Diversity is disappearing, diversity is disappearing. That's what chicken little would say, if that harbinger of calamity were to look up and see what the Telecommunications Act of 1996 had done to the radio airwaves, and may very well cause to happen to the cable and satellite industries.

In a nutshell, lack of diversity is about big business controlling the airwaves to keep profits high. Although it's about money, diversity of opinion and culture are at stake. The ramifications of fewer companies controlling larger slices of the airwaves means the minority opinion is squashed and assimilated into the majority. But wait, I get ahead of myself. We need to look at how it happened and the ramifications to other news/entertainment mediums, including the Web.

The Telecom Act of 1996 was portrayed by its backers as a way to allow Baby Bell phone companies to get into the long-distance business, promote competition, and deregulate cable rates. In all, the Telecom Act's list of initiatives covered nearly 200 pages of legislation. One of those initiatives lifted all ownership limits for radio station broadcasters nationwide and allowed them to operate as many as eight signals in the country's largest markets. Previously, broadcasters could own just 40 stations nationally, and only two in a given market.

Initially, the 1996 Telecommunications Act was introduced to address and rewrite out-dated laws in the telecom industry to allow America to better compete in the global market. In its original presentation, radio and television revisions were minimal. Proponents claimed that eliminating the limit on the number of stations one company could own and control would increase the number of radio formats, and allow stations to better serve their communities.

Since the passage of the Telecom Act, 10,000 radio station transactions worth approximately $100 billion have taken place, according to BIA Financial Network. As a result, there are 1,100 fewer station owners in the business today, down nearly 30 percent since 1996. The largest operator, Clear Channel Communications owns nearly 1,200 stations. Radio mergers since 1996 have reduced the ownership down to four main players. Of those four, Clear Channel and Infinity Broadcasting control one-third of all radio advertising revenue.

Now, the FCC wants to relax rules regarding the newspaper-broadcast cross-ownership ban. Both the National Association of Broadcasters and the Newspaper Association of America support the bill. There are also some broadcasters in favor of raising the TV ownership audience cap from 35% to 50% and even higher.

The Congress may use the perceived success or failure of the radio industry as the basis for allowing cross ownership and deregulation of TV stations and newspapers. You can be sure that some of the nation's largest television station owners, as well as newspaper publishers, are lobbying Congress for a similar deregulation that radio got in the Telecom Act. The TV station owners and newspaper publishers will certainly want to own stations and newspapers in the same market, and will want congress to lift the cap on the number of individual TV stations one company can own.

Fortunately, there are some senators that do not want to repeat the mistakes made with Telecom Act of 1996. Sen Fritz Hollings (Democrat SC) the chairman of the Senate Commerce Committee wants there to be competition through media diversity and he insists that government should protect the public trust. He proposed an 18-month moratorium on any changes in the FCC's cross-ownership rule. His bill would require the FCC to report to Congress any attempts to change the media ownership rules.

Is there anything inherently wrong or misguided about near total ownership of a market? The obvious answer is yes because our laws do not allow monopolies and restriction of competition (okay so the laws are not always enforced). Another reason particular to radio and television, which is in their charters, has to do with serving the needs of a community. For example, if one company owns hundreds of radio stations, they could provide programming that is served by one radio personality who does not live in any of those towns and therefore does not have any real connection to those towns. You would not receive local information, news or even weather from these stations. The greater good of a community would not be served, especially if something very specific like a severe weather pattern came barreling down on the city catching its residents unaware - because no local services were provided.

Since the FCC is charged with regulating the nation's telecom industry, including radio, TV, telephone, wireless and satellite it must move cautiously. It has indicated that it will wait for the outcome on ownership caps that is presently before the US Court of Appeals in Washington DC.

Changes to the ownership rules have been slowed but waivers are given. For example, the FCC voted to grant a waiver allowing Rupert Murdoch's News Corp. to purchase 10 Chris-Craft Industries television stations, which made Murdoch's television group the largest in the nation. Murdoch also owns Sky News Global Networks, the world's largest satellite television company. The company has a bid to purchase the Hughes Corporation's (owned by GM) DirecTV. The deal fell through and EchoStar, the number two U.S. satellite provider, got the nod - for $26 billion, and an investigation from congress about being a monopoly.

Both Murdoch and EchoStar are convinced that satellite is the answer to cable competitors (such as AOL Time Warner), as well as the foundation for the coming interactive television revolution. Critics are concerned that the DirecTV deal would give Murdoch or EchoStar dictatorial powers over the country's news and information flow. Broadcast satellite has been cable TV's biggest competitor. Would that still be the case if its largest player, DirecTV, were owned by a company with vast cable holdings, such as News Corporation? Senator John McCain Republican chairman of the Senate Commerce Committee announced that when the satellite merger is finalized, he will hold hearings to explore any anti-competitive implications.

Finally, there is the Web. The big names include AOL and Microsoft. AOL has the subscribers and the NetScape browser while Microsoft has the operating system and the Explorer browser. Since Microsoft controls the operating system and Web browser that most of us use, they can make their software so that it will help drive users to its Web sites as well as its partner sites. For more on this read "Microsoft -Threat or Menace?" by ChipCenter's senior editor, Lee Goldberg. I have two opposing thoughts about Microsoft. The first is that it is better for the user to have only one operating system that interacts with their application programs. The other is that lack of competition or monopolistic behavior has never been a long-term good idea for customers. Or, said differently, it's bad to have only one operating system that interacts with your application programs.

As I'm sure you know, Microsoft just released its latest operating system - Windows, XP - and already it is embroiled in accusations of unfair business behavior. One accusation is about Smart Tags which is part of Office XP. This tool automatically adds new links to documents. Sounds benign and even useful, until you find out that you don't choose where on the Internet these links point; Microsoft decides for you. The XP operating system supposedly will extend these Smart Tags to the Web browser, essentially bypassing the Web site operator's assumed right to decide where links point. Microsoft says that Smart Tags don't look like other links, and maybe they will be turned off by default, and maybe it will be easy for sites to override them.

Microsoft's XP will also integrate its instant-messaging service to take on AOL's dominance in this arena. And XP offers something the company calls Passport, which is a service for storing personal information, such as credit card numbers and passwords. Some observers think that Passport will put Microsoft in a position to get a piece of online transactions, and increase their control of online users. The only way out will be to use a different operating system, such as Linux or Apple.

The curious aspect to me is that all this control by a few companies is not complemented by service to the customer. I have never understood why people continue to use AOL as an Internet service provider when it is difficult to get online and even more difficult to stay connected. That has been a continuous AOL problem for at least five years and yet the company remains the largest ISP. All it would take for them to correct the situation would be for a large mass of customers to choose another provider. In the 60s we said "power to the people" and today's version migh be "power to the consumer".

Vote in the Poll

Analog Main | Product of the Week | Columns | Editorial | Tech Notes

		Click here to get your listing up.