Mass Communications Law

The FCC establishes the requirements for the licensing of stations and sets up a framework that tries to ensure some competition for licenses. It allows the free market to determine such matters as advertising costs, expenses, cost of equipment, and choice of programming by broadcasters.

In addition to regulating commercial and educational broadcasting, the FCC has pervasive power to govern nonbroadcast use of communications facilities, such as interstate commerce carrier systems, radio systems for truck-to-truck communication, taxicab networks, marine and ship radio, aviation frequencies, citizens band (i.e., CB) radio, international "ham" communication, police and fire communications networks, and cable and satellite television. All radio stations owned and operated by the United States, however, are exempt from regulation by the FCC.

The FCC may not decide whether a particular advertising message is false or misleading. This subject matter is delegated by law to the FEDERAL TRADE COMMISSION (FTC). The FCC can act when a licensee continues to broadcast an advertisement that the FTC has determined to be false and misleading. The FCC does not set advertising rates or oversee ordinary and usual business practices, such as production charges, commission arrangements, and salaries of artists.

Although government regulation of broadcasting appears to conflict with the First Amendment's guarantee of FREEDOM OF SPEECH and FREEDOM OF THE PRESS, such regulation is often justified in terms of the limited number of available broadcast frequencies. Unlike the print media, which can physically coexist in the same community at the same time, broadcasting requires the government to make a choice between two or more potential broadcasters that wish to use the same broadcast space. In broadcasting, two or more radio or television stations cannot physically operate on the same frequency, because neither would be heard. Because it is important to the general public that someone be heard, the FCC must choose who that will be.

The FCC is not always faced with the necessity of choice. Only one broadcaster might apply for a particular open frequency. The FCC must determine, no matter how many applicants, whether a potential broadcaster has the proper qualifications and whether it will operate "in the public interest" before the applicant will be permitted to broadcast.

Licensing

Congress has devised a procedure by which broadcasters are granted an exclusive right or license to broadcast over a particular frequency for a statutory maximum number of years. Under the Telecommunications Act of 1996, new licenses and renewals are granted for eight years. The FCC classifies different types of stations and the particular services they provide, and it assigns the band of frequencies for each individual station. The three sets of broadcast frequencies are the AM band, the FM band, and a third set used for television. Licenses are issued only on a showing that public convenience, interest, and necessity will be served and that an applicant satisfies certain requirements, such as citizenship, character, financial capability, and technical expertise.

Citizenship A noncitizen, foreign government, or corporation of which any officer or director is an alien, or where more than one-fifth of the stock is owned by ALIENS or representatives of foreign governments, may not receive a broadcasting license. These restrictions are mandatory and the FCC may not waive them. Only Congress may pass legislation making an exception to the citizenship rule. There are no similar restrictions on foreign ownership of CABLE TELEVISION systems.

Character Applicants must possess the essential character qualifications of honesty and candor. However, the FCC evaluates the applicant based on information that the applicant provides. The FCC relies on the honesty of applicants because it has neither the staff nor the budget to verify the representations made by license applicants or its licensees. Any intentional MISREPRESENTATION by an applicant will seriously jeopardize the license application, regardless of the significance of the matter.

A license may be denied for violations of CRIMINAL LAW, but disqualification does not automatically occur for minor offenses. An applicant that has been convicted of violating federal regulatory laws in a business not involving communications might have a license application denied because the conviction indicates an intentional disregard for government regulations.

When faced with a choice between an applicant against whom no character question is raised and one who has violated a law, but not one that results in an automatic denial, the FCC is most likely, all other considerations being equal, to grant the license to the non-lawbreaker.

Financial Qualifications An applicant must demonstrate the financial capability to construct and operate the proposed facility for one year. If the person intends to rely on anticipated revenue, he or she must file evidence that these revenues will, in fact, be earned. Such evidence may include affidavits from prospective advertisers indicating their plan to contract with the station for advertising time.

An applicant who wants to buy an existing profit-making station need only show the financial ability to maintain operations without revenues for the first three months. A station that has earned profits in the past is considered to be likely to continue to earn profits in the future. Where a station that is already in financial difficulty is being sold, the applicant-purchaser must demonstrate a capability to produce a profit in the first year of operation.

Technical Expertise A broadcaster must comply with all of the technical requirements imposed by the FCC, such as the use of transmitting equipment that is the type approved by the FCC and the operation of broadcast facilities during the hours appropriate for the frequency sought.

Ownership of More Than One Station Before 1996, the FCC enforced its "multipleownership rule," which restricted persons or entities from acquiring excessive power through ownership of a number of radio and television facilities. The rule was based on the assumption that if one person or company owned most or all of the media outlets in an area, the diversity of information and programming on these stations would be restricted. The rule meant that a single entity could not own more than one station in the same market, such as two AM stations in the same community, or in adjacent communities when the stations' signals would overlap to a certain designated extent. In addition, the FCC restricted the total number of licenses that one entity could own to 12 AM, 12 FM, and seven television stations anywhere in the United States.

The Telecommunications Act of 1996 eliminated the restrictions limiting the number of AM and FM stations that may be owned by one entity nationally. The FCC was directed to reduce the restrictions on locally owned AM and FM stations as well. The act eliminated the restriction on the number of television stations that an entity may own directly or indirectly and increased the ceiling on permissible national audience reach from 25 percent to 35 percent. The FCC was directed to permit entities to have cross-ownership in network and cable systems. The act also removed the prohibition on cable operators from owning or controlling local television broadcast systems.