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The Dual Role of Property Rights in Protecting Broadcast Speech
Published online by Cambridge University Press: 13 January 2009
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The connection between property rights and free-speech rights has most often surfaced in conflicts between the two. In his classic formulation of the problem, journalist A. J. Liebling mocked the First Amendment's free-press clause by noting that ownership of a printing press was required in order to actually enjoy the constitutional protection. In an important case decided in 1980, Pruneyard Shopping Center v. Robins, the U.S. Supreme Court ruled that a group wishing to circulate political petitions at a shopping center had a constitutional right to do so. There the Court found that such governmentally enforced access to private property did “not amount to an unconstitutional infringement of [the shopping center owners'] property rights under the Taking Clause of the Fifth Amendment….”
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References
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7 “It is undisputed that the broadcast stations protected by ‘must carry’ are the ‘marginal’ stations within a broadcast market,” wrote Justice Sandra Day O'Connor in her dissenting opinion in Turner.
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18 The Court was not swayed (or even heavily influenced, it seems) by the government's own study of the “must carry” matter. Analysts at the Federal Trade Commission found that consumers were well-served by abolition of the “must carry” rules (which had been struck down by two federal appellate courts in the 1980s). Rather than use their market power to exclude rivals for audience (and advertiser) share, cable systems which dropped broadcasting signals in the wake of “must carry” deregulation were found to be primarily searching for programming more in demand by the viewing public. See Vita, Michael G. and Wiegand, John P., “Must-Carry Regulations for Cable Television Systems: An Economic Policy Analysis,” journal of Broadcasting and Electronic Media, vol. 37 (Winter 1993), pp. 1–19.CrossRefGoogle Scholar
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20 See, e.g., the recent volume by conservative legal scholar Bork, Robert, Slouching Towards Gomorrah: Modern Liberalism and American Decline (New York: Regan Books, 1996)Google Scholar, which endorses more-ambitious government regulation of movies, records, and television programs.
21 The most detailed legal argument for government regulation of the U.S. press, a case made generically for print and electronic media, has been published by Jerome Barron; see, e.g., Barron, , “Access to the Press — A New First Amendment Right,” Harvard Law Review, vol. 80 (1967), pp. 1641–78.CrossRefGoogle Scholar
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30 The 1927 Radio Act established the system of spectrum allocation and licensing “according to public interest, convenience and necessity.” This regulatory system yet prevails in the United States, although the Federal Radio Commission (authorized in the 1927 act) was replaced by the Federal Communications Commission (with authority broadened to include interstate telephony and other wireline communications) in the 1934 Communications Act.
31 The most important Supreme Court cases are NBC v. United States, 319 U.S. 190 (1943)Google Scholar; and Red Lion Broadcasting Co. v. FCC, 395 U.S. 367 (1969).Google Scholar
32 Pool, , Technologies of Freedom, p. 251.Google Scholar
33 This view is well articulated in McGinnis, , “Once and Future.”Google Scholar McGinnis argues strongly that additional rationales favor a property-rights approach, including the strong influence of John Locke and natural law on James Madison, who crafted the First Amendment.
34 Whether unregulated markets will be sufficiently competitive to deliver the full benefits of decentralized decision-making is a matter for study (and often intense debate) in particular sectors. Yet it is widely conceded that generic policy remedies exist (most notably, antitrust as it is called in the United States, competition policy as it is often called elsewhere) and may be applied separate and apart from any direct regulation of speech.
35 The extent to which this important point causes confusion in contemporary analyses can be seen in a recent paper by Corbett, Kristilyn, “The Rise of Private Property Rights in the Broadcast Spectrum,” Duke Law Journal, vol. 46 (12 1996), pp. 611–50CrossRefGoogle Scholar. The article is correct to note that the U.S. courts have long held that “[t]he policy of the [1934 Communications] Act is clear that no person is to have anything in the nature of a property right as a result of the granting of a license” (quoting from the Supreme Court's decision in FCC v. Sanders Brothers Radio Station, 309 U.S. 470 [1940]Google Scholar). It is also correct to note that in recent years, parties holding FCC licenses have petitioned for and sometimes won targeted rule changes which effectively relax government regulation of licensee behavior. But the analysis seriously errs in taking this development as synonymous with an increase in private property rights and a decline of the “public trust” system. That is because a policy regime switch to private property rights in the radio spectrum would allow entrants — not just licensed incumbents — to access radio waves where such entry did not interfere with existing uses. Not only does the system of “public interest” regulation still prohibit free entry into wireless markets, that system is strongly supported by broadcasters (and other current FCC licensees) which benefit from the entry barriers in place. Hence, the rights which incumbents seek to expand are not, strictly speaking, private property rights, but greater latitude under rules crafted in the “public interest.”
36 Rent-seeking is a subset of economic competition; specifically, competition for a fixed pie. This is in contrast to more traditional market competition, where rivals compete by offering customers better prices and/or higher quality. Rent-seeking involves rivalry to obtain a monopoly or special economic position; a classic rent-seeking example would involve competition between potential radio broadcasters to procure a government-issued radio license. See Krueger, Anne O., “The Political Economy of the Rent Seeking Society,” American Economic Review, vol. 64 (06 1974), pp. 291–303.Google Scholar
37 This would, in essence, give private broadcasters flexibility to do anything with the bandwidth assigned to radio or television service so long as it does not interfere with other transmissions. Currently there exist severe restrictions placed on what types of signals broadcasters emit; vast bandwidth — within the “broadcasting band” — is protected from use by any party; and business practices (including editorial control) are regulated in detail by the Federal Communications Commission.
38 These acts established the current regime in the United States, where an independent regulatory agency of the federal government issues broadcasting licenses according to “public interest” criteria. It should be noted that FCC license auctions, authorized by Congress in 1993, are used only for nonbroadcast services such as cellular telephones and paging. See Hazlett, Thomas W., “Assigning Property Rights to Radio Spectrum Users: Why Did FCC License Auctions Take 67 Years?” paper delivered at the Marconi Center Conference on the Law and Economics of Property Rights to Radio Spectrum (07 1996).Google Scholar
39 Congressional Record, vol. 68 (02 3, 1927), p. 2871.Google Scholar
40 Federal Radio Commission brief in General Electric Co. v. federal Radio Commission, 58 Appeals DC 386 (1929), p. 148Google Scholar; cited in General Electric's brief to the U.S. Supreme Court in response to a request for writ of certiorari filed by the Federal Radio Commission (12 1929), p. 47.Google Scholar
41 Congressional Record, vol. 68 (02 3, 1927), p. 2870Google Scholar. Note that this rationale for regulation is consistent with the “collective ownership” rationale in that “public ownership” is distinct from “government ownership.”
42 Despite the “ceiling to attic” rewrite of the 1934 Communications Act which was enacted as the Telecommunications Act of 1996, spectrum allocation was not reformed in any substantial aspect. Indeed, broadcasters won further protections against auctions for TV or radio licenses.
43 See Hazlett, Thomas W., “The Rationality of U.S. Regulation of the Broadcast Spectrum,” Journal of Law and Economics, vol. 33 (04 1990), pp. 133–75.CrossRefGoogle Scholar
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45 Ibid., p. 78 (footnote omitted).
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51 Ibid., pp. 126–27.
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57 See, e.g., Ernst, Morris, “Who Shall Control the Air?” The Nation, vol. 122 (04 21, 1926), pp. 443–44Google Scholar; and Ernst, , “Radio Censorship and the ‘Listening Millions’,” The Nation, vol. 122 (04 28, 1926), pp. 473–75.Google Scholar
58 As quoted in McChesney, , Telecommunications, p. 80.Google Scholar
59 Ibid., p. 81.
60 Ibid.
61 Ibid.
62 See Ernst, , “The ‘Listening Millions’,” p. 474.Google Scholar
63 The ACLU resolved its position so clearly in favor of governmental control that it was attacked in 1934 by Louis G. Caldwell, “the foremost commercial broadcasting attorney in the United States” (McChesney, , Telecommunications, p. 240Google Scholar), for “advocating what seems to me an inconsistent and indefensible view on radio censorship. The evil to be avoided — if we have any regard for the lessons of history — is governmental restraint on liberty of expression, whether imposed by hereditary monarchs or democratic majorities” (ibid., emphasis in Caldwell's speech).
64 The Department of Commerce could easily have increased the bandwidth allocated to radio broadcasting, or reduced the minimum separation between license assignments, or resorted to increased use of frequency time-sharing, thereby increasing the AM band's intensity of use. Such proposals, in fact, were voted down by the Federal Radio Commission — in the face of heavy lobbying against them by commercial broadcasters — in the first substantive decisions rendered by the FRC in 1927. A radio trade journal wrote at the time: “Broadening of the band was disposed of with a finality which leaves little hope for the revival of that pernicious proposition; division of time was frowned upon as uneconomical.… [T]he commissioners were convinced that less stations was the only answer” (Hazlett, , “The Rationality of U.S. Regulation of the Broadcast Spectrum,” p. 155).Google Scholar
65 McChesney, , Telecommunications, p. 254.Google Scholar
66 Quoted in Barnouw, Eric, A Tower in Babel (New York: Oxford University Press, 1967), p. 219.Google Scholar
67 McChesney, , Telecommunications, p. 28.Google Scholar
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69 Ibid., p. 30, quoting Rosen, , The Modern Stentors (supra note 55).Google Scholar
70 Ibid, (footnote omitted).
71 Ibid., p. 254.
72 The implicit assumption here is that pressure groups tend to advocate policies which advance their financial self-interest. This is not an ambitious assumption; it is often employed in the economics and public choice literature. See Becker, Gary, “A Theory of Competition among Pressure Groups for Political Influence,” Quarterly Journal of Economics, vol. 98 (05 1983), pp. 357–85CrossRefGoogle Scholar. That the advocacy of “public interest” licensing by representatives of the nonprofit sector seemingly backfired has been previously explained by the weakly monitored agency relationship between such policy advocates and their economic constituencies (Hazlett, , “The Rationality of U.S. Regulation of the Broadcast Spectrum,” p. 168Google Scholar). To the extent that the nonprofits' cause was advanced in some measure by purely ideological arguments — a much likelier possibility than in the for-profit sector (where firm managers have a fiduciary responsibility to stockholders to maximize stock value) — the nonprofit principal-agent problem becomes further exacerbated.
73 Dill, , Radio Law, p. 89Google Scholar, emphasis in original. It is most instructive to observe herein that the largest radio incumbents were quite anxious to convert their property rights established under priority-in-use into mere “privileges.” It is clear that a privilege implies less legal standing than a right. The Supreme Court has been quick to note this, of course, and bases its lessened protection of broadcast speech (versus printed communications, for instance) on the premise that access to the radio waves is not a right but a privilege. (Note that the Red Lion Broadcasting opinion is peppered with the term “privilege.”) This gets to the irony of property rights discussed in Section III.
74 Rosen, , The Modern Stentors, pp. 96–97.Google Scholar
75 McChesney, , Telecommunications, p. 29.Google Scholar
76 Pool, , Technologies of Freedom (supra note 23), p. 16Google Scholar, writes: “American legislators and the courts rejected these three abuses which publishing had suffered in their country of origin [Great Britain]: licensing of the press, special taxes on the press, and prosecution for criminal libel. The unconstitutionality of licensing, which the American courts referred to as ‘previous’ or ‘prior restraint,’ was decided as early as 1825.” Pool cites Commonwealth v. Blanding, 3 Pick 304, 15 Am. Dec. 214, as the precedent.
77 In the 1996 presidential election cycle, for instance, both major-party candidates took turns criticizing television programming. President Clinton (joined by Vice President Al Gore and Attorney General Janet Reno), complained that TV shows displayed excessive violence, and advocated that the government force cable and broadcast networks to develop a system of violence ratings, while requiring TV stations to air minimum levels of educational programming for children in order to gain license renewals. Republican nominee Robert Dole also denounced Hollywood for its emphasis on violence and vulgarity, singling out Time Warner's more lurid movies and sensational “gangsta rap” music recordings for opprobrium.
78 Federal Communications Commission, Notice of Proposed Rulemaking, MM Docket No. 93–48, FCC 95–143 (released 04 7, 1995)Google Scholar. See also Winer, Laurence H., “Children Are Not a Constitutional Blank Check,” in Corn-Revere, Robert, ed., Rationales and Rationalizations (Washington, DC: Media Institute, 1997), pp. 69–124.Google Scholar
79 See, e.g., Lewis, Kathy, “Networks Agree to Boost Kids' TV Standards; Clinton Praises Plan to Offer Three Hours of Programs Weekly,” Dallas Morning News, 07 30, 1996, p. A1.Google Scholar
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81 This mandate was relaxed in 1988, after cellular systems in large metropolitan areas had already been built. See Calhoun, George C., Digital Cellular Radio (Norwood, MA: Artech, 1988).Google Scholar
82 See, e.g., Levin, Harvey J., The Invisible Resource (Baltimore: Johns Hopkins Press, 1980).Google Scholar
83 Hence, a technically inferior technology (say, analog cellular) may be pushed as a condition of the FCC license, because an alternative (say, digital cellular) would increase industry output to the point of decreasing profitability. (Where this sort of thing occurs depends, of course, on the profit function, which incorporates the demand function.)
84 Kwerel, Evan and Williams, John, “Changing Channels: Voluntary Reallocation of UHF Television Spectrum,” Federal Communications Commission, OPP Working Paper No. 27 (11 1992)Google Scholar. This study can be characterized as part of a two-decades old effort by some FCC staff to liberalize the rights issued by the Commission, using license flexibility to improve the allocation of radio spectrum. This constitutes a move in the direction of property rights, but within the “public interest” regulatory framework. (Even former FCC Chairman Reed Hundt has endorsed this liberalization, at least for nonbroadcast services. See Hundt, Reed E. and Rosston, Gregory L., “Spectrum Flexibility Will Promote Competition and the Public Interest,” IEEE Communications Magazine [12 1995], pp. 40–43.CrossRefGoogle Scholar) As a practical matter, however, the position remains highly controversial; indeed, the Kwerel and Williams study was embargoed for some months by the FCC, and only released to the public in November 1992 — after the November elections determined that the Bush Administration would soon be leaving office.
85 The UHF (or ultrahigh frequency) TV band encompasses channels 14 through 69.
86 Some cracks in the rigidity of the FCC allocation policy have recently begun to appear. They are summarized in Hazlett, Thomas W., “Liberalizing Radio Spectrum Policy,” unpublished paper (10 1997).Google Scholar
87 This, of course, would not be ironic to economists from Adam Smith to Karl Marx to Milton Friedman. The classical argument for unregulated competition has often been mischaracterized by modern critics of capitalism as springing from an innate trust of (or affection for) business interests. Yet Smith was quite clear in his belief that such interests would surely attempt to conspire against competitive market forces, but typically be defeated by the pervasive force of self-interest. Marx was even more insistent that competition would defeat capitalists' own attempts to maximize profit, and in fact lead to the ruination of the entire class. Friedman and other modern economists condemn industrial policy as “corporate welfare,” and argue for free-market competition (including unfettered international trade) to counter business interests.
88 The Telecom Revolution: An American Opportunity (Washington, DC: Progress and Freedom Foundation, 1995)Google Scholar. I served on a Working Group that assisted on the report.
89 Pearl, Daniel, “Think Tank Linked to Gingrich Urges Ending FCC, Privatizing Spectrum,” Wall Street Journal, 05 21, 1995, pp. A3, A6.Google Scholar
90 Streeter, , Selling the Air (supra note 22).Google Scholar
91 To be distinguished from the 1927 Radio Act. The 1912 legislation gave the Secretary of Commerce and Labor the duty to assign radio licenses so as to “minimize interference.” That broadcasting policy was, for all intents and purposes, settled by the 1912 Radio Act is a case made unconvincingly by Streeter. More compelling work in this area, including that by authors presumably sympathetic to Streeter's self-described “neo-Marxist” analysis (for instance, McChesney, 's Telecommunications, Mass Media, and DemocracyGoogle Scholar), all focus on the 1920s radio market as the venue for fundamental decision making on broadcasting policy. Indeed, most of Streeter's book is devoted to showing how events well after 1912 shaped the modern broadcasting marketplace.
92 Streeter, , Selling the Air, p. 252.Google Scholar
93 Streeter is aware of the explicit provision, dating to a resolution passed just before passage of the Radio Act of 1927, which forces broadcasters to waive any claim to a vested right in order to receive a license. But he considers it a mindless contradiction of a confused system: “[T]he vigorous pursuit of the principle of property has led to a series of dilemmas. The fact that our law simultaneously has forbid ownership of the airwaves and invited their purchase and sale for more than sixty years is only the most glaring of these” (ibid., p. 254). This is upside down. Since 1927, the regulatory regime has explicitly overruled the “principle of property” in favor of a “public interest” licensing scheme. By truncating rights — and mandating that no one can buy or sell the “airwaves” —the regime has ensured that incumbent corporate interests have been well served. Cartels have been created and enforced all along the radio dial. No confusion there.
94 See Walker, Jesse, “Don't Touch That Dial,” Reason, 10 1995, pp. 30–35Google Scholar; and Lew, Julie, “Radio Renegade Fights FCC Rules,” New York Times, 12 8, 1997, p. D12.Google Scholar
95 Walker, , “Don't Touch That Dial,” p. 32Google Scholar. The Corporation for Public Broadcasting dispenses federal subsidies for programs appearing on public stations. Its role is to promote programming which would not be aired by commercial broadcasters — precisely the niche which “pirate radio” stations aim to fill.
96 “Radio Free America” website, formerly at: http://pages.prodigy.com/RFAmerica/KCILState.html. (Apparently the website has been discontinued.)
97 The devil, as usual, is in the details. Although sold as a hard standard, it is soft in the sense that stations may meet the letter of the law without airing three hours of educational programming for children per week. And, of course, the issue as to what constitutes educational programming is to be hammered out over time.
98 Lewis, , “Networks Agree” (supra note 79).Google Scholar
99 Hazlett, Thomas W., “The ‘Public Interest’ Fraud,” Wall Street Journal, 05 6, 1996, op-ed page.Google Scholar
100 Reed Hundt, chairman of the FCC from 1993 to 1997, has testified that broadcasters are not likely to bring suit against the government for infringing on their First Amendment rights because — if successful — such a suit would bring down the entire licensing scheme which protects the market value of their broadcast properties (i.e., shields them from competitive entry). Hence, broadcasters prefer retaining (or, in the case of new awards such as digital TV licenses, obtaining) extremely valuable broadcasting rights and are quite willing to trade away their constitutional rights in the bargain. On the other side of the deal, policymakers are eager to make this exchange, as it allows government to bridge the First Amendment wall and exercise direct influence over “free speech.” Hundt, for instance, earned a reputation as an activist FCC chairman on “content” issues, frequently reminding broadcasters of their “public interest” obligations with respect to children's educational programming, free time for political candidates, viewer ratings for violent content, maintaining a years-old agreement not to air liquor ads, etc.
101 As FCC Member Glen O. Robinson described the process in Cowles Florida Broadcasting, Inc., 60 FCC2d 371, 439 (1976).Google Scholar
102 See also Hazlett, Thomas W., “Sham Regulation as an Equilibrium Solution in FCC Broadcast Licensing,” unpublished manuscript (06 1996).Google Scholar
103 In the 1993 federal budget, Congress finally approved (after decades of requests by various parties, including the executive branch) the use of auctions for assigning nonbroadcast FCC licenses. In the comprehensive Telecommunications Act of 1996, broadcasters again escaped auctions when their licenses were specifically exempted from auctions. See Hazlett, Thomas W., “Explaining the Telecommunications Act of 1996: Comment on Thomas G. Krattenmaker,” Connecticut Law Review, vol. 29 (Fall 1996), pp. 217–42.Google Scholar
104 See: http://www.fcc.gov/wtb/auctions/.
105 High definition television can be provided via analog or digital transmission formats. What is called “digital TV” may or may not be “high definition.”
106 Donlan, Thomas G., Supertech (Homewood, IL: Business One Irwin, 1991), p. 4Google Scholar. One key, if subtle, aspect to this passage is that the interest group lobbying for entry into the market is identified as the makers of various wireless devices. The cellular and paging companies that actually provide services, i.e., incumbent FCC licensees, do not typically have an interest in promoting new entry. Those equipment suppliers who sell the inputs to competitive service providers are the business interests most likely to promote additional market rivalry and, hence, consumer welfare.
107 ABC announced in summer 1997 that it would not broadcast high definition programs with its new digital TV licenses, while other broadcasters studiously avoided committing to HDTV. (See “There's No Stampede to HDTV,” CMP Media Inc., 08 20, 1997Google Scholar; CMP is an online news service available at: http://www.newspage.com.) This is hugely ironic, because the digital TV licenses were allocated to broadcasters, without charge, in a ten-year-long FCC rulemaking which reserved spectrum and preferential treatment in the award of such licenses (including the no-charge provision) due to the stated importance of this new technology (HDTV) to the “public interest.” The technology acted as a place-marker reserving special opportunities for U.S. broadcasters. However, at the eleventh hour, the FCC reconsidered its imposed HDTV standard, and liberalized its rules — TV stations receiving the new licenses would be required only to transmit digital (not necessarily high definition) TV signals. Taken alone, this flexibility in the FCC allocation is a very good thing, which the computer industry — largely shut out of the FCC's pro-broadcaster standard-setting process for HDTV — lobbied to achieve. (See Hazlett, Thomas W., “Industrial Policy for Couch Potatoes,” Wall Street Journal, 08 7, 1996, p. A14Google Scholar.) But the global picture is that the FCC's Stated rationale for foreclosing competitive use of the UHF band for the past decade has now been revealed as an empty bag, in that an HDTV mandate for broadcasters has been determined by the Commission to no longer be in the “public interest.”
108 These technologies allow much greater communications capacity over (or through) a given frequency range.
109 Baran, Paul, “The Myth of Spectrum Shortage Exposed,” Computer Technology Review, Supplement, Summer/Fall 1995, pp. 18–20.Google Scholar
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