was a technical one precluded the possibility that other dimensions of radio, most notably its educational, political, and cultural potential, would be given a prominent place in the discussion of how to regulate the spectrum (McChesney, 1993; Streeter, 1996). The other dominant assumption of 44 Hoover's associative vision for society was that capitalism, in the form of corporativism, was the only rational way to organize wealth in the 20th century. In Hoover's view, the corporations had brought order to the chaotic process of industrializing the economy, and an orderly society was the key to progress. Capital invested in radio by private corporations needed to be protected for the public's interest to be served. Thus, the amateurs and educators who invented radio, who operated with delicious abandon and unstructured enthusiasm, were seen as a threat to the corporate order, an order that was necessary, at least in Hoover's estimation, to properly develop this national resource. Hoover held four radio conferences between 1922 and 1926 (Benjamin, 1998; Engelman, 1996; McChesney, 1993; Sarno, 1969). The attendees were largely technical experts from RCA. The focus was on creating an orderly structure from which broadcasting could be developed given the limited capacity of the electromagnetic spectrum. In 1923, Hoover instituted three levels of radio broadcasting service (Sterling & Kittross, 1990). Clear-channel stations had the right to broadcast at a maximum level of power that could reach across a wide geographical terrain, regional stations could broadcast their signal with lower power, and local stations could only broadcast on weak signals during the daylight hours. However, Hoover's efforts to establish a hierarchy of licensees was invalidated by the courts on the ground that he had exceeded his authority as Secretary of Commerce (United States v. Zenith Radio Corporation et al., 1926). By 1927, the "industry was now hopelessly out of control and begged for legislation to relieve the chaos that threatened to destroy this young but potentially powerful medium" (Witherspoon et al., 2000, p. 4). 45 Congress finally stepped in and passed the Radio Act of 1927 (Benjamin, 1998; Engelman, 1996; McChesney, 1993; Sarno, 1969). The Radio Act established a temporary Federal Radio Commission (FRC) that had the authority that the Secretary of Commerce lacked (Public Law No. 632, 1927). Like the ICC, the FRC was made up of five members who were appointed to serve 6-year staggered terms. The Commissioners came from different geographic areas, and it was their task to allocate licenses and protect the integrity of the spectrum. The FRC was charged with regulating broadcasting in the name of the public interest, convenience, or necessity (Radio Act of 1927 §3). This provision indicates that legislators distinguished broadcasting from other communication technology and from other industrial endeavors. Congress expressly declared that the electromagnetic spectrum was a publicly owned resource. Therefore, the FRC was designated to protect the integrity of the spectrum but also also protect the integrity of the service provided to the public. Despite the mandate to regulate the spectrum according to the public interest, convenience, or necessity, there was little discussion of what types of radio service would benefit the public (Engelman, 1996; McChesney, 1993). The FRC was an expedient solution to a pressing problem that needed immediate resolution. The structural components of the commercial model of broadcasting were not considered in the discussions leading up to General Order 40, the order that reorganized the broadcast spectrum (Radio Service Bulletin No. 137, 1928). When the FRC was deliberating the matter of how to assign channels, it solicited input from the National Association of Broadcasters (NAB) but not groups representing educational interests or other 46 noncommercial broadcasters (Benjamin, 1998). The public was not consulted. After the first conference in 1922, participation was largely limited to industry representatives and engineers who were affiliated with commercial interests. The chief engineer for AT&T appointed the engineers advising the FRC. The FRC announced a reassignment plan in 1928 (Engelman, 1996; McChesney, 1993). There would be 40 clear-channel station allotments, 34 regional channels, and 30 low-power, local stations assigned to each region (Radio Service Bulletin, No. 137, 1928). Licensees would be subject to renewal hearings every 3 years and many stations were required to share a frequency, thereby ensuring that one or both stations would not be able to gain the audience required to make them financially sustainable (Sterling & Kittross, 1978). One hundred stations were eliminated in this manner. According to McChesney (1993, 1999) when the aftermath of the Radio Act of 1927 became evident, it was clear to all concerned that the commercial model of broadcasting would dominate the ether and that this model would be unable to accommodate the goals of educators, community, or special interest groups. According to Aufderheide "the unarticulated assumption underlying the regulation of broadcasting from its inception was that the ether was a virtual public culture" (1999, p. 226). However, General Order 40 did nothing to advance this goal. Instead, it successfully eliminated the problem of interference without considering the content of the communication that would be offered to the public. The Communications Act of 1934 created a permanent FCC and gave the FCC jurisdiction over all aspects of the communications industry. Aside from minor modifications, the act contained essentially the same provisions as the 1927 Radio Act, including the condition 47 that broadcasters held their licenses in the name of the public trust and that all broadcasters must abide by the public interest, convenience, or necessity. The Marketplace of Ideas Less than a year after the Radio Act of 1927 passed, the newly appointed FRC issued a public statement designed to clarify the public interest provision of the Radio Act (2 FRC Ann. Rep 166, 1928). The Commission reiterated the importance of maintaining spectrum integrity but also said that it was important to provide the public with different types of radio service. The Commission explicitly stated that they would not look favorably on duplication of programs or services in the geographic location when allotting licenses (Kahn, 1984), the implication being that diverse programming, and diverse ownership of stations, was in the public's interest. The Commission also said it was important to maintain local service, and noted that there were many more people who wanted to obtain broadcasting licenses than were channels available. Accordingly, broadcasters that were allotted licenses had a special responsibility to serve the public interest. The Commission stated: "The emphasis must be first and foremost on the interest, convenience, and necessity of the listening public, and not on the interest, convenience, and necessity of the individual broadcaster or advertiser" (Kahn, 1963, p. 63). Despite this statement, later that year, the FRC announced that it was allotting all but 3 of the 40 clear-channel, long-range frequency assignments to the two existing commercial networks. Others would be assigned regionally. Although the language in the Radio Act of 1927 could be traced back to earlier attempts to regulate the railroads in that the public interest, convenience, or necessity, the phrasing reflected the earlier common law concept of affection with the public interest; 48 there was no attempt to categorize broadcasters as common carriers (Benjamin, 1998; Sarno, 1968). In fact, although the new plan ostensibly declared that broadcasters were only allowed to use portions of the electromagnetic spectrum in exchange for serving the public interest, this provision essentially gave broadcasters the privilege of using spectrum space without promising to provide public access. The Act also gave these same corporations (who controlled other sectors of the communication industry) what amounted to a right of condemnation. That is, corporations were allotted the most valuable spectrum real estate while amateurs, educators, and other special interest groups were pushed to the margins. These conditions were all but certain to lead to a repetition of the economic patterns that plagued the telegraph, telephone, and railroad industries. The phrase "public interest, convenience, or necessity" was ambiguous at best, and Congress failed to specify its precise meaning (Aufderheide, 1999; Avery, 2007; Avery & Stavitsky, 2003; Streeter, 1996). Instead, the new administrative agency would make its own interpretations on a case-by-case basis over the ensuing decades. The FRC had to reconcile many contradictory beliefs about how the industry should be regulated and supported. The hallmarks of corporate liberalism included faith in expertise and the liberating effects of technology. Hoover's vision of the associative state also expressed the view that creating economic efficiencies in industry would serve the greater good and that capital raised by privately owned or publicly owned corporations was superior to government restrictions and regulatory coercion. Hoover's faith in industry to act in its own self-interest, thereby serving the public interest, would soon be called into question during the Depression, but nonetheless, his vision was the foundation for the principles contained in the Radio Act of 1927. 49 However, at the same time that Hoover and Congress were busy setting up the regulatory regime that would govern broadcasting for the remainder of the century, much of the values held during the earlier era remained (Horowitz, 1989; Lustig, 1982; Streeter, 1996). The property rights of individuals were still sacrosanct despite the fact that Congress had expressly declared that the rights of broadcasters were only a temporary privilege granted according to how well they performed a public service. Even though the FRC had declared that service to the community of license was the paramount definition of public service, the foundation of corporativism was designed to take advantage of economies of scale through the organization of business interests on a national and regional basis. When Hoover endorsed the formation of RCA, he rejected the proposition that locally owned broadcast stations could compete in an open market to produce the best programming for the public. As the Supreme Court began to expand the First Amendment rights of individuals, the FRC and later the FCC were intent on restricting the rights of individual broadcasters to control the airwaves. As Hoover's vision of the associative state gave way to the New Deal era, these conflicts went unresolved. The Progressive era spawned federal regulatory agencies that sought to protect small producers from large corporations, but by the time the FCC came into existence, the country was suffering from the effects of the Great Depression (Aufderheide, 1999, Horowitz, 1989). During the New Deal era, federal regulatory agencies were required to encourage the economic growth and stability of the industries they controlled so the public could be served with increased access to dependable, affordable services. When the FCC allowed broadcasters to monopolize their allotted portion of the electromagnetic 50 spectrum, they did so with the caveat that the broadcaster must operate as a public trustee. Spectrum space was scarce, so those who were granted the privilege to broadcast had a social responsibility to the public. As the early chaos on the airwaves gave way to a more stable structure, regulators turned their focus to the public interest component of their duties and devoted much energy over the years to the social intent of the legislation that created the agency. Station Ownership Limits From 1928 on, the FRC, and later the FCC, operated under the theory that the public interest would best be served by promoting the diversification of broadcast viewpoints as well as preventing undue concentrations of economic power in the broadcast industry (Prometheus Radio Project v. FCC, 2004, p.16). Regulators, who had once sanctioned RCA as the chosen instrument to dominate the new field of broadcasting, were now forwarding policies that promoted a competitive marketplace of ideas. Accordingly, the Commission sought to promote diversity and competition in broadcasting by limiting the number of radio stations a single party could own or acquire in a local market. After the courts ratified the Commission's ability to make public interest evaluations when issuing licenses, the FCC took steps to enlarge its criteria for measuring an applicant's public service obligations (Great Lakes v. the Federal Radio Commission, 1930). In 1938, the FCC denied an application for a new AM station from a candidate that already controlled an AM station in the same community (Genesee Radio Corp., v. FCC, 1938). The Commission reasoned that there would be no competition between two commonly owned stations in the same community and that, consequently the situation would not encourage new applications from other potentially more diverse 51 licensees. Therefore, in order to assure a substantial equality of service to all interests in a community and to assure diversification of service and advancements in quality and effectiveness of service, the Commission held that it would "allow commonly owned duplicate facilities only where it would fulfill a community need that otherwise could not be satisfied" (Genesee Radio Corp, 1938, p. 186). This was the first of a long series of regulations that would be instituted by the FCC with regard to broadcast ownership policies that were proposed to serve the public interest. The assumption that diversity of ownership was the equivalent of diversity of opinion went unchallenged. By 1940, 95% of all radio was network owned or affiliated (Barnouw, 1968; Baughman, 1981; Sterling & Kittross, 1990). Many members of Congress and some in the broadcast industry believed that the FCC had not done enough to break the monopolistic tendencies of the networks (McChesney, 1993). In 1941, the FCC issued its Report on Chain Broadcasting and announced that it would not issue a license to more than one station in the same area to a single network, and again regulators did not challenge the assumption that diversity of ownership equaled diversity of opinion. The networks, which had the most to lose, were the only ones who contested this assumption (FCC, 1941). The report declared that increased competition in network broadcasting would serve the public interest (Barnouw, 1968; Kahn, 1984; Sterling & Kittross, 1990). The Federal Trade Commission and the FCC, after prevailing in a protracted court battle, forced NBC to sell off its Blue Network, which became the American Broadcasting Company (NBC v. U.S., 1943). 52 Also, in the 1940s, the FCC issued a series of rules designed to prohibit common ownership of stations providing the same type of broadcasting service in a single community (DeClerk, 2005; Emord, 1989; Kahn 1984). This included a prohibition against licensees having any financial interests in any competing broadcast stations. The FCC reasoned that if one station owner had an interest in promoting another station in the same service area, there would be a lesser likelihood of competition between the stations. The FCC expanded the financial interest prohibitions over the years to forbid licensees in the same community from forming consulting relationships, from forming time brokerage agreements, or from forming commonly owned advertising agencies. These rules were formulated to maintain diversity of ownership in broadcast markets through competition and existed until 1989. As the feasibility of operating FM stations moved forward and the viability of television loomed on the horizon, the FCC issued its first duopoly rule (Aufderheide, 1999; Horowitz, 1989; Keller, 2004; "Rules," 1940). The rule prohibited AM station owners from acquiring licenses for another FM station or another television station in the same market. In 1940, the Commission also issued its first national multiple ownership rules and required any licensee that wished to own or operate more than three television stations and six FM radio stations nationwide to provide proof that such ownership would encourage competition. In 1944, the FCC amended that rule to allow a single owner to control five television stations, six FM stations, and seven AM stations nationwide but by 1946, the FCC allowed a single licensee to own up to seven AM stations, seven FM stations, and seven television stations nationwide. When Storer Broadcasting Company challenged the legitimacy of maintaining caps on national ownership of broadcasting facilities in 1956, the Supreme Court affirmed the FCC's 53 authority to do so (United States v. Storer Broadcasting Co., 1956). The multiple ownership rules were amended once again in 1964 to define more precisely the standard for determining the boundaries of overlapping service areas (Multiple Ownership Rules, 1964). These rules remained constant until the 1970 when the FCC expanded its ownership rules to accommodate changing market conditions. By 1964, the FCC was concerned about the growth of consolidation in national broadcast markets and adopted an interim Top 50 policy (Emord, 1989; Horowitz, 1989). This policy required that a hearing be held if any licensee wished to obtain a second VHF television station in any of the top 50 markets in the nation. The potential licensee had to show that there was a compelling public interest involved if the applicant wished to acquire a second station. The following year, the FCC amended this policy so that no licensee could own more than three VHF television stations and two UHF stations in any of the top 50 markets in the country. In 1968, the FCC required that anyone wishing to own up to four UHF stations in any of the top 50 markets could do so if the applicant could show that there was a compelling public interest for multiple ownership. During the 1970s, the FCC passed several measures designed to impede the growth of consolidation in the broadcast industry (Emord, 1989; Horowitz, 1989; Krasnow et al., 1982). In 1970, the Commission instituted its one-to-a-market rule. This regulation prohibited a licensee from owning more than one broadcast station in a community. Again, the FCC reasoned that diversity in ownership of broadcasting outlets in a community would be equated with diversity of broadcast voices. Therefore, this rule met its public interest mandate. The following year, the Commission amended the rule to 54 allow AM/FM combinations in a single market as a means to encourage the growth of FM outlets. In 1970, the Commission also passed regulations that restricted cross-ownership of broadcast properties in communities (Emord, 1989; Horowitz, 1989; Krasnow et al., 1982). The Commission said that it would not allow a licensee of a television station to purchase an interest in a cable television system, or to purchase additional television stations in the same community. The Commission also prohibited networks from owning cable systems and did not allow telephone companies to purchase interests in cable systems. These barrier-to-entry restrictions were forwarded to prevent consolidation in the broadcast and cable industries so a diversity of voices could be accessed by the public and so existing services would be protected. The same justification was offered when the FCC banned newspapers from owning broadcast licenses in the same communities and vice versa (Emord, 1989; Horowitz, 1989; Krasnow et al., 1982; Levi, 2000). This law was not retroactive, so existing cross-ownership relationships were grandfathered in, but the principle of encouraging diversity of ownership under the public interest mandate was upheld by the courts (Emord, 1989). The Supreme Court held that the cross-ownership ban was a "reasonable means of promoting the public interest in diversified mass communications" (NCCB v. U.S, 1978, p. 802). In an effort to limit the number of broadcast stations that any one licensee could own nationwide, the FCC instituted a policy against regional concentration in 1977. The policy banned ownership of more than three broadcast stations in a region if the two stations were within 100 miles of the third. 55 Throughout its history, the FCC periodically attempted to regulate the content that broadcasters offered their audiences, most notably when it issued its report on the Public Service Responsibilities of Broadcast Licensees (Baughman, 1981; Friendly, 1967; Kahn, 1968). These attempts to require programming that was thought to encourage civic dialogue, or other public interests were not often successful, perhaps due to the deep ambivalence that many citizens and government officials felt about having regulators dictate what programming was good for the public. However, regulators were able to obtain greater levels of support for policies that favored diversification of ownership because of the public's historical aversion to the unchecked growth of corporations across industries. The Commission's long-held policy of encouraging diversity in local and national markets was intended to allow the public to access a full range of perspectives on topics of local and national interest (Armstrong, 2002). Even though members of the broadcast industry did not favor the Commission's attempts to limit the holdings of large media corporations, there was widespread public and political support for these policies throughout the 1970s. Public Participation During the 1950s, there had been a series of scandals involving members of the FCC (Baughman, 1981; Horowitz, 1989). The always close relationship between the agency and the industry it regulated led to a series of corruption charges and resignations. As the communication industry grew, it became more diversified, and more complicated, and the FCC was increasingly seen as ineffectual and bureaucratic. The FCC's attempts to define the public's interest with regard to television programming had failed, and the regulatory agency was perceived of as a nuisance by the industry. If citizens favored 56 entertainment over news and public affairs programming, and if the corporations that dominated the airwaves were receiving more revenue from producing entertainment than they were from more intellectual fare, the FCC could do nothing about it. The FCC had no real power to formulate or enforce policy, and its decisions gained little attention in the press (Baughman, 1981). Still, some citizens were worried about the effect of violence and crass commercialization in broadcasting. By the late 1950s, " a critical consensus developed that television had become a social problem, had come to be widely shared by many of those contemplating the nation's problems" (Baughman, p. 54). Between 1958 and 1960, television was under attack. Intellectuals and political leaders bemoaned television's tendency to reflect the worst of American society. There was a sense that television programming had entered a steep decline since the early golden years of the 1950s (Minnow, 1965; Sterling & Kittross, 1990). Another concern stemmed from the negative role of advertising on television and in society at-large. During the 1960s and 1970s, many members of society questioned the legitimacy of institutions that were the cornerstones of civic life (Krasnow et al., 1982; Ranly, 1976; Sterling & Kittross, 1990). There was a general distrust of large corporations in many industries. The mass media were not immune to this type of examination, and in fact it was a focal point for the frustrations of citizens who were critical of the culture they believed the media were perpetuating (Armstrong, 1981). Grassroots organizations dedicated to reforming the excesses of the media sprang up all over the country (Grundfest, 1976; Krasnow et al., 1982; Ranly, 1976; Rowland, 1982). These organizations put pressure on commercial broadcasters to put an end to violence and the 57 amount and type of commercial advertisements on children's programs. They demanded that broadcasters remove all liquor and tobacco advertisements from television, and they insisted that television was contributing to harmful racial and ethnic stereotypes. Media activists called for more public input into the regulatory process and they put the industry on notice that they intended to take advantage of all of their rights and responsibilities as citizens. The Office of Communication of the United Church of Christ had successfully challenged the license renewal of a station in Jackson, Mississippi, that aired blatantly racist programming (Grundfest, 1976; Korn, 1991; Krasnow et al., 1982; Office of Communication of the United Church of Christ. v. FCC, 1966; Ranly, 1976; Rowland, 1982). That case established the legal right for public participation in the regulatory process, and for the first time citizen groups began to challenge license applications and renewals. Broadcasters sometimes found that it was easier to bargain with the groups than to fight them outright. Local groups were getting together and starting their own listener-supported community radio stations with volunteer programmers and broadcasts of local public affairs (Milam, 1975; Soley, 1999). Activists demanded better programming for children. In 1967, Congress passed the Public Broadcasting Act, the mechanism that fostered a national network of public television and radio stations. Beginning in 1970, cable television began offering access channels to the public, and many cities around the country experimented with locally produced programming (Engelman, 1996; Linder, 1999). Alternative press publications began to appear and journals devoted to analyzing the media were founded. During this same era, while the FCC was tightening its ownership restrictions and while citizens were demanding more 58 and better services from the telecommunications industry, the development of new communications technologies were threatening to disrupt the established order of America's structure broadcasting. The Romance of Cable Community Antenna Television (CATV) was created in the 1950s to boost the transmission of local broadcasting stations in rural areas that had poor reception (Horowitz, 1989; Streeter, 1987). The early systems did not transmit original programming. At first, local broadcasters welcomed CATV because it brought them more viewers. However, when experimental cable operators began distributing programming that did not originate in local communities, the network affiliated stations started to see cable television as a threat to their dominance. In 1962, the FCC began to deny cable operators the right to carry distant broadcast signals for two reasons. First, the FCC reasoned that if cable system operators were allowed to carry imported broadcast signals into a local market it would fragment local audiences and weaken broadcasters' ability to earn revenue and affect their ability to produce local programming. The other concern was that if cable operators were allowed to retransmit programming originated elsewhere, they would enjoy an unfair competitive advantage over affiliates that had to pay to produce or carry the programming. Consequently, the FCC passed a series of regulations designed to protect affiliate stations. The cable industry languished for many years. However, the fortunes of cable television began to change when media activists and regulators came to see cable television as a possible alternative to the offerings of the networks and established broadcasters. As Streeter (1987) put it, "a discourse of new 59 technologies" became prevalent in the 1970s (p. 174). This way of thinking about technology had almost religious overtones to it and provided a utopian vision of the promise of new communications technology. This was nothing new, as people had proclaimed that a new, more democratic age of communications was upon us when other technologies, such as the telegraph and radio had surfaced, but in the light of such widespread dissatisfaction with the status quo during the more recent era, people embraced the "cable fable" with particular zeal. Even though the Supreme Court reaffirmed the validity of the spectrum scarcity doctrine in Red Lion v. FCC during the 1970s, the prospect of cable systems with multichannel carrying capacities entranced groups as varied as educational broadcasters, minority advocates, foundations, and consumer advocates (Engelman, 1996; Red Lion v. U.S., 1967, Streeter, 1987). By embracing the potential of cable as a means of deliverance from what many saw as inferior offerings by established broadcasters, these groups reasoned that the lack of spectrum space, not a lack of imagination, was responsible for the dearth of quality programming available on