The U.S. federal government has long had its hand in media regulation. Media in all their forms have been under governmental jurisdiction since the early 1900s, when experts started becoming aware of the effects that wire- and radio-based communication would have on commerce, national security, and citizen safety. Since that time, regulatory efforts have transformed as new forms of media have emerged and expanded their markets to a larger audience.

In the early 20th century, two important U.S. regulatory agencies appeared. Under the auspices of the federal government, these agencies — the Federal Trade Commission (FTC, founded in 1914), and the Federal Communications Commission (FCC, founded in 1934) — have shaped American media and their interactions with both the government and audiences. This section describes the origin, purpose, and current function of each agency.

Federal Trade Commission

The first stirrings of the FTC date from 1903, when President Theodore Roosevelt created the Bureau of Corporations to investigate the practices of increasingly larger American businesses. In time, authorities determined that an agency with more sweeping powers was necessary. On September 26, 1914, the FTC came into being when President Woodrow Wilson signed the FTC Act into law, creating an agency designed to “prevent unfair methods of competition in commerce” (ftc.gov). From the beginning, the FTC absorbed the work and staff of the Bureau of Corporations, operating in a similar manner, but with additional regulatory authorization. In the words of the FTC,

Like the Bureau of Corporations, the FTC could conduct investigations, gather information, and publish reports. The early Commission reported on export trade, resale price maintenance, and other general issues, as well as meat packing and other specific industries. Unlike the Bureau, though, the Commission could…challenge “unfair methods of competition” under Section 5 of the FTC Act, and it could enforce…more specific prohibitions against certain price discriminations, vertical arrangements, interlocking directorships, and stock acquisitions (Federal Trade Commission).

Role of Antitrust Legislation

Since the late 19th century the federal government has sought to encourage competition in certain consumer markets – including  by regulating aspects of companies’ business practices. Most notably, it has tried to discourage the formation of monopolies by passing several antitrust acts.

During the 1880s, Standard Oil was the first company to form a trust (a unit of business made up of a board of trustees, formed to monopolize an industry), an “arrangement by which stockholders…transferred their shares to a single set of trustees. (Our Documents, 1890). With corporate trustees receiving profits from the component companies, Standard Oil functioned as a monopoly (a business that economically controls a product or a service). The Sherman Antitrust Act was put into place in 1890 to dissolve trusts such as these. The Act stated that any combination “in the form of trust or otherwise that was in restraint of trade or commerce among the several states, or with foreign nations” was illegal (Our Documents, 1890).

The Sherman Antitrust Act served as a precedent for future antitrust regulation. The 1914 Clayton Antitrust Act and the 1950 Celler-Kefauver Act expanded on the principles laid out in the Sherman Act. The Clayton Act helped establish the foundation for many of today’s business and media competition regulatory practices. Although the Sherman Act established regulations in the United States, the Clayton Act further developed the rules surrounding antitrust, giving businesses a “fair warning” about the dangers of anticompetitive practice (Gongol, 2005). Specifically, the Clayton Act prohibits actions that may “substantially lessen competition or tend to create a monopoly in any line of commerce” (Gongol, 2005).

The problem with the Clayton Act was that, while it prohibited mergers, it offered a loophole in that companies were allowed to buy individual assets of competitors (such as stocks or patents), which could still lead to monopolies. Established in 1950 and often referred to as the Antimerger Act, the Cellar-Kefauver Act closed that loophole by giving the government the power to stop vertical mergers. (Vertical mergers happen when two companies in the same business but on different levels—such as a tire company and a car company—combine.) The act also banned asset acquisitions that reduced competition (Financial Dictionary).

These laws reflected growing concerns in the early and mid-20th century that the trend toward monopolization could lead to the extinction of competition. Government regulation of businesses increased until the 1980s, when the United States experienced a shift in mind-set and citizens called for less governmental power. The U.S. government responded as deregulation became the norm.

The Structure and Purposes of the FTC

As we’ll see in the next section, the Federal Communications Commission (FCC) provides most of the nation’s media regulations. However, the FTC also has a hand in regulating the media industry. As previously discussed, the FTC primarily dedicates itself to eliminating unfair business practices, but in the course of those duties it has limited contact with media outlets.

Since the early 1980s, the United States government has become increasingly business-friendly, including within regulatory bodies such as the FTC. An unsettling example of this trend was the FTC Improvements Act (1980), a Regan-era piece of legislation that affected several industries, including media. In the late 1970s, advised by a task force of experts on children’s health and psychology, the FTC was considering restrictrictions to the televised marketing of sugared products to children. Since children have limited ability to understand the purpose of advertising, the Commission reasoned that such ads qualified as an unfair and deceptive practice affecting commerce (prohibited under the original FTC Act). This proposal drew the attention of food and beverage producers, who pressured Congress to intervene. The result of their influence, the FTC Improvements Act, states that “The Commission shall not have any authority to promulgate any rule in the children’s advertising proceeding…on the basis of a determination by the Commission that such advertising constitutes an unfair act or practice…affecting commerce” (Beales, 2004). In short, although marketing sugary food and drink to children has a detrimental effect on their health, the FTC’s ability to protect them as consumers was effectively removed.

A more recent One example of the FTC’s media regulatory responsibility is the National Do Not Call Registry. In 2004, the agency created this registry to prevent most telemarketing phone calls, exempting such groups as nonprofit charities and businesses with which a consumer has an existing relationship. Although originally intended for landline phones, the Do Not Call Registry allows individuals to register wireless telephones along with traditional wire-based numbers.

Federal Communications Commission

Since its creation by the Communications Act of 1934, the FCC has been “charged with regulating interstate and international communications by radio, television, wire, satellite and cable” (fcc.gov). Part of the New Deal—President Franklin D. Roosevelt’s Great Depression–era suite of federal programs and agencies—the commission worked to establish “a rapid, efficient, Nation-wide, and world-wide wire and radio communication service” (Museum of Broadcast Communications).

The responsibilities of the FCC are broad, and throughout its long history the agency has enforced several laws that regulate the ownership of media. A selection of these laws include the 1941 National TV Ownership Rule, which stated that a broadcaster cannot own television stations that reach more than 35 percent of the nation’s homes; the 1970 Radio/TV Cross-Ownership Restriction, which prohibited a broadcaster from owning a radio station and a TV station in the same market; and the 1975 Newspaper/Broadcast Cross-Ownership Prohibition, which discourages ownership of a newspaper and a TV station in the same market (PBS, 2004). These regulations were meant to encourage diversity in media ownership and to prevent domination of the media industry by a small handful of powerful conglomerates. All of them were relaxed over time, and have been erased in practice by the FCC under the Trump administration. Deregulation of the media industry – a decades-old trend – accelerated under Chairman Ajit Pai, a staunch supporter of free market ideology who was nominated to the Commission by President Obama in 2012 and elevated to lead the body by President Trump in 2017.

The Present Structure and Purposes of the FCC

The FCC contains three major divisions: broadcast, telegraph, and telephone. Within these branches, subdivisions (bureaus and offices) allow the agency to more efficiently carry out its tasks. Four bureaus are key to the regulation of mass media: the Media Bureau, the Wireline Competition Bureau, the Wireless Telecommunications Bureau, and the International Bureau.

The Media Bureau oversees licensing and regulation of broadcasting services. Specifically, the Media Bureau “develops, recommends and administers the policy and licensing programs relating to electronic media, including cable television, broadcast television, and radio in the United States and its territories” (Federal Communications Commission). Because it aids the FCC in its decisions to grant or withhold licenses from broadcast stations, the Media Bureau plays a particularly important role within the organization. Such decisions are based on the “commission’s own evaluation of whether the station has served in the public interest,” and come primarily from the Media Bureau’s recommendations. The Media Bureau has been central to rulings on children’s programming and mandatory closed captioning.

The Wireline Competition Bureau (WCB) is primarily responsible for ensuring that “all Americans have access to robust, affordable broadband and voice services,” with special attention to serving “schools, libraries, health care providers, and rural and low-income consumers” (Federal Communications Commission).  “rules and policies concerning telephone companies that provide interstate—and, under certain circumstances, intrastate—telecommunications services to the public through the use of wire-based transmission facilities (i.e. corded/cordless telephones) (Federal Communications Commission).” Formerly, the The WCB regulates access to the physical infrastructure such as utility poles and rights-of-way that are necessary to deliver broadband (telecommunications lines with multiple channels that allow different signals to be carried simultaneously) services to customers, and promotes market growth and competition.  wireless-based communications in the United States., the WCB maintains its large presence in the FCC by “ensuring choice, opportunity, and fairness in the development of wireline telecommunications services and markets” (fcc.gov). In addition to this primary goal, the bureau’s objectives include “developing deregulatory initiatives; promoting economically efficient investment in wireline telecommunications services; and fostering economic growth” (fcc.gov). The WCB recently ruled against Comcast regarding blocked online content to the public, causing many to question the amount of authority that the government has over the public and big businesses.

Another prominent bureau within the FCC is the Wireless Telecommunications Bureau (WTB). The rough counterpart of the WCB, this bureau oversees the “licensing of all  wireless services, from fixed microwave links to amateur radio to mobile broadband services” (Federal Communications Commission). mobile phones, pagers, and two-way radios, handling “all FCC domestic wireless telecommunications programs and policies, except those involving public safety, satellite communications or broadcasting, including licensing, enforcement, and regulatory functions (Federal Communications Commission).” The WTB also regulates wireless services related to public safety and facilitates bidding in spectrum auctions. balances the expansion and limitation of wireless networks, registers antenna and broadband use, and manages the radio frequencies for airplane, ship, and land communication. As U.S. wireless communication continues to grow, this bureau seems likely to continue to increase in both scope and importance.

Finally, the International Bureau is responsible for representing the FCC in all satellite and international matters. A larger organization, the International Bureau’s goal is to “connect the globe for the good of consumers through prompt authorizations, innovative spectrum management and responsible global leadership (Federal Communications Commission).” In an effort to avoid international interference, the International Bureau coordinates with partners around the globe regarding frequency allocation and orbital assignments. It also concerns itself with foreign investment in the United States, ruling that outside governments, individuals, or corporations cannot own more than 20 percent of stock in a U.S. broadcast, telephone, or radio company.

Move Toward Deregulation

Media deregulation took off during the Reagan administration, when economic policy turned toward reducing government oversight of “free markets.” Reagan’s appointee to lead the FCC,former media industry lawyer Mark Fowler, immediately began overturning existing rules, including those that placed caps on market access. Fowler’s well-known argument that televisions were mere household appliances – “toasters with pictures” – supports the administration’s commitment to allowing the laws of supply and demand to determine the ownership structure of the media industry (Croteau & Hoynes, 2005). Between 1981 and 1985, lawmakers dramatically altered laws and regulation to give more power to media licensees and to reduce that of the FCC. Television licenses were expanded from 3 years to 5, and corporations were now allowed to own up to 12 separate TV stations.

The shift in regulatory control had a powerful effect on the media landscape. Whereas initially laws had prohibited companies from owning media entities in more than one medium, consolidation created large mass-media companies that increasingly dominated the U.S. media system. Before the increase in deregulation, eight major companies controlled phone services to different regions of the United States. Today, however, there are four (Kimmelman). Companies such as Viacom and Disney own television stations, record companies, and magazines. Bertelsmann alone owns more than 30 radio stations, 280 publishing outlets, and 15 record companies (Columbia Journalism Review). Due to this rapid consolidation, Congress grew concerned about the costs of deregulation, and by the late 1980s, it began to slow the FCC’s release of control.

Today, deregulation remains a hotly debated topic. Some favor deregulation, believing that the public benefits from less governmental control. Others, however, argue that excessive consolidation of media ownership threatens the system of checks and balances and further amplifies the corporate voice. Proponents on both sides of the argument are equally vocal, and it is likely that regulation of media will ebb and flow over the years, as it has since regulation first came into practice.

References

Beales, Howard. (2004). “Advertising to Kids and the FTC: A Regulatory Retrospective That Advises The Present.” Remarks given before the George Mason Law Review 2004 Symposium on Antitrust and Consumer Protection Competition, Advertising, and Health Claims. https://www.ftc.gov/public-statements/2004/03/advertising-kids-and-ftc-regulatory-retrospective-advises-present

Columbia Journalism Review, “Resources: Who Owns What,” http://www.cjr.org/resources/?c=bertelsmann.

Croteau, William, and Hoynes, David. “The Business of the Media: Corporate Media and the Public Interest.” 2005

Federal Communications Commission, “About the FCC,” http://www.fcc.gov/aboutus.html.

Federal Communications Commission, “About the WTB,” http://wireless.fcc.gov/index.htm?job=about.

Federal Communications Commission, “International Bureau,” http://www.fcc.gov/ib/.

Federal Communications Commission, “Media Bureau,” http://www.fcc.gov/mb/.

Federal Communications Commission, “Wireline Competition Bureau,” http://www.fcc.gov/wcb/.

Federal Trade Commission, “A Brief History of the Federal Trade Commission,” program notes, Federal Trade Commission 90th Anniversary Symposium, 6.

Federal Trade Commission, “About the Federal Trade Commission,” http://ftc.gov/ftc/about.shtm.

Financial Dictionary, “Celler-Kefauver Antimerger Act,” http://financial-dictionary.thefreedictionary.com/Celler-Kefauver+Antimerger+Act.

Gongol, Brian. “The Clayton Antitrust Act,” February 18, 2005, http://www.gongol.com/research/economics/claytonact/.

Kimmelman, Gene. “Deregulation of Media: Dangerous to Democracy,” Consumers Union, http://www.consumersunion.org/telecom/kimmel-303.htm.

Messere, Fritz. “The Federal Radio Commission Archives,” http://www.oswego.edu/~messere/FRCpage.html.

Museum of Broadcast Communications, “Deregulation,” http://www.museum.tv/eotvsection.php?entrycode=deregulation.

Museum of Broadcast Communications, “Federal Communications Commission,” http://www.museum.tv/eotvsection.php?entrycode=federalcommu.

Our Documents, “Sherman Antitrust Act (1890),” http://www.ourdocuments.gov/doc.php?flash=old&doc=51.

PBS, “Media Regulation Timeline,” NOW With Bill Moyers, PBS, January 30, 2004, http://www.pbs.org/now/politics/mediatimeline.html.

Sutter, John D. “Google: Internet freedom is declining,” CNN, September 21, 2010, http://articles.cnn.com/2010-09-21/tech/google.transparency_1_internet-censorship-google-maps-internet-freedom?_s=PM:TECH.