CONTENTS

Preface xxv Acknowledgments xxix About the Authors xxxi

PART I Introduction 1

CHAPTER 1 The Electromagnetic Spectrum: What Is Spectrum and Why Regulate Its Use? 3 I. Harnessing the Electromagnetic Spectrum to Communicate 3 II. Regulating and Licensing Spectrum Use 4 A. Development of Radio Regulation 4 B. Spectrum Scarcity: The Communications Act of 1934 Public Interest Standard 5 National Broadcasting Co. v. United States 5 Notes and Questions 12 III. Spectrum 101 14 A. What Is Spectrum? 14 B. The Nature of Spectrum 14 C. Spectrum Allocation 19

CHAPTER 2 From Telegraph to Broadband: A Brief History 23 I. Public Interest 23 II. Nineteenth-​Century Communications Developments 24 A. and Matrimony (1837) 24 B. Market Definitions 25 1. The First Phase of the Patent Wars: 1876-​1899 Market Foreclosure 25 2. Local Versus Long-​Distance Communication (1879) 25 3. The Second Phase of the Patent Wars 26 4. Local Exchange Franchises 26 III. Early Twentieth-​Century Developments 26 A. If You Can’t Manage the Market, Manage the Regulators 26

xi xii Contents

B. Universal Service and Utility Regulation 27 C. Accept Regulation and Keep the Monopoly (1913) 28 IV. AT&T Establishes a Monopoly 29 A. The Communications Act (1934) 29 1. Rate of Return Regulation 30 2. The Vertically Integrated AT&T 30 3. Cross-Subsidies​ and Universal Service 31 V. The Second Wave of Competition 31 A. Interconnection and Customer Premises Equipment 31 B. Long-​Distance Competition 32 VI. and Computer Convergence 33 A. Computer II 33 B. The Modification of Final Judgment 33 C. Post-​Divestiture Competition 34 VII. Technology and Competition 34 VIII. Collapse of the Long-​Distance/​Local Market Distinction 35 IX. The and Internet Protocol 35 X. Competition in the Local Market and the Act of 1996 36 XI. Internet Protocol, Broadband, and Intermodal Competition 37 A. Regulating Broadband 39 B. The Impact of VoIP 39 Notes and Questions 40 XII. The Federal Communications Commission 41 A. The Commission’s Rulemaking Process 43

CHAPTER 3 FCC License Transfer Applications: Comparing the Public Interest and Antitrust Law Standards 45 I. FCC License Transfer Application and Construction Permit Standards 45 II. Antitrust Merger Standards and Jurisdiction 54 A. DOJ and FTC Antitrust Merger Standards 54 B. DOJ and FTC Horizontal Merger Guidelines: Key Concepts 58 1. Evidence of Adverse Competitive Effects 58 2. Product Market Definition 59 3. Geographic Market 60 4. Market Participation 61 5. Market Shares 61 6. Market Entry 62 7. Calculating Market Concentration: The Herfindahl-​Hirschman Index 63 8. Considerations Regarding the Firm to Be Acquired in a Merger or Transaction 64 9. Evaluating a Merger’s Potential Consequences 65 10. Sources of Evidence 66 Notes and Questions 67 Contents xiii

PART II Broadcasting, Spectrum Regulation, the Public Interest, Technological Convergence and Competition, and the Transition to the Internet 69

CHAPTER 4 Regulating Broadcast Licensees in the Public Interest 71 I. Scope of FCC Authority to Regulate Broadcasters in the Public Interest 71 A. Spectrum Scarcity and Public Interest Regulation of Broadcasting 72 Red Lion Broadcasting Co. v. Federal Communications Commission 72 Notes and Questions 77 B. Public and Broadcaster Rights in Spectrum 77 Columbia Broadcasting System, Inc. v. Democratic National Committee 77 Notes and Questions 81 II. Constitutional Framework for Spectrum and Speech Regulation 82 A. Contrasting Broadcast Regulation and Newspaper Publishing Legal Standards 82 Miami Herald Publishing Company v. Tornillo 82 Notes and Questions 85 B. Constitutional Limits of FCC Regulations of Classes of Speech or Speakers 86 Federal Communications Commission v. League of Women Voters of California 86 Notes and Questions 92 III. Public Standing and the Public Interest in Communications Regulation 93 A. Public Standing in FCC Proceedings 93 Office of Communication of the United Church of Christ v. Federal Communications Commission (1966) 93 Notes and Questions 99 B. The Public Interest Standard for FCC License Renewal 101 Office of Communication of the United Church of Christ v. Federal Communications Commission (1969) 101 Notes and Questions 104 C. Service to the Broadcaster’s Community of License and the Public Interest Standard 105 Notes and Questions 106 IV. Localism and the Public Interest 107 Notes and Questions 107 Project: Comparing Sources of Local News Coverage 109 xiv Contents

CHAPTER 5 Promoting Democratic Dialogue in the Public Interest 111 I. Overview 111 A. Fostering Diversity for Democratic Dialogue 111 B. Promoting Coverage of Controversial Issues of Public Importance and Airing of Opposing Viewpoints: Fairness Doctrine Litigation and Legacy 112 C. The Personal Attack and Political Editorial Rules 114 D. Financial Syndication and Prime Time Access Rules 114 E. Political Broadcasting Statutes and Rules 116 F. The Relationship Between Legal and Regulatory Constructs, the Media Environment, and Democratic Debate 116 II. The Fairness Doctrine’s Rise, Fall, and Legacy 117 A. Fairness Doctrine Origin and Overview 117 B. Fairness Doctrine, Paramount First Amendment Rights of Viewers and Listeners, and the Public Interest 118 Red Lion Broadcasting Co. v. Federal Communications Commission 119 Notes and Questions 121 C. The Fairness Doctrine and the Public Interest 122 Syracuse Peace Council v. Federal Communications Commission 122 Notes and Questions 128 D. The Fairness Doctrine and the Marketplace Model: Arkansas AFL-​CIO v. FCC 130 Arkansas AFL-​CIO v. Federal Communications Commission 130 Notes and Questions 133 III. The Broadcaster as Public Trustee Versus the Marketplace Model 135 A. The Marketplace Model Based on Market Interest 135 B. Broadcaster as Trustee Model 136 Notes and Questions 137 IV. Fake News, Falsehoods, and Media Disinformation 138 Project: Media Exposure Diversity 140 V. Political Broadcasting and Over-the-​ ​Air Broadcasters 141 A. Broadcasters’ Statutory Requirements to Provide Access to the Airwaves to Legally Qualified Federal Political Candidates Before Primary and General Elections 141 B. Political Broadcasting Obligation 141 Notes and Questions 142 C. Equal Opportunities for Legally Qualified Federal, Local, and State Candidates for Access to Broadcast, Cable, and Satellite Air Time 143 Notes and Questions 145

CHAPTER 6 Regulating Indecent, Profane, or Obscene Speech 147 I. Contrasting Constitutional Standards for Broadcasting, Cable, Telephone, and Internet Regulations of Indecent Conduct to Protect Children 147 Contents xv

A. Introduction 147 B. Statutory Prohibitions on Broadcast of Obscene, Indecent, or Profane Language 147 C. Obscene Speech: Do We Know It When We See It? 148 D. Regulation of Indecent Speech: Regulatory Distinctions from Broadcasting to the Internet 151 II. Regulating Indecency on Radio and Broadcasting 152 A. Standards for Regulating Indecency in Broadcasting 152 Federal Communications Commission v. Pacifica Foundation 152 Notes and Questions 158 B. Time Channeling: Reasonable Time, Place, and Manner Regulation 160 Notes and Questions 161 C. Standard Shift: Patently Offensive as Measured by Contemporary Community Standards for the Broadcast Medium 161 Federal Communications Commission v. Fox Television Stations (Fox II) 164 Notes and Questions 167 D. Regulation of Fleeting Visual Indecency on Broadcast Media and Notice Issues 168 CBS v. Federal Communications Commission 168 Notes and Questions 170 III. Constitutional Limits on Regulation of Indecency on Cable 170 United States v. Playboy Entertainment Group, Inc. 171 Notes and Questions 171 IV. Constitutional Limits on Regulation of Indecency on the Internet 172 A. Attempts to Regulate Indecency on the Internet, and Immunities for Internet Service Providers 172 Reno v. American Civil Liberties Union 173 Notes and Questions 181 B. The Children’s Online Protection Act 181 Ashcroft v. American Civil Liberties Union 181 Notes and Questions 185 C. Regulating Indecency Through Federal Spending Constraints 186 United States v. American Library Association, Inc. 186 Notes and Questions 190 D. and Judicial Recognition of the Internet’s Role in Society 190 E. Immunities for Interactive Computer Service Providers for Content Created by Third Parties as Compared to Content Creator Liability 191 xvi Contents

CHAPTER 7 Speech Beyond the First Amendment’s Boundaries 193 I. Introduction: Legal Tests for Speech Beyond the First Amendment’s Boundaries 193 A. Tort Theories of Defamation as a Constraint on Broadcast Speech 193 B. Defamation 194 C. Libel 198 D. Conclusion 200 Notes and Questions 200 Problem: Defining a Limited Public Figure 200 II. Speech Outside the Boundary of First Amendment Protection 202 A. Introduction to Jurisprudence Regarding Fighting Words, Incitement to Imminent Lawless Action, and True Threats 202 B. Fighting Words 202 C. Hate Speech and the First Amendment 203 D. Incitement to Imminent Lawless Action 205 E. True Threats 207 Notes and Questions 210 Problem: Defining True Threats 211

CHAPTER 8 Broadcast Regulation: Access to FCC Licenses 213 I. Overview of FFC License Standards and Process 213 II. FCC License Standards Under the Communications Act of 1934 215 A. Overview of Licensing Spectrum in the Public Interest 215 B. Broadcast License Renewal Standards 215 C. FCC License Grant Factors, Standards, and Process 216 Federal Communications Commission v. Sanders Brothers Radio Station 216 Notes and Questions 218 III. Comparative Hearings to Allocate FCC Licenses 218 Ashbacker Radio Corporation v. Federal Communications Commission 218 Notes and Questions 220 A. Diffusion of FCC License Control, Ownership Diversification, and the Public Interest in Spectrum Licensing 221 TV 9, Inc. v. Federal Communications Commission 221 Notes and Questions 224 B. Promoting Diversity of Voices and Viewpoints Through Policies to Promote Minority Ownership of FCC Licenses: Metro Broadcasting v. FCC 226 Metro Broadcasting, Inc. v. Federal Communications Commission 227 Notes and Questions 241 Contents xvii

C. FCC Licensing and Consolidation Policies and Ownership Diversification 243 Sandoval, Minority Commercial Radio Ownership in 2009: FCC Licensing and Consolidation Policies, Entry Windows, and the Nexus Between Ownership, Diversity and Service in the Public Interest 243 Notes and Questions 246 D. Promoting Ownership of FCC Licenses by Women: FCC Standards and Policies 247 Lamprecht v. Federal Communications Commission 247 Notes and Questions 254 E. Comparative Hearings Factor: Integration of Ownership into Management and Operations 255 Bechtel v. Federal Communications Commission 255 Notes and Questions 257 F. Accessing FCC Licenses Through Lotteries 258 IV. Access to Licenses Through FCC Auctions 258 A. Auctions Overview 258 Notes and Questions 260 B. Broadcast Incentive Auction Authorized by the Spectrum Act of 2012 261 Notes and Questions 262

CHAPTER 9 FCC License Transfer Case Studies: Comparing Public Interest and Antitrust Law Standards 265 I. FCC License Transfer Standards: Comparing Communications Law Public Interest and Antitrust Law Competition Standards 265 II. FCC License Transfer Application Video Market Case Studies 267 A. Sinclair/​Tribune, 2017-​2018 267 1. Transaction Facts and FCC Hearing Designation Order, July 2018 267 Notes and Questions 270 2. EchoStar/DirecTV​ License Transfer Application: Market Definition and Public Interest Issues 271 Hearing Designation Order 271 Notes and Questions 283 III. The Public Interest Test for FCC License Transfers in Vertical and Horizontal Markets 285 A. Are Behavioral Remedies Sufficient to Protect the Public Interest? 285 In the Matter of Applications of Comcast Corporation, Corporation, and NBC Universal, Inc. for Consent to Assign Licenses and Transfer of Control 286 Notes and Questions 301 xviii Contents

IV. The Wireless Telecommunications and Internet Markets: Spectrum Concentration, the Public Interest, and Notice of Intent to Request a Hearing Designation 302 A. AT&T/​T-​Mobile, 2011, FCC License Transfer Application Analysis 302 Notes and Questions 305 B. The Sprint/​T-​Mobile 2019 License Transfer Approval Order and the FCC’s Proposed Extension of DISH’s Licenses 307 1. Standard for Analyzing a Proposed License Transfer’s Competitive Effects 309 Notes and Questions 310 2. Issues Raised by FCC Comment Process Regarding DISH Agreements with T-Mobile​ and Spring and DISH’s Request for License Extension 311 Notes and Questions 312 3. Issues Raised by the FCC’s Failure to Request Comment on DISH’s Request to Extend Its Licenses and the FCC’s Characterization of DISH’s Letter as a Request for License Modification, Which Limits Public Comment 313 Notes and Questions 313

CHAPTER 10 Media Ownership Regulation Following the Telecommunications Act of 1996 315 I. The Telecommunications Act of 1996 and FCC Quadrennial Reviews of Media Ownership Rules 315 A. Fox Television Stations v. FCC, 2002 316 Fox Television Stations, Inc. v. Federal Communications Commission 316 Notes and Questions 324 II. The FCC’s Media Ownership Reviews and the Prometheus Radio Project Docket 326 A. The 2002 Media Ownership Review, Prometheus I 326 Prometheus Radio Project v. Federal Communications Commission (Prometheus I) 326 Notes and Questions 339 B. The 2007 Media Ownership Review Proceeding, Prometheus II 340 Prometheus Radio Project v. Federal Communications Commission (Prometheus II) 340 Notes and Questions 348 C. The 2014 Media Ownership Review, Prometheus III 349 D. The 2016 Media Ownership Review and 2018 Incubator Order, Prometheus IV 350 Prometheus Radio Project v. Federal Communications Commission (Prometheus IV) 350 Notes and Questions 354 Contents xix

PART III Cable Regulation, the Public Interest in Technological and Market Evolution, Competition, and Convergence 355

CHAPTER 11 Cable’s History of Entrepreneurship, Market Evolution, Regulation, and Technological Innovation 357 I. Introduction 357 II. Entrepreneurship and Market Evolution 357 III. Early FCC Attempts to Regulate Cable 359 IV. Evolution of the Cable Market and Business Model 361 V. Modern Cable Markets and Regulation 362 VI. Cable, , and Television 365 VII. The Technology Behind Cable 366

CHAPTER 12 Grappling with Regulation 369 I. Introduction 369 United States v. Southwestern Cable Co. 370 Notes and Questions 373 II. The Limits on Ancillary Jurisdiction 374 Problem 375 Notes and Questions 375 III. The Cable Act of 1984 376

CHAPTER 13 Access to the Market and Access to Infrastructure 381 I. Introduction 381 II. Cable Access to Market 382 A. Municipal Franchises 385 City of Los Angeles v. Preferred Communications, Inc. (Preferred II) 388 City of Los Angeles v. Preferred Communications, Inc. (Preferred III) 390 Notes and Questions 393 III. Cable Access to Municipal and Private Rights-of-​ ​Way 394 Federal Communications Commission v. Florida Power Corp. 397 Notes and Questions 400 National Cable & Telecommunications Ass’n, Inc. v. Gulf Power Co. 401 Notes and Questions 404 xx Contents

CHAPTER 14 The Franchise Authorities and the Franchise Process 407 I. Introduction 407 II. The FCC Takes a Role in the Franchising Process 408 In the Matter of Implementation of Section 621(a)(1) of the Cable Communications Policy Act of 1984 as Amended by the Consumer Protection and Competition Act of 1992 408 Notes and Questions 411

CHAPTER 15 Cable Access to Content 415 I. Introduction 415 II. Cable Copyright Issues 415 Notes and Questions 419 III. The Fortnightly and Teleprompter Aftermath 420 IV. The FCC Changes Its Mind 422 Notes and Questions 424 Project 424 V. Syndex Redux? Rebroadcast Consent 425

CHAPTER 16 Reverse Access 427 I. Introduction 427 Turner Broadcasting System, Inc. v. Federal Communications Commission (Turner I) 428 Notes and Questions 432 II. Must-​Carry Rules Revisited 434 Turner Broadcasting System, Inc. v. Federal Communications Commission (Turner II) 434 Notes and Questions 437 III. Must-​Carry and Retransmission Consent 438 Note and Questions 440

CHAPTER 17 Cable Rate Regulation 441 I. Introduction 441 II. Cable Rate Regulation 442 A. Cable Rate Levels After the FCC Authority Sunset 446

CHAPTER 18 Cable Operating in the Public Interest 447 I. Introduction 447 II. Redlining, Franchise Authorities, and the Franchise Process 448 Notes and Questions 449 III. Public, Educational, and Governmental Channels 450 IV. Leased Access 452 Notes and Questions 455 Contents xxi

PART IV Telephone Regulation, the Public Interest, Universal Service, Technological Evolution, Competition, Convergence, and Information Technologies 457

CHAPTER 19 The Modification of Final Judgment 459 I. The Breakup of AT&T 459 A. Customer “Foreign Equipment” Attachments 459 B. Legalization of Foreign Equipment Interconnection 460 C. Part 68 Rules 460 II. The Modification of Final Judgment 461 United States of America v. American Telephone & Telegraph Company 461 Notes and Questions 468

CHAPTER 20 Competition in the Long-​Distance Market 469 I. Introduction 469 Policy and Rules Concerning Rates for Competitive Common Carrier Services and Facilities Authorizations Therefor, First Report and Order 469 Notes and Question 481 II. Thanks, But No Thanks 481 MCI Telecommunications Corp. v. Federal Communications Commission 481 Notes and Questions 486 III. Leveling the Playing Field 486 In the Matter of Motion of AT&T to Be Reclassified as a Non-​Dominant Carrier 486 Notes and Questions 495

CHAPTER 21 Convergence and Competition Between Telephone and Computer Networks 497 I. Introduction 497 II. The Computer Inquiries 497 III. Challenge to FCC Regulation 499 California v. Federal Communications Commission 499

CHAPTER 22 Telephone and Cable Competition in Video Distribution 513 I. Introduction 513 II. Video Dialtone 514 xxii Contents

National Cable Television Association, Inc. v. Federal Communications Commission 514 Chesapeake & Potomac Telephone Company of Virginia v. Federal Communications Commission 520 III. Open Access 531 Telecommunications​—​Technological and Regulatory Factors Affecting Consumer Choice of Internet Providers 532 AT&T Corporation v. City of Portland 534 Notes and Questions 540

CHAPTER 23 Local Market Voice Competition: Wireless Versus Wireline 543 I. Introduction 543 II. Spectrum Allocation and Market Entry 544 National Association of Regulatory Utility Commissioner (NARUC) v. Federal Communications Commission 544 III. Mobile Telephone Arrives 549 An Inquiry into the Use of the (Spectrum) Bands 825-845​ MHz and 870-​890 MHz for Cellular Communications Systems 551 Notes and Questions 558 Amendment of the Commission’s Rules to Allow the Selection from Among Mutually Exclusive Competing Cellular Applications Using Random Selection or Lotteries Instead of Comparative Hearings 559 Implementation of Section 309(j) of the Communications Act​—​ Competitive Bidding 567 Notes and Questions 570

CHAPTER 24 Mergers and Acquisitions, Expansion and Bypass 571 I. Introduction 571 II. Mergers and Acquisitions 572 England-​Joseph, Telecommunications​—​Process By Which Mergers of Local Telephone Companies Are Reviewed 572 In re Applications of Pacific Telesis Group and SBC Communications, Inc. for Consent to Transfer Control of Pacific Telesis Group and Its Subsidiaries 575 Notes and Question 581 In the Matter of Applications for Consent to the Transfer of Control of Licenses and Section 214 Authorizations from Tele-Communications,​ Inc., Transferor to AT&T Corp. 581 Notes and Questions 598 III. “Opening” the Local Market 598 Covad Communications Company v. Federal Communications Commission 598 Notes and Questions 610 Earthlink, Inc. v. Federal Communications Commission 611 Contents xxiii

IV. Entering the Long-​Distance Market 619 A. Section 271 Authorization 619 SBC Communications Inc. v. Federal Communications Commission 620 B. Market Consolidation 631 SBC Communications Inc., Telephone Company, and Communications Services Inc., for Authorization to Provide In-​Region, InterLATA Services in California 632 Notes and Questions 635

CHAPTER 25 Internet Regulation 637 I. A Tale of Two 637 U.S. Telecom Association v. Federal Communications Commission and United States of America 637 Notes and Questions 647 Restoring Internet Freedom, Order Declaratory Ruling, Order, Report and Order 648

Glossary 653 Table of Cases 665 Index 669