Table of Materials... xv Copyright Permissions...xix Preface...xxi Part One. Spectrum and Broadcast... 3 Chapter 1. Why Regulate... 5 1.1 Introduction... 5 1.2 Defining Spectrum... 6 1.3 The Early History of Broadcast... 15 1.4 Rationales for Regulation... 30 1.4.1 Scarcity/Interference... 31 Coase, Why Not Use the Pricing System in the Broadcast Industry?... 34 1.4.2 Special Interest Protectionism... 38 Hazlett, The Rationality of U.S. Regulation of the Broadcast Spectrum... 38 1.4.3 Consumer Preferences... 46 Chapter 2. The FCC... 51 2.1 Introduction... 51 2.2 A Regulatory Overview... 51 2.3 The Federal Communications Commission... 57 2.4 An Overview of Spectrum Management... 62 2.5 Regulatory Tradeoffs and Allotment... 64 Chapter 3. Zoning the Spectrum... 67 3.1 Introduction... 67 3.2 Command and Control... 68 3.2.1 Making Room for PCS... 69 Redevelopment of Spectrum to Encourage Innovation in the Use of New Technologies... 69 3.2.2 Authorizing Satellite Radio... 77 Establishment of Rules and Policies for the Digital Audio Radio Satellite Service Band... 77 3.3 Dedicating Spectrum to Unlicensed Uses... 83 3.3.1 The Spectrum Policy Task Force Report... 83 Spectrum Policy Task Force Report... 84 3.3.2 Academic Commentary... 93 Benkler, Some Economics of Wireless Communications... 93 3.4 Alternative Approaches... 101 3.4.1 Authorizing Additional Licensed Uses... 101 3.4.2 Unlicensed Secondary Services... 103 3.4.3 Spectrum Leasing and Private Commons... 105 Promoting Efficient Use of Spectrum Through Elimination of Barriers to the Development of Secondary Markets... 107 vii
viii Chapter 4. Structuring and Assigning Licenses... 113 4.1 Introduction... 113 4.2 License Renewal and Transfer... 114 4.2.1 License Renewal... 114 4.2.2 License Transfer... 119 Changes in the Entertainment Formats of Broadcast Stations... 121 FCC v. WNCN Listeners Guild... 124 4.3 Merit-Based Hearings... 126 4.3.1 Uncontested Initial Assignment Hearings... 127 H.E. Studebaker... 127 Charles Henry Gunthorpe, Jr... 128 4.3.2 Comparative Initial Assignment Hearings... 130 FCC Policy Statement on Comparative Broadcast Hearings... 132 4.3.3 Licensing Case Study... 136 Application of Simon Geller... 136 4.3.4 Special Considerations for Racial Minorities and Women... 142 Metro Broadcasting, Inc. v. FCC... 143 Lutheran Church Missouri Synod v. FCC... 157 4.4 Transition to Lotteries, Auctions... 164 4.4.1 Reform of the Licensing Process... 165 Prevention of Abuses of the Renewal Process... 165 4.4.2 Lotteries and Auctions... 169 Kwerel and Felker, Using Auctions to Select FCC Licensees... 170 4.4.3 Initial Assignment by Auction... 177 Implementation of Section 309(J) of the Communications Act Competitive Bidding for Commercial Broadcast Licenses... 178 4.4.4 Bankruptcy and the Limits of FCC Authority... 186 Nextwave Personal Communications v. FCC... 188 Chapter Five. Public Trustee Obligations... 197 5.1 Introduction... 197 5.2 The Fairness Doctrine and Related Obligations... 198 5.2.1 The Fairness Doctrine... 198 Miami Herald Publishing Co. v. Tornillo... 198 Red Lion Broadcasting Co. v. FCC... 200 Fairness Doctrine Report... 208 Complaint of Syracuse Peace Council... 217 5.2.2 The Personal Attack and Political Editorial Rules... 224 5.2.3 Political Broadcasting... 227 Request of ABC, Inc. for Declaratory Ruling... 228 Request for Declaratory Ruling of National Association of Broadcasters Regarding Section 312(A)(7) of the Communications Act... 237 Petition for Reconsideration by People for the American Way and Media Access Project of Declaratory Ruling Regarding Section 312(A)(7) of the Communications Act... 240 5.2.4 The Scarcity Rationale in Other Media... 247 Time Warner Entertainment Co. v. FCC (1996)... 248 Time Warner Entertainment Co. v. FCC (1997)... 250 5.3 Indecent Broadcasts... 254 FCC v. Pacifica Foundation... 254 Action for Children s Television v. FCC [ACT III]... 266
ix Complaints Against Various Broadcast Licensees Regarding Their Airing of the Golden Globe Awards Program... 286 Complaints Against Various Television Licensees Regarding Their Broadcast on November 11, 2004 of the ABC Television Network s Presentation of the Film Saving Private Ryan... 289 Complaints Regarding Various Television Broadcasts Between February 2, 2002 and March 8, 2005... 294 5.4 Televised Violence and Blocking Unwanted Material... 300 5.5 Children s Television... 306 Children s Television Programming and Advertising Practices... 307 Policies & Rules Concerning Children s Television Programming (1991)... 313 Policies & Rules Concerning Children s Television Programming (1996)... 316 5.6 Commercialization, Ascertainment, and Other Rules... 335 Deregulation of Commercial Television, Report and Order... 336 Chapter Six. Digital Television... 347 6.1 Introduction... 347 6.2 Making Room for HDTV... 348 Advanced Television Systems (1991)... 349 6.3 Choosing A Standard... 355 Advanced Television Systems (1996)... 356 6.4 Rules For DTV Spectrum... 367 Advanced Television Systems (1997)... 367 6.5 Hastening the Transition... 378 6.6 Public Interest Obligations... 381 Final Report of the Advisory Committee on Public Interest Obligations of Digital Television Broadcasters... 381 Chapter Seven. Structural Limitations... 389 7.1 Introduction... 389 7.2 Television Networks and Vertical Integration... 389 Schurz Communications v. FCC... 392 7.3 Ownership Restrictions... 403 Prometheus Radio Project v. FCC... 408 Part Two. The Emerging Video Marketplace... 435 Chapter Eight. Foundations... 437 8.1 Introduction... 437 8.2 The MVPD Competitive Landscape... 438 8.3 Paying for Television... 440 Coase, Why Not Use the Pricing System in the Broadcast Industry?... 442 8.4 Why Regulate: Natural Monopoly... 444 8.5 Why Regulate: Implications for Broadcast... 450 Besen and Crandall, The Deregulation of Cable Television... 451 Home Box Office (HBO) v. FCC... 463 8.6 Who Regulates Cable Television... 472 Time Warner Entertainment Co. v. FCC... 476 Chapter 9. Shared Content... 485 9.1 Introduction... 485 9.2 Programs in Isolation... 485 9.2.1 Copyright Law... 485
x 9.2.2 Syndicated Exclusivity and Network Nonduplication... 489 United Video v. FCC... 490 9.2.3 Direct Broadcast Satellite... 497 CBS Broadcasting v. Primetime 24... 498 The Satellite Television Act of 1999... 505 9.3 Programs Grouped into Signals... 511 9.3.1 First Amendment Challenges to Cable Must-Carry... 514 Turner Broadcasting System Inc. v. FCC [Turner I]... 514 Turner Broadcasting System Inc. v. FCC [Turner II]... 531 9.3.2 First Amendment Challenges to DBS Must-Carry... 548 Satellite Broadcasting & Communications Ass n v. FCC... 549 9.3.3 Must-Carry and the Digital Transition... 561 Carriage of Digital Television Broadcast Signals, Second Report and Order... 561 Chapter 10. Structural Limitations... 569 10.1 Introduction... 569 10.2 Protecting Program Suppliers... 570 Time Warner Entertainment Inc. v. FCC... 571 10.3 Regulation of Program Supply Contracts... 585 10.3.1 The Program Access Rules... 585 Development of Competition and Diversity in Video Programming Distribution and Carriage, First Report and Order... 585 10.3.2 Extension of the Program Access Rules... 600 Implementation of the Cable Television Consumer Protection and Competition Act of 1992, Report and Order... 600 10.3.3 Extension of the Program Access Rules to DirecTV... 604 General Motors Corp. and Hughes Electronic Corp., Transferors, and News Corp. Ltd., Transferee... 604 Chapter 11. Emerging Issues in the Video Marketplace... 613 11.1 Introduction... 613 11.2 Choice... 614 11.2.1 Is More Always Good?... 614 Sunstein, The First Amendment in Cyberspace... 614 Posner, Bad News... 621 11.2.2 The Commission on Cable à la Carte... 630 Further Report on the Packaging and Sale of Video Programming Services to the Public... 631 11.2.3 Price Discrimination... 637 11.3 Digital Copyright... 639 American Library Association v. FCC... 643 Chapter 12. Indecency Revisited... 655 12.1 Introduction... 655 12.2 Cruz v. Ferre... 655 Cruz v. Ferre... 655 12.3 Denver Area... 658 Denver Area Educational Telecommunications Consortium, Inc. v. FCC... 658 12.4 United States v. Playboy Entertainment Group, Inc.... 678 United States v. Playboy Entertainment Group, Inc... 678
xi Part Three. Telephone Regulation... 693 Chapter 13. An Introduction to Telephone Regulation... 695 13.1 Introduction... 695 13.2 Telephone History... 695 13.3 Infrastructure and Intuitions... 703 13.3.1 Telephone System Vocabulary... 703 13.3.2 Telephone Economics... 704 13.4 Telephone Regulation... 707 13.4.1 Categories of Regulation... 708 13.4.2 Who Regulates... 708 Chapter 14. Defining the Telephone Monopoly... 713 14.1 Introduction... 713 14.2 Precursors to Divestiture... 714 14.2.1 Competition in CPE... 714 Huber, Kellogg, and Thorne, Federal Telecommunications Law... 714 14.2.2 Competition in Long Distance Telephony... 718 14.2.3 Communications and Computer Convergence... 720 Robinson, The Titanic Remembered: AT&T and the Changing World of Telecommunications... 721 14.3 Breaking up Bell: The 1984 Divestiture... 723 14.3.1 The MFJ... 724 United States v. American Telephone and Telegraph Co.... 724 14.3.2 Notes on the Government s Theory... 732 14.3.3 Monopoly Boundaries After Divestiture... 739 Robinson, The Titanic Remembered: AT&T and the Changing World of Telecommunications... 739 Chapter 15. Rate Regulation and Universal Service... 747 15.1 Introduction... 747 15.2 Rate Regulation... 747 15.2.1 Rate of Return Regulation... 747 15.2.2 Price Cap Regulation... 750 Policy and Rules Concerning Rates for Dominant Carriers... 751 15.2.3 Rate Regulation as Markets become Competitive... 759 Robinson, The Titanic Remembered: AT&T and the Changing World of Telecommunications... 761 15.3 Universal Service... 763 15.3.1 Origins... 763 15.3.2 Ramsey Pricing... 765 15.3.3 Universal Service After Divestiture... 768 Chapter 16. The Telecommunications Act of 1996... 771 16.1 Introduction... 771 16.2 The Local Competition Provisions... 772 Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, First Report and Order... 774 16.3 Jurisdiction to Implement the 1996 Act... 781 16.3.1 Local Competition, National Regulation... 781 United States Telecom Association v. FCC (USTA II)... 787
xii 16.3.2 Case Studies... 788 Nixon v. Missouri Municipal League... 789 AT&T Communications of Illinois v. Illinois Bell... 793 Chapter 17. Unbundling, Interconnection, and Line-of-Business Regulation Under the 1996 Act... 799 17.1 Introduction... 799 17.2 Identifying UNEs... 799 17.2.1 Iowa Utilities Board... 799 AT&T Corporation v. Iowa Utilities Board... 799 17.2.2 After Iowa Utilities Board... 806 United States Telecom Association v. FCC (USTA II)... 810 17.2.3 In Response to USTA II... 820 Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers... 820 17.3 Pricing Network Elements... 825 Verizon Communications Inc. v. FCC... 828 Review of the Commission s Rules Regarding the Pricing of Unbundled Network Elements... 842 17.4 Interconnection... 848 Developing a Unified Intercarrier Compensation Regime (2001)... 851 Developing a Unified Intercarrier Compensation Regime (2005)... 854 17.5 BOC Line of Business Restrictions... 861 Chapter 18. Universal Service and Access Charge Reform Under the 1996 Act... 863 18.1 Introduction... 863 18.2 Universal Service Reform... 863 FCC News Release: Joint Board Adopts Universal Service Recommendations... 866 Federal-State Joint Board on Universal Service (1997)... 868 18.3 Access Charge Reform... 881 Access Charge Reform, First Report and Order... 881 Federal-State Joint Board on Universal Service (2004)... 891 Part Four. The Internet and Advanced Services... 903 Chapter 19. The Internet... 905 19.1 Introduction... 905 19.2 The History and Architecture of the Internet... 905 19.3 Internet Regulation... 913 19.3.1 The Principles of Internet Unregulation... 915 A Framework for Global Electronic Commerce... 915 19.3.2 Regulation of Indecency... 917 Sable Communications of California, Inc. v. FCC... 918 Regulations Concerning Indecent Communications by Telephone... 923 Reno v. ACLU... 927 Ashcroft v. ACLU... 936 19.3.3 Copyright Infringement... 947 MGM Studios, Inc. v. Grokster... 948 Chapter 20. Advanced Services... 955 20.1 Introduction... 955 20.2 Advanced Services Under Section 706... 955
xiii Inquiry Concerning the Deployment of Advanced Telecommunications... 957 Availability of Advanced Telecommunications Capability in the United States... 968 20.3 Unbundling, Interconnection, and Advanced Services... 973 Intercarrier Compensation for ISP-Bound Traffic... 980 20.4 Regulating DSL and Cable Modem Services... 984 AT&T v. City of Portland... 986 National Cable & Telecommunications Ass n v. Brand X Internet Services... 990 Appropriate Framework for Broadband Access to the Internet over Wireline Facilities (2002)... 1007 20.5 Network Neutrality... 1012 Appropriate Framework for Broadband Access to the Internet over Wireline Facilities (2005)... 1013 Atkinson and Weiser, A Third Way on Network Neutrality... 1015 20.6 Voice over Internet Protocol (VoIP)... 1028 Petition for Declaratory Ruling that pulver.com s Free World Dialup is Neither Telecommunications nor a Telecommunications Service... 1030 Petition for Declaratory Ruling that AT&T s Phone-to-Phone IP Telephony Services are Exempt from Access Charges, Order... 1035 American Council on Education v. FCC... 1041 20.7 Competition in Telephony and Advanced Services... 1047 Part Five. Epilogue... 1053 Chapter 21. Antitrust and Merger Review in Telecommunications... 1055 21.1 Introduction... 1055 21.2 Merger Enforcement and Telecommunications Regulation... 1055 21.2.1 Background on Merger Policy... 1056 21.2.2 The SBC/Ameritech Proceeding... 1060 Applications of Ameritech Corp., Transferor, and SBC Communications, Inc., Transferee, for Consent to Transfer Control of Licenses and Lines Pursuant to Sections 214 and 310(D) of the Communications Act... 1060 Separate Statement of Commissioner Harold Furchtgott-Roth... 1071 Statement of Commissioner Michael K. Powell... 1076 21.2.3 Reforming the FCC s Merger Review Process... 1078 Statement of Chairman William E. Kennard... 1078 Statement of Commissioner Harold Furchtgott-Roth... 1080 21.2.4 The FCC s Own Institutional Reforms... 1081 21.2.5 The Elusive Effort to Restrict Merger Review Authority... 1084 FCC Approves SBC/AT&T and Verizon/MCI Mergers... 1085 21.3 Antitrust in a Regulatory Thicket... 1091 Verizon v. Law Offices of Curtis v. Trinko... 1091 Statutory Appendix... 1097 Conceptual Index and Telecommunications Glossary... 1171