roundtable: Larry Irving Speech to FCBA, 6-22
roundtable: Larry Irving Speech to FCBA, 6/22
Larry Irving Speech to FCBA, 6/22
DGARDNER@ntia.doc.gov
Thu, 29 Jun 1995 10:10:43 -0400
Message-Id: <sff27c80.043@ntia.doc.gov>
Date: Thu, 29 Jun 1995 10:10:43 -0400
From: DGARDNER@ntia.doc.gov
To: roundtable@cni.org
Subject: Larry Irving Speech to FCBA, 6/22
In response to a request from a TPR participant, here is a speech given
by NTIA Administrator Larry Irving to the Federal Communications Bar
Association given last week. If you have any questions, feel free to
contact me at 202.482.1835 or dgardner@ntia.doc.gov.
Thanks,
David Gardner
NTIA/ Office of the Assistant Secretary
<dgardner@ntia.doc.gov>
#########################
"Telecom Policy Reform: End of an Era or Policy Errors?"
Remarks by Larry Irving
Assistant Secretary for Communications and Information
National Telecommunications and Information Administration
Department of Commerce
at the
Federal Communications Bar Association's
Annual Meeting
Washington, D.C.
June 22, 1995
[as prepared]
Now I know that some of you are expecting and others are
dreading a 45-minute speech about why NTIA deserves to exist.
I'm not going to give that speech.
However, if I were to do a defense of NTIA, then I would
have to mention that no one would be talking about video
dialtone today, but for NTIA's work on this issue back in the
1980s.
And there would be no way that I could stand before you
and not mention that the successful spectrum auctions for PCS
would not have taken place, but for the pushing and prodding
of then-NTIA Administrator Janice Obuchowski. I know how hard
Janice worked on this issue because I was one of those persons
she prodded who would not budge on this issue. Then I came to
NTIA, and OMB told me we had to find revenue, and suddenly I
had an epiphany -- we should auction the spectrum! I could
mention that it was NTIA that helped persuade CBO that the
return to the U.S. Treasury would be much greater than the $3-
4 million it was projecting. And it was NTIA who assisted the
Commission when the cellular industry was insisting that PCS
could not have more than 20 MHz of spectrum and some cable
companies and others were insisting that PCS licenses could
not have less than 40 MHz. Tom Sugrue, Bill Maher, and other
NTIA-ers came to the rescue with a plan for 30 MHz.
Do you like closed captioning? Descriptive captioning?
Again, NTIA at work.
Would you like to do more transactions with clients over
electronic networks but have concerns about security and
privacy? NTIA is working to resolve all these issues.
But I really don't want to get going about NTIA . . .
Because then I'd have to mention the more than $2 billion
of economic activity generated for U.S. telecom companies
through the Latin American Telecom Conferences (LATS), which
we co-sponsored with TIA. And I'd have to talk about the lead
role that NTIA played in the G-7 Ministerial Conference on the
Information Society.
And if I were the bragging type, then I would talk about
how we are helping communities across the country connect to
the information superhighway.
And if I were to launch an unrestrained offensive to save
NTIA, then I would agree with the FCC on the need to have an
independent agency, but also on the importance of having an
agency to advise the President. This is what the U.S.
Government advocates at every bilateral and multilateral
conference in which we participate. Our President should have
what every leader of every other developed nation has -- the
benefit of a telecom and information policy shop to advise him
or her on such issues.
But, I really do not want to spend my time with you today
defending NTIA. So I won't!
Telecommunications Reform Legislation -- Failing the Three C's
Test
Rather, let's talk about telecommunications policy, and
examine where we are headed.
I want to note at the outset that I am here talking to
you today not as an advocate of communications clients, but as
an advocate of consumers, of the public interest.
The Administration very much wants a telecom reform bill
-- but we want a good bill, one that brings us actual, true,
verifiable, and robust competition among providers; greater
choice, higher quality, and lower prices for consumers; and
media sources that reflect and serve our local communities and
provide a diversity of viewpoints.
Let's talk about some of the positive aspects of the
bills -- preemption of entry barriers; connection of schools,
libraries, and hospitals; reform of limitations on foreign
ownership; permitting RBOCs into other lines of businesses; V-
Chip or Choice Chip.
The V-Chip provision should be in the final bill. Motion
pictures, records, video games, even the Internet, are rated
to protect children. Why should broadcast and cable be
different? Let me tell you what I saw on a premium station
last Sunday night at 8:00 p.m. -- a mother and her son
shooting up drugs! This is at a time that many children are
watching television. Shouldn't a parent be able to keep
objectionable programming out of his or her house?
The good news is that it appears that we are on the road
to passage of comprehensive telecom reform legislation. The
bad news is that if the final legislation looks anything like
the bill that was reported out of the House Commerce Committee
or the bill that the Senate passed just last week, we may
regret we started down the path of reform.
I voice this concern because the two bills fail the
"Three C's Test" -- consistency, competition, and consumer
protection.
Consistency
The bills are marred by inconsistencies. Let's see --
it's wrong for telephone companies to cross-subsidize, but it
is necessary for cable companies to raise consumers' cable
television rates so that they can finance their telco
ventures.
And, we know we've had problems with cable companies
discriminating against producers of programming -- we passed a
law to prevent such activity in 1992 . . . but rather than
have telephone companies offer cable on a common carrier, open
access platform, we're going to allow them to choose to be
private carriers for cable.
These inconsistencies simply do not make sense.
Competition
Competition is what we all said we wanted when the debate
began. But when the gavels fell in the House and Senate,
competition is not what we got. We're getting deregulation.
Make no mistake -- deregulation is not synonymous with
competition. We cannot move overnight from regulated
monopolies to a truly competitive market. This transition
will take time.
Now, I know competition is a hard concept for those who
have enjoyed monopoly status for years.
Look at the long-distance industry, the computer
industry, the wireless industry -- they are all proof of the
benefits of competition to consumers and to our country. In
each of these industries we have seen how competition has
resulted in lower prices, high-quality goods and services,
greater choice for consumers, and increased innovation.
Congress says it wants competition, yet it assumes that
competition simply will not exist in rural America. And so
the Senate bill contains a buyout provision that allows a
monopoly telephone company to buy the monopoly cable company
in any town with 50,000 people or less. Why in the world is
Congress preempting competition like this?
I'll tell you. This provision is nothing more than
providing certain small and medium size cable and telephone
company owners with an exit strategy -- a way to cash out and
become millionaires. It is corporate welfare, pure and
simply. Consumers in one-third of this nation will be
deprived of the benefits of competition. We are subverting
the public interest in order to fill the pockets of a handful
of millionaires.
Consumer Protection
Frankly, the legislation may turn out to be a consumers'
nightmare. As the legislation currently stands, consumers'
telco and cable rates are likely to increase significantly.
It's hard for me to talk about the '92 Cable Act without
seeming proprietary. So I'll be very brief. Let me just say
that the Administration has a problem with leaving consumers
at the mercy of deregulated monopolists. If you want to talk
about reform when competition arrives, or want to change the
definition of effective competition, then we're here for you.
But elimination of protection before competition is just
wrong.
Last week in the Washington Post, Tom Shales summed it
all up quite well. He said: "There's something for everybody
in the [telecom] package, with the notable exception of you
and me. Broadcasters, cablecasters, telephone companies, and
gigantic media conglomerates all get fabulous prizes.
Congress is parceling out the future among the communications
superpowers, which stand to get more super and more powerful,
and certainly more profitable, as a result."
I grew up in Queens. If I see grass, I sneeze. I'm a
city boy through and through. But I am worried about what
this bill does to rural Americans. Rural consumers will
receive a double whammy, since cable rates for small systems
will be deregulated immediately and the buyout provisions will
preclude any possibility of competition. Just what rural
Americans have been waiting for -- unregulated monopolies.
For the past two years, on behalf of the Administration,
I have been out there fighting for the three C's --
consistency, competition, and consumers. But, I have to admit
we're not having all the success we would like in the
legislative arena. I'm a jazz guy, but I like some country-
western music. And, I find myself singing one of Mary Chapin
Carpentar's songs. She has a great line -- "Sometimes you're
the windshield; sometimes you're the bug." These days on
Capitol Hill, I feel like the bug.
But I know that legislation and politics go in cycles and
I know that if, as I fear, cable rates start skyrocketing
again, consumers have recourse. They can vote their
displeasure and voice their displeasure. And eventually,
after paying billions of excess dollars to cable companies,
they will get some relief. The process eventually will work.
When we deregulated prematurely in '84, Congress reacted in
'92.
But there is one issue on which we as consumers and as
Americans have no recourse, no failsafe device to rescue us --
and that is media concentration. This is where the
legislation really could profoundly affect this nation, and
not for the better.
Media Concentration -- From Teletopia to the Return of the
Media Mogul
We began with a vision of open networks, of electronic
magazine racks, of thousands of entrepreneurs having access to
airwaves, to wireline and wireless networks -- a teletopia.
But, that's not what the legislation is going to bring
Americans.
Congress is seeking to eliminate or relax media ownership
rules. Under the House bill, the same individual or company
can own two television stations, an unlimited number of radio
stations, the local newspaper, and the cable system in an
area. In rural areas, the same company also could own the
phone system. Now, it is fair to say that if one person
controls all of these media sources, that person will have a
strong influence on how that community thinks. As Congressman
Ed Markey has stated, "this provision will make Citizen Kane
look like an underachiever."
The Senate bill, while retaining more of the limits on
local ownership, eliminates limits on the number of television
stations owned nationwide, expands audience reach to 35
percent of the national audience, allows the same entity to
own a television station and the cable system in a community,
and eliminates all local and national limits on radio
ownership.
This potential monopolization of the marketplace of ideas
should concern each of us. Cross-ownership rules were enacted
to protect the needs of local communities and to promote free
exchange of diverse viewpoints and information. Diversity of
ownership assures that a variety of opinions and viewpoints
will be heard. Do we still care about localism and diversity?
News and information is essential to our system of
democracy, which relies on an informed citizenry. As John
Stuart Mill wrote in On Liberty, "only through diversity of
opinion is there . . . a chance of fair play to all sides of
the truth." Broadcasting and newspapers are still the major
sources of news, information, and entertainment in this
country. Two thirds of Americans get their news from
television. But with media concentration, the lead story on
television and radio will also be the story on the front page
of the local newspaper.
The dangers of abuse and monopolization of thought were
seen prior to establishment of the media ownership rules by
the FCC and Congress. For example, in 1938, the FCC allowed
for a single regional "superstation" on a clear channel. WLW
in Cincinnati, Ohio, was rated #1 in 13 states and #2 in six
states. It soon was discovered, however, that the station
owner was broadcasting only anti-labor political commentary.
The domination of one controlling opinion led to an end of
regional superstations.
Media concentration also will bring a loss of localism.
Currently, of the 11,000 radio stations around the country,
two-thirds are owned by sole proprietors. They live in their
communities and reflect the character of their towns. If you
watched "Northern Exposure," think about Chris. This guy runs
the local radio station in a small town in Alaska, and has
eccentricities that match those of his neighbors. And
everyone in the town listens to the station -- to find out
what events are taking place, whether a major weather storm is
moving in, who needs a job or has one to offer.
Elimination or relaxation of national ownership caps will
cause Chris and his cohorts to slowly disappear. And
communities will suffer. Take the real-life example of WTOC-
TV in Savannah, GA. WTOC runs a very popular high school
football highlight show in the fall from 11:30 -12 PM, EST.
But that's David Letterman's time. He draws half the size
audience as does the football program. However, CBS gets all
of the revenue from the Letterman show (and his blessings for
live clearance), while they get zero income (and lots of
static from Letterman) when WTOC does high school football and
delays Letterman one-half hour giving the competing `Leno'
show a 30-minute jump. WTOC has been able to keep CBS at bay
because it is a strong station. However, if network-owned
stations were to cover 50 percent of the U.S. homes, coverage
of high school football in Savannah and other towns would
disappear faster than I can give this speech -- which, at the
rate I speak, is (as my staff repeatedly points out) way too
fast.
An advertiser or a political candidate seeking to reach
an audience would face a bottleneck -- the local media mogul -
- with a strangle-hold over a community. The owner of the
television station could require its advertisers or candidates
to also buy time on its radio station and space in its
newspaper. Advertisers or candidates who purchase time on a
competitor's station may be blocked from buying space in the
newspaper.
This is not just the product of my overactive imagination
. . .
For a sense of what we have to look forward to, we can
look back to the 1950s when radio stations and local
newspapers engaged in such tactics. Many newspapers denied
space to anyone who advertised on the radio, refused to
publish radio programming logs, and wrote only unfavorable
reviews of the local stations. For example, the Mansfield
Journal required its newspaper advertisers to enter into
exclusive contracts with the paper and refrain from buying air
time.
Our communities will suffer. In a letter sent to a
member of the Senate, Gary Ganger, Vice President and GM of
KTK, an FM station in Gainsville, Florida, relayed the
following story. He wrote: "A colleague told me at the
recent NAB convention in Las Vegas that he and I were part of
a dying breed. We show too much concern for the non-revenue
generating elements of broadcasting. We spend too much time
at our stations on community issues like helping in hurricane
disaster relief efforts and giving candidates free time to
discuss issues beyond what can be said in a thirty or sixty-
second commercial announcement."
Recently, I received a letter from Stephen Godofsky, a
radio broadcaster from Tampa Bay, Florida, who underscores the
need to protect the public interest. He writes: "for
economic reasons, again it is the public who will receive
short shrift if broadcasting is totally deregulated. As these
large companies attempt to gain control of more and more
properties, they will bid up the prices of broadcast
facilities around the country. And once, they attain a degree
of control economic reality will not doubt set in and they
will attempt to attain efficiency (i.e. cut costs) in areas
which are the easiest to eliminate. Those areas will no doubt
be those relating to public service and community involvement
-- ironically the primary areas for which broadcast licenses
were originally intended."
Why do we want to tilt the playing field in favor of
large, national owners? Is this how we want to define the
public interest?
We have the best media system in the world. As Bill Ryan
of Post-Newsweek recently stated, "[t]he whole world is trying
to emulate the local system of broadcasting that we have in
this country, and here we are creating a structure that will
abolish it or put it in the hands of very, very few."
The Future of Telecom
To be honest, I would rather be talking today about the
exciting future on telecom -- about the Internet and the new
Elvis site in Poland that I found last night while surfing the
Net; about new ways of thinking about intellectual property
rights and the extent we need to rope in cyberspace cowboys;
about what we accomplished at G-7 and all the international
telecom activities taking place as a result; about the schools
and community centers in our inner cities that are being given
on-ramps to the information superhighway and giving new
opportunities to young folks. These are issues that are
critical to the future of our country; these are the issues
that NTIA is working on every day. But today, I felt
compelled to talk about the present, to make sure that we
don't make mistakes that will jeopardize our future.
Conclusion
I don't mean to be harsh. I just want to be honest. I
know that it is often easier not to speak out so. As Calvin
Coolidge once said, "I've noticed that nothing I never said
has hurt me." But, as you can tell, I feel passionately about
these issues. And, therefore, I cannot remain silent.
The telecom landscape is changing. I hope it remains an
open, level field, where many players can engage in a variety
of lines of businesses to inform, entertain, and educate us.
The Clinton Administration will continue to work hard to
ensure that our telecom policy serves the public interest.
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