Federal Communications Commission

In a sweeping overhaul of the Communications Act of 1934, Congress passed the Telecommunications Act of 1996 (47 U.S.C.A. § 51 et seq.) in February 1996. The legislation was designed to deregulate the $500-billion-per-year telecommunications industry and to encourage competition, thus freeing telephone companies, broadcasters, and cable television operators to enter one another's markets in order to secure lower prices and higher-quality services for U.S. consumers. Critics of the legislation charged that it would increase the cost of cable TV and telephone service and would encourage monopolization of the media. Supporters of the legislation claimed that it would foster competition and make available new services such as advanced wireless communications, home banking, and interactive television. By 2002, both sides could claim that parts of their predictions had come true.

Critics of the act have noted that the cable television industry has gone through a steady stream of MERGERS AND ACQUISITIONS, resulting in just a few major cable companies dominating the cable industry in the United States. Cable bills have steadily risen since the passage of the 1996 act. Advocates of deregulation point out that wireless communication has continued to grow in a competitive marketplace and that consumers have more choices and lower costs. As for radio, critics have charged that the relaxation of ownership rules by the FCC has resulted in the acquisition of many stations in one market by just one company. As a consequence, local programming has given way to national programming for entire radio chains.

The 1996 act contained provisions that went beyond deregulation to include restrictions on the distribution of indecent material. For example, Title V of the act, known as the Communications Decency Act of 1996 (CDA) (47 U.S.C.A. § 223(a)–(h)), forbade the transmission of indecent material over computer networks such as the INTERNET unless steps were taken to keep the material away from children, and required that new television sets be equipped with an electronic block that would allow viewers to prevent children from viewing objectionable programming. In February 1996, two separate actions were filed in U.S. district court in Philadelphia challenging the constitutionality of the CDA. The first suit, ACLU v. Reno, No. Civ.A. 96-963, 1996 WL 65464 (E.D. Pa.), was filed by the AMERICAN CIVIL LIBERTIES UNION and 19 other plaintiffs. The second action, American Library Ass'n v. United States Department of Justice, No. Civ. A. 96-1458 (E.D. Pa.), was brought by the American Library Association and 26 other plaintiffs. The other plaintiffs in both actions included civil libertarians, computer businesses, online services, newspapers, and librarians.

The lawsuits were consolidated for hearing before a special three-judge panel, authorized under the CDA and consisting of two federal district court judges and the chief judge of the U.S. Court of Appeals for the Third Circuit. The plaintiffs sought a preliminary injunction to prevent enforcement of the CDA pending the outcome of a trial of their lawsuit. They challenged section 223 of the CDA, which states, in part, that any person in interstate or foreign communications who "by means of a telecommunications device knowingly … makes, creates, or solicits and … initiates the transmission of … any comment, request, suggestion, proposal, image, or other communication which is obscene or indecent, knowing the recipient of the communication is under 18 years of age" may be fined or imprisoned. In addition, section 223 makes it a crime to use an "interactive computer service" to transmit to persons under 18 years of age any material that, in context, "depicts or describes, in terms patently offensive as measured by contemporary community standards, sexual or excretory activities or organs, regardless of whether the user of such service placed the call or initiated the communication." The plaintiffs argued that the CDA violates the FIRST AMENDMENT because it bans a substantial category of protected speech from most parts of the Internet. The government responded that shielding minors from access to indecent materials is a compelling interest that justifies the restrictions imposed by the act.

The court noted that the CDA was not narrowly tailored to further the government's interest in protecting minors, noting that "it is either technologically impossible or economically prohibitive for many of the plaintiffs to comply with the CDA without seriously impeding their posting of online material which adults have a constitutional right to access." According to the court,

The Internet is a far more speech-enhancing medium than print…. Because it would necessarily affect the Internet itself, the CDA would necessarily reduce the speech available for adults on the medium. This is a constitutionally intolerable result….As the mostparticipatory form of mass speech yet developed, the Internet deserves the highest protection from governmental intrusion. The court granted the plaintiffs' request for a preliminary injunction to prevent enforcement of the disputed sections of the CDA pending trial (Reno, 929 F. Supp. 824 [E.D. Pa. 1996]).

In another lawsuit, Playboy Entertainment Group, owner of the Playboy cable television channels, challenged the act's requirement that cable companies block audio and video transmissions of sexually explicit programs. Section 561 of the act states, in part,

In providing sexually explicit adult programming or other programming that is indecent on any channel of its service primarily dedicated to sexually-oriented programming, a multichannel video programming distributor shall fully scramble or otherwise fully block the video and audio portion of such channel so that one not a subscriber to such channel or programming does not receive it.

In Playboy Entertainment Group v. United States, 918 F. Supp. 813 (D. Del. 1996), the district court issued a TEMPORARY RESTRAINING ORDER blocking the enforcement of section 561. Playboy had argued that the blocking and time requirements imposed on cable operators violated the First Amendment and EQUAL PROTECTION. When Playboy applied for an injunction, the same court dissolved the RESTRAINING ORDER and upheld the law. On appeal, the U.S. Supreme Court affirmed.

The pace of deregulation by the FCC continued through 2002, with the promise of more consolidation of companies in the cable, broadcast, radio, and telecommunications sectors.