The Digital TV Heist

by Robert W. McChesney

On April 3, the Federal Communications Commission approved a plan to provide for the transition to digital television. Under the plan, each existing broadcaster would be given six new megahertz of spectrum for digital transmission. This is in addition to the portion of the spectrum that they now use for analog transmission. In essence, a public resource, valued between $20 billion and $100 billion, is being handed on a silver platter to some of the largest media firms in the world-General Electric (NBC), Westinghouse (CBS), Disney (ABC) and Rupert Murdoch's News Corporation (Fox). Technically, the new spectrum is not a gift. It comes in the form of eight-year licenses. But license renewal is virtually automatic: Once granted, broadcast spectrum has never been reclaimed from corporate users.

After all the stations have switched to digital and most Americans have digital TV sets or converters that will enable them to receive digital signals on their existing sets, the FCC is supposed to reclaim the spectrum now used for analog broadcasting and auction it off to other kinds of users. The process is expected to take anywhere from seven to 10 years.

On the surface, the arrangement seems benign, and that is exactly how some members of the FCC and the National Association of Broadcasters (NAB) --the commercial broadcasters' lobbying organization -- want us to see it. The American people will benefit, they tell us, from the vastly higher picture and sound quality of "high definition' television. Indeed, NAB President Eddie Fritts calls the plan "a birthday present" to the nation's consumers.

In truth, the plan ranks among the most indefensible giveaways in American political history. As conservative pundit William Safire notes, "The rip-off is on a scale vaster than dreamed of by yesteryear's robber barons." Perhaps most egregious, these firms may be allowed to sell their new digital licenses at huge profits.

Digital broadcasting holds vastly greater potential than its analog predecessor. First and foremost, digital technology permits each existing broadcaster to create four to six channels in their six megahertz of spectrum-the amount now needed to broadcast one signal. But that's not all. Digital TVs will also be easily accessible to the Internet, and numerous other interactive uses loom on the horizon. As FCC Chair Reed Hundt acknowledges, "everything will be different" with digital television. "The change is so extreme," he says, "that many people have not grasped it."

With the advent of digital TV, every community that currently has four to seven over-the-air TV stations may soon be able to receive 20 to 50 stations. For the 35 percent of U.S. 'IV households that do not get cable or satellite television, this alone would be a striking change. Yet these 20 to 50 stations will be owned by the same people who now own the existing stations. For instance, Rupert Murdoch's News Corporation-which now owns 22 stations in the largest markets--could have as many as 100 channels.

The giveaway highlights the political muscle of corporate communications firms and the NAB--the lobby that Republican Sen. John McCain of Arizona calls the most powerful he has encountered in his 14 years in Washington. The four firms that own the major networks, plus Time Warner, owner of major television properties, gave more than $3 million lion in "soft money" to the Democrats and Republicans in the 1995-96 election cycle. The broadcasters' power is based not only on their great wealth, but also on their ability to defeat members of Congress who dare to get on their bad side by opposing their interests. If push comes to shove, we can expect broadcasters to run "scare" ad campaigns to mobilize viewers to protect "free" television from regulation.

The digital spectrum plan reflects the stark limitations of the FCC as a body that supposedly represents the public interest. It also reveals the sheer corruption of the 1996 Telecommunications Act, which authorized the giveaway. Arguably among the most important laws of this generation, the Telecom Act was prepared in nearly complete secrecy and a virtual blackout in popular press coverage. It was a bill written by big business, for big business. The law's overarching purpose was to pave the way for the eventual deregulation of all communications industries. Rejecting the notion that there is a public interest in communications besides corporate profit maximization, Congress debated only who would get the most breaks in the final version of the law-cable companies, broadcasters, Baby Bells or long-distance carriers. A few crumbs were tossed to "special interest" groups like schools, libraries and hospitals, but only when they didn't interfere with the pro-business thrust of the legislation.

Digital TV may well have been the new law's most outrageous feature. With no publicity or debate, the NAB was able to insert a clause in the draft of the act requiring the FCC to allocate digital spectrum slots to the existing broadcasters at no charge. When this leaked out prior to the law's passage, it caused such an uproar that then Sen. Bob Dole felt compelled to call it "a handout to the rich, the powerful." He said he would not permit the bill to pass unless the clause was removed. But the communications firms moved quickly, mobilizing their army of lobbyists to lean on members of Congress to prevent a congressional debate on communications policy during an election year. As a result of their pressure, Dole received sparse support from his colleagues and caved in when the FCC assured him that it would not proceed with the digital allocation until Congress had a chance to revisit the matter. Then Dole quit the Senate to concentrate on his presidential campaign. His successor as Senate majority leader, Trent Lott of Mississippi, along with other key congressional figures, informed the FCC that Congress had no interest in the matter. And the matter died. All the key congressional leaders-Democrat and Republican, liberal and conservative alike except for the iconoclastic McCain, were now advancing the NAB's position.

Although the Telecom Act advised the FCC to provide free spectrum for digital use to the existing broadcasters, it left open how the FCC should implement the policy. The FCC could have required stringent public-service requirements as a condition for the digital licenses, but in the end the only concession the FCC wrangled from the broadcasters was that they would speed up transition to digital. This, however, benefitted no one but manufacturers of digital TV sets and production equipment.

The FCC's performance followed a pattern established when the federal agency was formed in 1934 to regulate broadcasting and telephone communications. An appointed body of five members (no more than three of whom can be from one political party), the FCC acts in near-secrecy and almost always defers to the powerful communications lobbies that monitor its activities like vultures. There have been intense policy debates at the FCC, but they have almost always arisen as a result of disagreements among powerful communications firms or sectors-local telephone versus long-distance telephone companies, cable versus over-the-air broadcasters, and the like.

Historically many members of the FCC have gone on to lucrative careers in the communications industries, and a significant percentage of the FCC's members have been unabashed boosters of the firms they were ostensibly regulating. Two of Hundt's three predecessors as FCC chairMark Fowler (1981-87) and Dennis Patrick (1987-9l)have used their FCC contacts and experience to become millionaire entrepreneurs in wireless communications, while the other-Al Sykes (1991-94)-is an executive in the Hearst media empire. Current FCC members James Quello and Rachelle Chong are described (off the record) by FCC watchers as flat-out bagmen for the NAB.

But over the years, some FCC members --- such as Clifford Duff, Freida Hennock, Newton Minow and Nicholas Johnson-revealed strong commitments to public service. These progressives had some clout. On the current FCC, Chairman Hundt is the closest to that progressive tradition. Not too long ago, Hundt characterized the digital spectrum giveaway as "the biggest single gift of public property to any industry in this century." And of the currently sitting commissioners, Hundt alone has championed the notion that broadcasters have important public-service obligations to society. But broadcasters' lobbies and politicians from both parties severely limit what even the best-intentioned folks at the FCC can accomplish.

The NAB defends its right to free spectrum on several counts, all of which are dubious. It argues that the cost of switching to digital production and transmission will be so great that it would be onerous to expect the broadcasters to also shelf out for spectrum. But why should the government assume the risk for this industry's investment? And if it does assume this risk, shouldn't the general public also be reimbursed for the $150 billion it will have to spend to purchase digital TV sets or converters for existing analog sets?

The NAB and its allies in Congress and on the FCC also claim the plan is not a giveaway because the FCC is merely "lending" new spectrum while the move to digital is underway, at which point it will reclaim the analog spectrum from the broadcasters. But in view of the immense commercial potential of digital broadcasting in comparison to analog, it is not an even trade. Moreover, it raises the question of why the broadcasters were given the current analog spectrum for free in the first place, while other corporations have had to purchase the right to use non-broadcast spectrum for activities such as wireless telephone communications.

NAB officials answer this question in a couple of ways. First, they claim that unlike other communications firms that use the spectrum, broadcasters do not charge the public for their product. But the public does pay--and dearly-for "free" television. Not only do we have to suffer through 16 to 20 minutes an hour of commercials, but we pay the cost of this advertising in increased product prices. The basic function of commercial broadcasting is to turn viewers into consumers. "We are here to serve advertisers," Westinghouse (owner of CBS) CEO Michael H. Jordan said in a recent interview. "That's our raison d'etre."

Second, the NAB and its allies justify the broadcasters' free use of the spectrum by citing their "public-service" programming. According to this argument, broadcasters provide programming in the public interest that they would never do if, like other kinds of communications firms, they were merely profit-maximizing entities. This was the historical justification for the practice of assigning broadcast licenses at no charge. In the '30s and '40s, broadcasters' "public-service" obligations were satisfied by noncommercial programs on the 40-odd percent of the schedule that advertisers shunned. But by the '60s, advertisers were buying time all day long, and public-service programs pretty much disappeared, except for the boring low-budget talk shows on Sunday mornings and late at night. By the '70s, advertisers bought even these time slots.

The FCC has the authority to require commercial broadcasters to provide time for various forms of public-service programming. Yet the best Hundt was able to do was to include a caveat to the April 3 deal reserving the right for the FCC to develop future public-service regulations for digital broadcasting. In conjunction with the FCC's digital TV plan, President Clinton authorized the formation of a 15person commission to study the matter until July 1998, at which time it will recommend public-service obligations for commercial digital broadcasters.

But it is hard to be optimistic about the chances of this presidential commission doing what Congress and the FCC have not been able or willing to do to date. An example of these "realistic" public-service obligations came in 1996 when the FCC negotiated a deal with commercial broadcasters requiring them to air three hours of children's programming per week. While this might sound like a dramatic gain, the illusion fades when one realizes that these three hours of kids' TV will be advertising-supported. Commercial kids' TV puts selling ahead of all else. As the Wall Street journal observes, some advertisers considered this "educational" deal a potential "marketing bonanza" that will simply increase access to the "littlest consumers."

Moreover, by giving away the digital spectrum before establishing a public interest standard, the FCC has lost most of whatever leverage it might have had in negotiations with the industry. In the current political environment, the only remotely substantive public-service principle under consideration -requiring free air time for political candidates-will probably get through only if it does not damage the billion-dollar-per-election TV political advertising cash cow.

The main alternative to the FCC's digital giveaway, advocated by Sen. McCain and by Bob Dole during his run for president, is the idea of selling the digital spectrum through auctions. This is a good idea as long as the auction is for eight-year leases and not for permanent ownership. That is the current practice, but there is strong momentum on the political right to sell outright this public property in order to generate more immediate revenue.

President Clinton, as part of his own budget-balancing plan, is similarly counting on auctioning off the analog spectrum-now used for broadcasting-when the transition to digital is completed early in the next decade. But selling off spectrum is disastrous public policy. The public's right to control its media and communication system would be permanently sacrificed for a one-time cash infusion. The superior alternative is to lease spectrum, broadcast and non-broadcast alike. In broadcast alone, this would generate $2 billion to $5 billion per year indefinitely, while preserving the right of future generations to determine how to use the spectrum. And because broadcast spectrum is controlled by a handful of corporations, the public must maintain its right to enforce public-interest obligations over these commercial users.

In the near term, the prospect for media reform is dim. There are a handful of excellent media groups that monitor FCC and congressional activities and fight to protect public interest principles: the Center for Media Education, the Renton Foundation, the Minority Media and Telecommunications Council, the Center for Study of Responsive Law, and, perhaps most important, the Media Access Project, to mention some of the more prominent organizations. But there is only so much they can accomplish in the current political climate.

The core problem is that the existing choices are unacceptable. The range of permissible debate must expand beyond the alternatives approved by the NAB and the corporate media. For example, why assume that corporate media giants are entitled to huge slots in the digital future? Even if they get single channels, why must they be given all of them? And why not examine publicly all the alternative uses of digital technology, rather than permitting the media giants to only develop those applications that serve their interests? And why are we limited to devising plans to increase advertising-supported educational programming aimed at kids? In a sane world, the very notion of advertising to children should be subject to withering public debate.

Why not use spectrum fees to establish a fully funded public radio and television system? For $5 billion annually, the United States could generate a noncommercial broadcast system of extraordinary range and quality. (The entire federal subsidy for public broadcasting this year is $260 million.)

These ideas deserve discussion at the open public hearing that the NAB and its allies have done so much to prevent. Yet none of these ideas is getting any attention because of the vise grip the corporate media have over politicians, the FCC and the terms of debate on media issues.

The most important job, then, is to generate public awareness and interest in media issues. (Common Cause has published a superb pamphlet on the digital giveaway, Channeling Influence: The Broadcast Lobby and the $70 Billion Free Ride, that is available on its website, www.commoncause.org.) As long as issues like digital TV are being determined by elites behind closed doors, the nature of the policies is pretty much a foregone conclusion.

The general organizing principle must be to repeal the bankrupt and fraudulent 1996 Telecommunications Act and replace it with a law that provides for citizen participation on the crucial communications issues. Progressives must put media reform at the top of their agenda because without it, the prospects of democratizing our society are slim. Fortunately, many groups expressly committed to this project have blossomed over the past few years, including the Cultural Environment Movement, Fairness & Accuracy in Reporting and the Institute for Alternative journalism, which, among other things, has organized the Media and Democracy Congress. But there is precious little time to waste as the digital window begins to close.

Robert W. McChesney teaches journalism at the University of Wisconsin. He is the author of Corporate Media and the Threat to Democracy (Seven Stories) and co-author, with Edward S. Herman, of The Global Media: The New Missionaries of Corporate Capitalism (Cassell).

Copyright © 1997 The Public Concern Foundation. All Rights Reserved.

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