Home » Regulation » Recent Articles:

Trump Administration Wants FCC to Regulate Social Media Networks, Impose New Rules

Phillip Dampier July 28, 2020 Public Policy & Gov't, Reuters No Comments

President Trump

WASHINGTON (Reuters) – A U.S. Commerce Department agency on Monday petitioned the Federal Communications Commission to reinterpret a 1996 law to require transparency in how social media companies moderate content, after President Donald Trump asked it to intervene in the matter.

Trump directed the National Telecommunications and Information Administration (NTIA) to file the petition after Twitter in May warned readers to fact-check his posts about unsubstantiated claims of fraud in mail-in voting.

Trump’s executive order asked the NTIA to petition the FCC to write regulations stemming from Section 230, a provision of the Communications Decency Act that shields social media companies from liability for content posted by their users and allows them to remove lawful but objectionable posts.

The NTIA said in Monday’s petition it wants the FCC to require social media firms to “publicly disclose accurate information regarding its content-management mechanisms” to “enable users to make more informed choices about competitive alternatives.”

Trump, a Republican who is running for re-election on Nov. 3, has repeatedly expressed anger at social media companies. On Monday, he said Twitter’s trending topics feature was unfair.

“They look for anything they can find, make it as bad as possible, and blow it up, trying to make it trend,” he wrote.

Both Democratic commissioners on the five-member FCC said the commission should quickly reject the petition.

“The FCC shouldn’t take this bait. While social media can be frustrating, turning this agency into the President’s speech police is not the answer,” FCC Commissioner Jessica Rosenworcel said in a written statement.

Republican Commissioner Brendan Carr said the “petition provides an opportunity to bring much-needed clarity to the statutory text.”

Twitter has called Trump’s executive order “a reactionary and politicized approach to a landmark law.”

A spokesman for FCC Chairman Ajit Pai, who has said in the past he does not see a role for the FCC to regulate websites like Twitter, Facebook or Alphabet’s Google, said on Monday the agency “will carefully review the petition.”

The FCC could take a year or longer to finalize any rules.

Andrew Jay Schwartzman, a Georgetown University lecturer, said Trump was on shaky legal ground.

“The FCC has no authority to interpret Section 230, and even if it did, the rule that Trump wants is utterly incompatible with the plain language of the statute,” he said.

Reporting by David Shepardson; Editing by Sandra Maler and Sonya Hepinstall

Special Report: Multiple States Dealing With Dangerous Outages at Frontier Communications

Frontier’s office in Charleston, W.V.

Conditions within many Frontier Communications service areas are in a state of dangerous disrepair, with a growing number of disruptions to 911 services and a long wait for urgent repairs of Frontier’s deteriorating landline network that can now take over a month.

A growing number of states are documenting unprecedented service problems at Frontier Communications, the independent phone company providing phone and internet services to homes and businesses in 29 states. News reports predict that the company will be in bankruptcy court as early as March, hoping to discharge or refinance its staggering debts. But until then, some Frontier customers have been unable to reach 911 or rely on their rural landline service for remote medical monitoring, potentially putting their lives at risk.

One of the latest states to report serious deficiencies with Frontier’s service is Wisconsin. At a Dec. 20 public meeting in Mondovi to discuss the quality of service at Frontier, the city administrator heard harrowing tales of rural Wisconsin residents who frantically tried to call 911 and got nothing but a strange busy signal.

The Wisconsin State Journal reported that after Mike Wright’s shed collapsed on him under the weight of multiple feet of snow, his wife’s attempts to reach 911 from their Mondovi home failed again and again. A Frontier technician later admitted 911 was out of service for about eight hours that day. Frontier apparently did not notify customers or the media about the outage.

James Rud, a volunteer firefighter and the town’s street superintendent, told the meeting that was not an unusual situation. A few years earlier, a local dentist’s office repeatedly tried to reach 911 after a disabled girl choked on a piece of dental equipment. There was no answer.

“Everybody’s frantic because they’ve called five times and got a busy signal on 911,” Rud told the meeting, noting that when people call 911 and “nobody picks up, your anxiety level goes from a bad situation to a (really) bad situation.”

That day, 911 operators were waiting to take emergency calls. The calls failed to connect because of network problems at Frontier. Based on a review of state regulator complaints, the problems are growing in size and scope across multiple states served by Frontier. In Wisconsin alone, at least 93 serious complaints were filed with the state’s telecom regulator. The Department of Agriculture, Trade, and Consumer Protection received 405 pages of complaints between January 2019 through January 2020, mostly about poor quality phone and internet service in rural Wisconsin and very long wait times for often ineffective repairs. One complaint from Barneveld even included a physician’s letter emphasizing the urgent need for reliable landline service for a patient in poor medical condition.

There are indications Frontier satisfactorily handled some complaints… eventually, but many customers had to take extraordinary action to get the phone company’s attention about problems the company allegedly ignored for months.

One complainant turned out to be Marathon County IT director Gerald Klein, responsible for maintaining the county’s 911 system. He couldn’t get Frontier to respond to him either, eventually reaching out to Wisconsin state officials as a last resort. Klein complained Frontier was unresponsive “for months” to his county’s request to upgrade a crucial trunk line necessary to activate a new and improved 911 system. He had no idea who to appeal to next.

“Our 911 system is maintained by Frontier but the equipment is long since past end‐of‐life,” Klein wrote in a letter to the Wisconsin Public Service Commission on Dec. 27. “Can I file a complaint with the Wisconsin PSC or can you give me other advice on how to get Frontier’s attention? Is this something that should be given to the FCC?”

Lane

In West Virginia, perhaps the epicenter of Frontier’s epic problems, Public Service Commission chairperson Charlotte Lane, a former Kanawha County delegate, considers Frontier’s performance in her state to be unacceptable.

“Frontier has over 300,000 customers in our state,” Lane said, noting that for many West Virginians Frontier is their sole provider. “In 2019, we received nearly 2,000 complaints from Frontier customers about the company’s phone and internet service. We spend a lot of time responding to these complaints.”

Other media reports count the number of complaints regarding Frontier exceeding 4,000 “over the last couple of years.”

Lane is especially worried about the growing number of 911 outage incidents reported across West Virginia. There were at least a half-dozen high profile outages in 2019 that attracted media attention and scrutiny from local, county, and state legislators.

In July 2019, the PSC commissioned Schumaker and Company to perform an extensive management audit of Frontier Communications. Lane said the audit was critical because Frontier’s performance has been questionable since the company acquired Verizon Communications-owned landlines in the state back in 2010. Lane said Frontier has been cutting staff and maintenance workers in the state, but wanted a definitive report on the company so the PSC can intelligently oversee Frontier’s performance. That report is due to be released on March 19.

West Virginia “has a lot of power and we will exercise it,” Lane said.

The same may not be true in Wisconsin, where a well-funded deregulation campaign by AT&T and other phone companies in Wisconsin won bipartisan favor in 2011, with the full endorsement of then Gov. Scott Walker. One Republican state senator even promised that the new law would result in more than 50,000 new jobs and inspire telecom companies to invest in the state. In fact, AT&T, Frontier, and other phone companies have cut jobs over the last nine years and Frontier has invested little in upgrading its Wisconsin network to more reliable fiber optic technology. Telecom companies also claim deregulation frees them from having to deliver traditional copper-based landline service where most people are now using cell phones, and consumers can always exercise their choice by switching from a disappointing phone company to the local cable operator.

But rural residents in Wisconsin complain they often do not have the option of switching to cell phone or cable service, because there is no reliable cell coverage or local cable operator in many of the areas Frontier services. That has left them vulnerable to the consequences of ending universal landline service and a telecom industry that is investing in upgrades almost exclusively in urban areas.

Even Frontier officials now admit serving rural areas is becoming an unsustainable proposition for the phone company.

A statement from Frontier’s Javier Mendoza.

“Frontier serves only about ten percent of the state voice lines in its service area—and falling—but has 100 percent of the universal service obligation to serve the most rural and high-cost areas,” Frontier spokesperson Javier Mendoza said in a statement about its business in West Virginia in July 2019. “Our customer base continues to decline, while the cost of service per line has increased dramatically. This has resulted in an unsustainable model for providing service in rural and high-cost areas, manifesting in increased numbers of service complaints. We plan to reach out to the state’s leaders to collaboratively find solutions to this difficult challenge.”

West Virginia’s Public Service Commission is undertaking a comprehensive audit of Frontier Communications.

Deregulation in states like Wisconsin has allowed Frontier to escape some of the harsher consequences from regulators held responsible for ensuring customers have reliable access to basic phone service. That leaves many rural customers vulnerable to whatever goodwill exists at private telecommunications companies to continue offering service.

Observers suggest Chapter 11 bankruptcy will allow Frontier to shed its punishing level of debt many believe is responsible for Frontier’s ongoing lack of investment in network upgrades. But others believe Frontier is more likely to seek a sale of its rural service areas to focus on its more profitable urban service areas, especially in California, Texas, and Florida. Frontier has already announced a sale of its landline network in the Pacific Northwest to a regional telecommunications company promising to scrap much of Frontier’s copper wire infrastructure in favor of fiber optics.

In the meantime, problems at Frontier’s operations are ongoing. Last week, a “massive phone outage” in Cabell County, W.V. took down phone service across large parts of the county.

Earlier this month, Frontier officials were called to a meeting to address complaints about poor service in Tennessee. In attendance were Cumberland County Mayor Allen Foster, Crossville City Mayor James Mayberry, Senator Paul Bailey and U.S. Representative John Rose. The complaints were called “severe” by the public officials and dangerous to public safety.

“Frontier officials appeared to have no definitive answer to the complaints,” reported 3B Media.

Plumas County, Calif. officials are alarmed about reports of Frontier’s possible bankruptcy. District 2 Supervisor Kevin Goss said he is a Frontier customer that has experienced firsthand the issues he says all Indian Valley residents experience: paying for high speeds and experiencing low speeds in return. Goss said Frontier’s broadband service often works only intermittently for a few hours at a time. Incoming residents often cannot subscribe to broadband service at all, after Frontier allegedly placed a moratorium on adding new DSL customers in the area in 2018. Koss claims he has seen no evidence Frontier plans to invest in service expansion and the DSL moratorium remains in place two years later.

In Minnesota, the state’s Public Utility Commission recently reached a settlement with Frontier over its poor quality landline and broadband service, particularly in rural areas. But now the Minnesota Department of Commerce is launching a new investigation focusing on Frontier’s billing and customer service practices.

“We are concerned about Frontier’s practices when customers are signing up for service and the prospect that Minnesotans are being overcharged for their phone service,” said Commerce Commissioner Steve Kelley.

A broken Frontier telephone pole. (Left) Frontier phone cables left stretched against a tree (Right) Images: PUCO

The Minnesota Department of Commerce has just launched another investigation into Frontier Communications, focusing on the company’s billing and customer service practices. The primary issues under investigation include whether Frontier failed to inform customers of their service options and whether Frontier enrolled customers in long distance service plans that customers did not want or use.

“We are concerned about Frontier’s practices when customers are signing up for service and the prospect that Minnesotans are being overcharged for their phone service,” said Commerce Commissioner Steve Kelley.

In Ohio, state regulators are tangling with Frontier over network and infrastructure upkeep practices. The Ohio Department of Transportation (ODOT) is taking issue with Frontier’s attempts to ‘pass the buck’ on pole and infrastructure maintenance. Patricia Binkiewicz says her family is collateral damage in that battle, after her husband’s car was struck by a falling branch hanging over Route 43 in Carroll County — a branch Frontier should have dealt with over a year ago.

“If you drive, especially around here, you’re going to see these trees hanging over lines and they don’t realize no one is claiming responsibility, accountability, any liability or damages if a tree should fall down,” Binkiewicz said. Attempts to have Frontier Communications deal with overgrown trees and brush fell on deaf ears. The company claimed that was the responsibility of ODOT. No so fast, ODOT responds.

A Frontier installer draped a new line across this customer’s residential propane tank, and then left. (Image courtesy: Mark Steil, MPR News)

“Utilities that run in the state’s right of way are to be maintained by the utility company,” ODOT spokesperson Lauren Borell said. “So, what that means is if there’re trees there, the utility company is responsible for those trees.”

When the story made the local news, ODOT removed the offending tree, but there is no word how many other trees represent accidents waiting to happen. Local officials claim Frontier has shown a lack of interest in investment.

That lack of investment is also apparent in the state of Utah, where the Utah Public Service Commission is continuing its investigation into Frontier Communications as a result of complaints from Castle Valley and the nearby area that the company failed to provide reliable service to customers. Julie Price, a spokesperson for Utah’s Division of Public Utilities, said her agency is concerned about the “company’s level of investment in Utah.”

The consequences of deregulation of phone service in rural areas dependent on landlines may eventually include unnecessary deaths from an inability to reach emergency services due to a service outage or network problem. Observers note that cell phone service remains spotty, especially indoors, in large sections of rural America. Some wireless carriers like T-Mobile and Sprint barely provide any direct coverage in states like West Virginia, and AT&T and Verizon offer solid service primarily in larger cities.

It remains unlikely rural cell service will ever be ubiquitous in many rural areas, because there will not be enough customers to make such investments profitable. Instead, for over a century consumers have traditionally relied on universally available landline telephone service. But as deregulation efforts weaken or eliminate universal service requirements, local phone companies may eventually cease offering landline service. AT&T is already experimenting with eliminating legacy phone lines in favor of wireless service, with mixed results. An effort by Verizon to replace deteriorating rural landlines with a wireless landline replacement proved unpopular and unreliable.

What compelled local phone companies to provide universal, high quality landline service for decades was strong regulatory enforcement with stiff fines for non-compliance. Repairs were expected to be made in most cases within a day or two, not four to nine weeks. Public safety from overgrown trees and brush near telephone company-owned utility poles is also a growing and relatively recent problem. In some cases, deregulation has left regulators unable to police the condition of utility poles that present a safety risk, and that task has now fallen on local media that can embarrass a company into fixing problems.

Public policy advocates recommend Frontier be held accountable for the quality of their service and states should strongly consider rolling back deregulation, especially in rural areas.

FCC’s Deregulatory Arguments ‘So Insubstantial, They Would Fail an Introductory Statistics Class’

Phillip Dampier September 24, 2019 Competition, Public Policy & Gov't No Comments

United States Circuit Judge Thomas L. Ambro has sat on the United States Court of Appeals for the Third Circuit hearing countless legal challenges of federal government rules, regulations, and laws since 2000. In fact, he has heard so many cases it might have worried petitioners when he opened his majority-held ruling with the words “Here we are again.”

Ambro (from the court’s decision):

“Here we are again. After our last encounter with the periodic review by the Federal Communications Commission (the “FCC” or the “Commission”) of its broadcast ownership rules and diversity initiatives, the Commission has taken a series of actions that, cumulatively, have substantially changed its approach to regulation of broadcast media ownership. First, it issued an order that retained almost all of its existing rules in their current form, effectively abandoning its long-running efforts to change those rules going back to the first round of this litigation. Then it changed course, granting petitions for rehearing and repealing or otherwise scaling back most of those same rules. It also created a new “incubator” program designed to help new entrants into the broadcast industry. The Commission, in short, has been busy. Its actions unsurprisingly aroused opposition from many of the same groups that have battled it over the past fifteen years, and that opposition has brought the parties back to us.”

FCC Chairman Ajit Pai is presiding over a sweeping deregulatory agenda that critics fear will further consolidate an already corporate dominated media landscape that has given a handful of companies approval to own and operate hundreds of radio and television stations, many in the same profitable media markets. One corporate owner can already own several local radio and TV stations and the FCC is working to further ease already relaxed ownership limits that could allow companies like Sinclair, Nexstar, and iHeartMedia to buy even more radio and TV stations.

The History of Broadcast Deregulation (1996-2019)

Judge Ambro

Deregulators targeting media ownership limits have been on a tear since the mid-1990s, with the first major changes in decades ushered in by the Clinton Administration’s 1996 Telecommunications Act, which required the FCC to conduct a review of media ownership rules every two years. The 1996 law required the FCC to determine “whether any of such rules are necessary in the public interest as the result of competition.” If not, the Commission is required by law to “repeal or modify any regulation it determines to be no longer in the public interest.”

What is in the “public interest” has historically been in the eye of the beholder. Democrats on the FCC have been wary of media consolidation and take a skeptical view of arguments that consolidation enhances competition and improves the efficiency of radio and television stations that can share resources. Democrats worry about the loss of diversity, cost-cutting, and consolidated control over news gathering operations. Republicans have been traditionally friendly to the argument that consolidation has allowed marginal stations to sell operations to a better funded corporate owner, with healthier broadcast competition the result. Republicans also argue regulation is unnecessary in a diverse media market where consumers have a choice of traditional broadcasters, satellite radio, cable television, internet streaming, etc. That makes strict ownership limits no longer necessary.

Neither side can argue with the fact that as a result of the 1996 Telecommunications Act, over 4,000 local radio stations were purchased from independent and small corporate owners and merged under the umbrella of a handful of giant corporate media companies. Although proponents of the 1996 Act claimed it would increase competition, in fact it did the exact opposite. With many stations now under the ownership of a handful of companies, corporate owners frequently programmed each station with a different format specifically to avoid head-to-head competition. While some listeners felt this increased the diversity of music formats heard on the air, many also noticed local voices began disappearing from those stations, replaced with automation or voices that originated in other cities. Some corporate owners cut costs by hiring a small team of announcers to program dozens of radio stations around the country. Local news coverage was also often among the first things to be cut.

Another consequence of the 1996 Act was a steep decline in minority ownership of stations. In particular, minority ownership of TV stations dropped to an all-time low since the federal government began tracking such data in 1990.

The consolidation wave did some corporate owners no favors either. Clear Channel Communications (now iHeartMedia), became a ripe target for a leveraged buyout after successfully acquiring hundreds of local stations. In 2008, Bain Capital and Thomas H. Lee Partners launched a successful takeover of Clear Channel for $24 billion, largely financed with debt that Bain and THL Partners put on Clear Channel’s books. Over 2,440 employee layoffs and cost cutting quickly followed, while the new owners leveraged the stations it now owned to maintain adequate financing to cover interest payments on its enormous debts. As The Great Recession took hold, advertising revenue diminished and credit markets became stingy and unforgiving. By 2010, the company faced bankruptcy and debt holders were growing impatient. Over the next several years, several debt restructuring efforts were undertaken to help the company pay down its debts, but debt holders finally had enough in 2018, forcing what is now known as iHeartMedia into bankruptcy reorganization.

The FCC itself later admitted that the consolidation frenzy caused negative effects that should be addressed. But the incoming George W. Bush Administration initially had other ideas and under the leadership of FCC Chairman Michael Powell, the majority of Republicans on the Commission supported further relaxation of ownership rules. In early 2003, the FCC held a single public hearing on the matter, which sparked outrage among many Americans concerned about the impact media consolidation had already had on their local stations. By June of that year, nearly two million letters from the public opposing further media consolidation had arrived at the FCC. The Commission, despite the public outcry, ultimately voted 3-2 to repeal a long-standing ban prohibiting a local newspaper from also owning a local television station (or vice versa) and also relaxed other ownership rules, claiming they were no longer necessary to protect competition, localism, or ownership diversity.

Among the changes:

  • Any one company could now own up to 45% of local stations in a market (it was 25% in 1985, relaxed to 35% in the 1990s).
  • The newspaper/TV station cross-ownership ban was eliminated.
  • Alternative forms of media and their popularity would now be considered when determining whether a company owned or controlled too much of a local media market. The FCC would now also consider magazines, cable channels, and internet services to decide if one owner had become too dominant.
  • License renewals no longer considered whether a station was adequately serving in the “public interest.”

Community Activists Strike Back at Corporate Consolidation and Media Homogenization

The FCC’s ability to ram through the rules changes, despite public opposition, was immediately met with a formidable 2003 court challenge by the Prometheus Radio Project, a non-profit advocacy and community organizing group that opposed corporate consolidation of radio stations and supported the low-power (LPFM) radio movement, which sought low-cost licensing of community radio stations to preserve localism and provide diverse radio programming.

Prometheus Radio Project v. FCC garnered support from several independent broadcasters and community groups like the Consumer Federation of America, the National Council of Churches of Christ, and the Media Alliance. In 2004, the same U.S. Third Circuit Court of Appeals that heard the most recent case against the FCC’s deregulation efforts ruled 2-1 in favor of Prometheus. The decision was written by the same Judge Ambro that remarked ‘here we are again’ this week. The ruling required the FCC to re-examine its media ownership rules and found the FCC’s justifications for the changes to be inadequate and in one case relied on “irrational assumptions and inconsistencies.” The Supreme Court later affirmed the Court of Appeals’ decision, frustrating the efforts of deregulators.

Media consolidation was once again a priority item on the FCC’s agenda after the election of President Donald Trump. Republican FCC Chairman Ajit Pai once again took aim at the already-relaxed media ownership rules to relax them even further. In a Republican-dominated 3-2 decision in November, 2017, the FCC once again eliminated the newspaper/TV station cross-ownership ban and would now permit one company to own two of the four largest television stations in a market, instead of just one.

Those changes were the ones struck down this week by the Court of Appeals.

FCC and Its Allies: Since You Don’t Stand to Make Millions from Consolidation, You Should Have No Say

An exasperated Judge Ambro repeatedly took the FCC (and indirectly Ajit Pai, the current chairman) to task for ignoring the Court’s instructions on formulating media ownership policies that would survive court challenges.

But first, Ambro’s decision eviscerated attempts by the FCC and interest groups allied with its deregulation policies to undercut public and opposition participation in the debate. First, both argued that the opposition lacked standing to sue the FCC in court over its new deregulation policy because they do not have any business interests at risk and cannot be harmed directly by the decision to deregulate. When the opposition filed legal briefs to prove standing, the FCC and its allies argued it was too late to submit proof and it should not be considered by the court.

Ambro’s decision rejected those arguments, noting “the same parties have been litigating before us for a decade and a half. It was not unreasonable […] to assume that their qualification to continue in the case was readily apparent.”

Ambro also took issue with the FCC’s argument that those in opposition to its new rules were only speculating it would lead to consolidation.

“The problem is that encouraging consolidation is a primary purpose of the new rules. This is made clear throughout the Reconsideration Order, see, e.g., 32 F.C.C.R. at 9811, 9836,” Ambro wrote. “The Government cannot adopt a policy expressly designed to have a certain effect and then, when the policy is challenged in court by those who would be harmed by that effect, respond that the policy’s consequences are entirely speculative.”

But it did not stop the FCC from trying.

The FCC also argued that opponents were worrying too much about the impact of the new rules. FCC lawyers reminded the court the agency would still carefully consider any new merger proposals put before it. Judge Ambro found that argument “immaterial.”

“The point is that, under the new rules, it will approve mergers that it would have rejected previously, with the rule changes in the Reconsideration Order the key factor causing those grants of approval,” Ambro wrote.

“We emerge from the bramble to hold that Regulatory Petitioners have standing,” Ambro concluded, signaling his irritation with attempts to stymie the lawsuit against the FCC.

Why the Top-Four Station Limit Matters

One of the groups allied with the FCC attempted to argue that the “top-four rule” that forbids any one company from owning or controlling more than one of the top-four television stations in a major local market is arbitrary, irrational, and indefensible.

But the court ruling explained why the rule exists and why it matters.

“The basic logic of the top-four rule, as we recognized in 2004, is that while consolidation may offer efficiency gains in general, mergers between the largest stations in a market pose a unique threat to competition. Although there might be other more tailored, and more complex, ways to identify those problematic mergers, the simplest is to declare, as the Commission has done, that mergers between two or more of the largest X stations in a market are not permitted. The choice of X must be somewhat arbitrary: each market’s contours will be slightly different, and no single bright-line rule can capture all this complexity. But the television industry does generally feature a distinct top-four, corresponding to the four major national networks, and four is therefore a sensible number to pick. And this is exactly the kind of line-drawing, where any line drawn may not be perfect, to which courts are the most deferential.

“[…]The Commission has the discretion to adopt a blunt instrument such as the top-four rule if it chooses. Indeed we confronted, and rejected, this exact argument—that treating all top-four stations the same wrongly ignored the variation in market structures—in Prometheus I. Id. at 417–18.

“Nor is it improper that the FCC’s justification for this rule is the same as it was in the 2002 review cycle. Section 202(h) requires only that the Commission think about whether its rules remain necessary every four years. It does not imply that the policy justifications for each regulation have a shelf-life of only four years, after which they expire and must be replaced.”

The fear is that if one company owns the local NBC and CBS affiliate in a large city, that company automatically will control a much larger percentage of the TV audience than any other station in the market. That can directly impact advertising rates charged by those stations, force other stations to consider similar mergers to maintain their market share, and leave many cities with two owners controlling the ABC, CBS, FOX, and NBC stations in a market. That would also put independent stations at a marked disadvantage, unable to attract advertisers that will expect the audience numbers combined stations would get.

The group opposed to this rule also claimed that the FCC must reaffirm and defend the very existence of this rule during each regulatory review period, an argument that was also rejected by the court decision. A FCC hostile to the rule would likely not mount much of a defense to justify it.

The FCC’s Newest Loophole: Alleged Diversity

One FCC proposal that partly escaped criticism from the court was a new radio “incubator” program that would relax ownership limits for radio station owners participating in the project. The incubator program is designed to “support new and diverse entrants in the radio broadcasting industry by encouraging larger, experienced broadcasters to assist small, aspiring or struggling broadcasters that otherwise lack the financing or operational expertise necessary to own and operate a full-service radio station.”

Critics contend the incubator program is a giant ownership limit loophole waiting to be exploited by large corporate station owners. Although initially protecting the new station’s independence for at least two years, the large corporate owner “helping” the new station become established can later buy the station, or manage the station’s programming and advertising inventory as soon as two years after the station gets on the air. Further, the corporate owner that will receive a waiver on station ownership limits for participating can ‘cash in’ that voucher in any market of “a similar proportion” to the one where the new station is launching. Most assumed that meant a market similar in size to population. But in fact it was defined as a market with a similar number of licensed radio stations.

The “market size” epic loophole would allow a corporate entity to set up a station in a relatively small sized city with a lot of licensed radio stations, such as Wilkes-Barre, Pa., which has 45, and take the resulting ownership waiver and “cash it in” by buying up a sixth extraordinarily valuable FM station in New York City, which has around 40 licensed stations on a very crowded radio dial.

The FCC attempted to place some limits on obvious loophole exploitation, like finding a front person to participate in the incubation program but allow the corporate “helper” to silently and secretly operate the station. But there are no obvious limits on allowing family members of corporate entities to participate. A similar loophole allowed Sinclair Broadcasting to acquire a significant number of additional TV stations above ownership caps by claiming they were in fact run independently by a family member of the CEO. There are multiple ways to abuse or exploit the program, but the court found the FCC gave adequate notice of the scope and rules of the project. The program’s impact on minority ownership was another matter, and the incubation program was put on hold as well because the FCC did not provide enough evidence of how the program would impact minority station ownership.

Judge Calls FCC’s Analysis Skills Insubstantial

“Problems abound with the FCC’s analysis,” Ambro wrote regarding the impact the FCC’s rules changes would have on minority ownership. “Most glaring is that, although we instructed it to consider the effect of any rule changes on female as well as minority ownership, the Commission cited no evidence whatsoever regarding gender diversity. It does not contest this. Instead it notes that ‘no data on female ownership was available’ and argues that it ‘reasonably relied on the data that was available and was not required to fund new studies.'”

Judge Ambro warned courts have frequently found certain FCC rules that were introduced without careful consideration of their impact are “arbitrary and capricious” and subject to be overturned at any time.

Ambro told the FCC it must do better.

“The only ‘consideration’ the FCC gave to the question of how its rules would affect female ownership was the conclusion there would be no effect. That was not sufficient, and this alone is enough to justify remand,” Ambro wrote. “Even just focusing on the evidence with regard to ownership by racial minorities, however, the FCC’s analysis is so insubstantial that it would receive a failing grade in any introductory statistics class.”

Ambro called the FCC’s analysis “woefully simplistic” because it attempted to use disparate data from two different federal agencies to measure minority ownership of broadcast stations, but the two entities asked different questions and used different methodologies.

“Attempting to draw a trendline between the [one agency’s data with another’s] is plainly an exercise in comparing apples to oranges, and the Commission does not seem to have recognized that problem or taken any effort to fix it,” Ambro complained.

Ambro also noted the FCC did not bother to estimate the number of minority-owned stations that would theoretically exist if the agency never changed its ownership rules.

Come Back to the Court With Your Homework… Finished

Judge Scirica

Ambro predicted an inevitable appeal of the court decision and additional litigation surrounding this week’s ruling. He warned the FCC that using the current majority to ram new rules through is not adequate and the FCC must prove the merits of its arguments if it wants to survive a court challenge. Ambro “remanded” or sent the proposed new rules back to the FCC to review and revise.

“On remand the Commission must ascertain on record evidence the likely effect of any rule changes it proposes and whatever ‘eligible entity’ definition it adopts on ownership by women and minorities, whether through new empirical research or an in depth theoretical analysis. If it finds that a proposed rule change would likely have an adverse effect on ownership diversity but nonetheless believes that rule in the public interest all things considered, it must say so and explain its reasoning,” Ambro wrote. “If it finds that its proposed definition for eligible entities will not meaningfully advance ownership diversity, it must explain why it could not adopt an alternate definition that would do so. Once again we do not prejudge the outcome of any of this, but the Commission must provide a substantial basis and justification for its actions whatever it ultimately decides.”

FCC Chairman Ajit Pai blasted the court decision and vowed an appeal, citing the partial dissent of Judge Anthony Joseph Scirica, who has consistently supported a number of the FCC’s deregulation efforts.

“For more than twenty years, Congress has instructed the Federal Communications Commission to review its media ownership regulations and revise or repeal those rules that are no longer necessary,” Pai said. “But for the last 15 years, a majority of the same Third Circuit panel has taken that authority for themselves, blocking any attempt to modernize these regulations to match the obvious realities of the modern media marketplace. It’s become quite clear that there is no evidence or reasoning — newspapers going out of business, broadcast radio struggling, broadcast TV facing stiffer competition than ever — that will persuade them to change their minds. We intend to seek further review of today’s decision and are optimistic that the views set forth today in Judge Scirica’s well-reasoned opinion ultimately will carry the day.”

U.S. Federal Appeals Court Deals Setback to FCC Push to Deregulate Media Ownership Rules

Phillip Dampier September 24, 2019 Competition, Public Policy & Gov't, Reuters No Comments

WASHINGTON (Reuters) – The Federal Communications Commission suffered a setback on Monday in a long-running legal battle when a federal appeals court struck down its latest effort to loosen U.S. media ownership rules.

The Republican-led FCC in 2017 voted to eliminate the 42-year-old ban on cross-ownership of a newspaper and TV station in a major market. It also voted to make it easier for media companies to buy additional TV stations in the same market, and for local stations to jointly sell advertising time and for companies to buy additional radio stations in some markets.

The court in a 2-1 decision Monday told the FCC to take up the issue again, saying the regulator “did not adequately consider the effect its sweeping rule changes will have on ownership of broadcast media by women and racial minorities.”

FCC Chairman Ajit Pai said in a statement that despite instructions from Congress to review media ownership regulations a majority of federal appeals court judges for 15 years “has taken that authority for themselves, blocking any attempt to modernize these regulations to match the obvious realities of the modern media marketplace.”

Pai added that “there is no evidence or reasoning — newspapers going out of business, broadcast radio struggling, broadcast TV facing stiffer competition than ever — that will persuade them to change their minds.”

The FCC plans to challenge the decision, he added.

Pai

FCC Commissioner Jessica Rosenworcel, a Democrat, said “over my objection, the FCC has been busy dismantling the values embedded in its ownership policies.” She said the “court rightly sent the FCC’s handiwork back to the agency because the FCC’s analysis was so ‘insubstantial.’”

Judge Anthony Scirica, who dissented from the opinion, said “Rapid technological change had left the framework regulating media ownership ill-suited to the marketplace’s needs. The public interest analysis at the heart of the FCC’s ownership rules is as dynamic as the media landscape.”

Big media companies including Tegna Inc, CBS Corp and Nexstar Media Group Inc cited the 2017 rule change as motivation for considering expansion opportunities.

The FCC is weighing other changes to U.S. media ownership rules. In December, it sought comments on a rule that bars one company from owning two TV stations in the same market except under certain circumstances. The FCC asked if those rules continue “to serve the public interest and remains necessary.”

The FCC is also considering if existing rules that limit the number of local radio stations in a single market should be rescinded, asking if the rule “remains necessary to promote competition, localism, or viewpoint diversity.”

Free Press, an advocacy, group, said the ruling “marks the fourth time this court has rejected the relentless attempts from the FCC and the broadcast industry to weaken media-ownership limits.”

Reporting by David Shepardson; Editing by Tom Brown

Californians Complained More About Telecom Companies Than Wildfire Outages Caused by PG&E

More Californians are complaining to state officials about their cable television, internet, and phone service than the energy utilities implicated in causing deadly wildfires that left customers without power for days or weeks.

California’s Office of Senate Floor Analyses prepared a report for elected officials contemplating extending deregulation of the state’s top telecommunications companies. It found deregulation has not always benefited California consumers, noting that several companies have been fined for allowing traditional phone service to fall below required service quality standards. As service deteriorates, lawmakers have tied the hands of state officials trying to enforce what service standards still exist. The report found that the telecom industry has been especially good at covering itself through lobbying and litigation to isolate and disempower consumers seeking redress.

“Many companies, including telecommunications providers, include arbitration clauses in their contracts that limit a consumer’s ability to form a class with other consumers to seek remedies for unfair business practices related to contracts,” the report notes. “These clauses frequently limit consumers to a specified arbitration process that limits the types of remedies consumers can obtain for unfair business practices.”

Customers with unreliable phone service pursuing complaints on the federal level with the Federal Communications Commission have also been dealt a blow by the Trump Administration and its Republican majority control of the FCC.

“It is unclear what kind of remedies consumers can obtain since the FCC has adopted an order limiting its own ability to establish requirements for these services,” the report found.

Deregulation has not stopped Californians from trying to get help from the California Public Utility Commission (CPUC), however. The CPUC’s Customer Affairs Branch recorded 1,087 complaints about the state’s phone and cable companies in January 2019, compared with 677 complaints against the state’s energy utilities and 53 lodged against water utilities.

The CPUC’s Customer Affairs Branch reported communications-related complaints were significantly higher than other utilities. (Image: California Office of Senate Floor Analyses)

“Despite the occurrence of wildfires in which utility infrastructure was implicated, complaints regarding energy utilities remained largely consistent between November 2018 and January 2019,” the report found. “The data indicates that the communications sector generates a greater number of complaints to the CPUC than other utility sectors on average, and a much greater percentage of those complaints are for customer issues over which the CPUC has no regulatory jurisdiction.”

Earlier this year, California’s largest investor-owned utility, Pacific Gas & Electric (PG&E), filed for bankruptcy protection after estimating it was liable for more than $30 billion in damages from recent wildfires. An investigation found equipment owned by PG&E was responsible for starting the worst wildfire in California history. The November 2018 Camp Fire killed 85 people and destroyed the town of Paradise. Yet the Customer Affairs Branch received fewer complaints about PG&E than it received regarding AT&T, Charter Spectrum, Frontier, Cox, and Comcast XFINITY.

Unintended consequences of deregulation have also caused several high profile scandals among telecom companies in the state. Some of the worst offenses were committed by cable and phone companies that further traumatized victims of catastrophic wildfires. An effort to implement new consumer protections for fire victims forced to relocate met fierce resistance from cable and telephone industry lobbyists. Some of those same telecom companies continued to bill wildfire victims for months for service at addresses that no longer existed. AT&T even billed customers that died in the fires.

A recent San Francisco Superior Court decision (Gruber v. Yelp) also found another consequence of deregulation. A judge ruled The California Invasion of Privacy Act (CIPA) does not apply to calls made or received on “digital” phone lines better known as Voice over IP (VoIP). The judge found that since the CPUC does not regulate VoIP calls, and such calls are not legally defined as a traditional phone call, CIPA cannot apply.

More than six months after devastating wildfires swept across the North Bay in 2017, AT&T was still billing customers that died in that fire. KGO-TV reports. (3:31)

After promising to never again erroneously bill wildfire victims, AT&T did it again to those traumatized by the 2018 Camp Fire that killed 85 people and wiped the town of Paradise off the map. KOVR in Sacramento reports on one family pleading with AT&T to stop billing them for landline service at an address that no longer exists. (2:15)

Search This Site:

Contributions:

Recent Comments:

Your Account:

Stop the Cap!