Michael Powell Unplugged

TERENCE SMITH:

Michael Powell's four years as chairman of the Federal Communications Commission have been busy and controversial– a dizzying array of businesses and technological developments occurred during Powell's tenure. He described the challenges ahead during a NewsHour interview early in his term.

MICHAEL POWELL:

Every single area that we have regulatory oversight for is in the midst of its most profound revolution ever, whether it be television or transition to high definition television, whether it be the deployment of broadband services over cable infrastructure, the increased use of satellite, television competition, telephone competition. All of those areas are at their most significant crossroads and inflection points. Whether we like it or not, we're right in the center of this information revolution for consumers.

TERENCE SMITH:

Not just consumers but media conglomerates were affected as Powell pushed the commission towards greater consolidation of media ownership.

SPOKESPERSON:

Those commissioners voting in favor of the item signify by saying, "aye."

TERENCE SMITH:

In June 2003, new media ownership rules were approved on a partisan 3-2 vote in the FCC. The rules would have allowed media companies to own more broadcasting and print outlets nationwide and in specific markets.

SPOKESPERSON:

These are our air waves.

TERENCE SMITH:

The decision led to an uproar among the public and in Congress. It also spawned a host of legal challenges. North Dakota Sen. Byron Dorgan was a vocal opponent of the new rules.

SEN. BYRON DORGAN:

The broadcast ownership rules, if left in place by the FCC, would result in fewer and fewer companies and people determining what the American people see, hear and read. And I don't think that's healthy.

TERENCE SMITH:

Instead, Congress rewrote some of the rules itself and the courts blocked the FCC's revisions. But while Powell fought many in Congress over media ownership, he worked with members seeking greater control over the content provided by some of the same companies he sought to deregulate.

The drive to monitor indecency over the airwaves had its tipping point in early 2004 with Janet Jackson's one-second revelation at the Super Bowl halftime show. That provoked outrage on Capitol Hill, among advocacy groups, and the members of a rarely-unified FCC.

Congress is currently considering legislation that would raise the penalties on stations for indecency to as much as $500,000 per incident. That has led to skittishness among broadcasters and self-censorship, such as last fall when scores ABC affiliates would not air the Oscar-winning Saving Private Ryan on Veterans' Day because of profane language. The FCC subsequently ruled that the film's language was not indecent or profane.

Broadcasting is but one business under the FCC's regulatory mandate. A wave of mergers has swept the telecommunications industry, 20-plus years after the breakup of AT&T. Powell has in large part encouraged the mergers.

He also joined the chairman of the Federal Trade Commission in pushing for a "do not call" list, which restricted telephone solicitations. Powell went against the mobile phone industry in pushing for number portability, which allowed consumers to keep their phone number if they switched providers. Powell announced his intention to leave this past January. The new chairman is likely to confront more mergers and continued debate over broadcast content.

TERENCE SMITH:

Joining me now are Reed Hundt, former chairman of the FCC from 1993-97 under the Clinton administration, and Rep. Joe Barton, a Texas Republican who chairs the House Energy and Commerce Committee, which has oversight over the FCC. Welcome to you both.

Congressman Barton, let's look at some of the issues that will confront the new chairman whenever he or she is announced, which should be very shortly, starting with this issue of indecency. You and your committee have pushed for the higher fines that we mentioned in the setup. Why are they needed in your view?

REP. JOE BARTON:

I think they're needed because the existing fines are so small it's to be almost nonexistent. I think that there is a $12,500 fine on the broadcast licensee. There's really no fine on the individual that actually does the act that is considered to be indecent.

So the bill that's already passed the House raises the fine to $500,000, and also makes it applicable to the individual that engages in the indecent act or utterance, as well as to the broadcast licensee.

TERENCE SMITH:

Now, this has to go to the Senate, be approved by the Senate. In your view, is this likely to become law?

REP. JOE BARTON:

I think it's very likely to become law. Sen. Brownback of Kansas has introduced a companion bill. I was supposed to talk with him today by phone and was not able to do so. Sen. Stevens has also indicated he's very supportive.

So I don't think the Senate is going to drag its heels on this. I think this is an issue that the Senate and the House will agree upon and will put on the president's desk sometime this year, perhaps as early as this summer, and that the president will sign.

TERENCE SMITH:

Reed Hundt, in your view, is this warranted or is Congress overreacting?

REED HUNDT:

You know, in my view, Congressman Barton speaks for the overwhelming majority of Americans, and certainly speaks for me in thinking that there's been a terrible decline in the standards of our media.

I think the media in the last several years has redefined down deviancy in terms of entertainment. I think the quality and quantity of news coverage has gone to a new low level in all the electronic media. And I think, frankly, to a large degree the media in the United States is an embarrassment to families and an embarrassment to our country in the eyes of the whole word.

I think that we've also seen, since last year's Super Bowl, that our Federal Communications Commission is completely incapable of developing a coherent policy for how to solve the problem of the declining standards in the media. The FCC took a look at one of the most moral movies in history, Saving Private Ryan, and took nearly six months to determine that it was not indecent.

I think we need to be realistic. We cannot expect five political appointees at the FCC to spend their time watching TV and trying to figure out what words are dirty, and trying to do the jobs such as investigating the payola paid by the government to journalists to adopt a government line. They can't be asked to investigate whether some alleged male escort has obtained a White House press pass under false pretenses. They can't do the job of policing the media that the congressman and the Senate actually think ought to be done.

So my view, with all due respect to the congressman, is we ought to give a police job to the police. We ask the local police to enforce community standards for obscenity. We ask the police to enforce standards against fraud. We ought to have local police and local communities and the FBI take on the job of protecting our country from inappropriate content.

TERENCE SMITH:

And get the FCC out of it?

REED HUNDT:

And let the FCC do the job of regulating businesses that it is supposed to do.

TERENCE SMITH:

Congressman Barton, what do you think of that idea?

REP. JOE BARTON:

Well, I'm not, you know, I'm not opposed to the FCC continuing to be the arbitrator. I agree that the decisions need to be made sooner. I also agree that if… or I would stipulate that if you raise the fine to something that's significant enough that the broadcasters and the product producers in Hollywood, if it's high enough that they notice it, it's probably going to be a deterrent and maybe will reclaim the public airways for the parents of the country.

TERENCE SMITH:

Reed Hundt, is there concern about censorship, self censorship, or a chilling effect with these very substantial fines?

REED HUNDT:

Here's a big concern when the FCC is trying to pass regulations about media businesses and also trying to be the police force for the content. What happens is people in the media think, "Well, if I give you the content that you political appointees like and it serves your political purposes, maybe you'll give me a break on the business regulation." That's what they think, and that's the fear that we ought to have. We ought not have it be that businesses can trade favorable content for favorable business regulations.

REP. JOE BARTON:

We're not changing the definition of what decent or indecent. This is just raising the fines to a level that actually is in tune with the current amount of money that's in play in some of these events, and number two, applying it to the individual.

But it doesn't take rocket science, in my opinion, if an entertainer at half time in the Super Bowl exposes a part of her anatomy that normally you wouldn't think should be exposed, or if certain words are uttered in some of these live broadcasts that most people think shouldn't be said in public. That's all we're talking about.

TERENCE SMITH:

Congressman, the point has been made that neither cable nor satellite television, for example, is covered by the FCC, it's not regulated. Should they be, and is there any serious legislative prospect that they will be?

REP. JOE BARTON:

Well, that's raised a bit of a controversy this week. Sen. Stevens and I both spoke to the National Association of Broadcasters meeting of some of their affiliates here in Washington earlier in the week. And he said, as he was walking out of room, apparently, and then I was asked about what he said as I was walking out of the room, about regulating cable and satellite in the same way that we regulate over the air.

And he and I both said that it's something that should be considered. What we didn't say is that we want to set standards on premium pay television, things like that, like the issue that I've been asked, the Sopranos or something, some program of that nature. The first thing is to raise the fines and to make them applicable both to individuals. Then we can talk about this convergence of the way that individuals receive their television, more and more they're not getting it over the air.

They're getting it through a cable outlet or a satellite transmission so that the average viewer who's watching your program this evening, probably 70 percent of them are not getting it from the over the air signal. They're getting it through some common carrier transmission system.

That being the case, at some point in time, either working with the industry voluntarily, or, if necessary, perhaps in the future by statuette, we would set some terms and conditions on the basic tier that is not a premium pay, that if you buy basic cable or basic satellite, you expect that programming to be family value programming.

TERENCE SMITH:

All right. Let me move us on to another issue that's going to confront the commission, the new chairman. Reed Hundt, we've had a rash of telecom mergers lately, big companies, big mergers, in effect rolling back 20 years of policy at the FCC what's your view of those and their impact or at least potential impact on the consumer?

REED HUNDT:

Well, they rolled back 20 years of policy in the United States for Republicans and Democrats embodied overwhelmingly in bipartisan votes. These mergers are very, very big deals. My view is that they need to be about something good for the country.

That thing ought to be broad band. About 70 percent of American homes do not have affordable broadband. About 70 percent of Korean homes do. Korea is number one in the world in penetration of high speed Internet access. The United States is number 13 and falling.

TERENCE SMITH:

So you would like to see, as a condition of these mergers, is that what you're saying?

REED HUNDT:

Well, Congressman Barton yesterday was able to elicit from a number of the COs in these merging companies statements about how they thought that they would be investing more in the network, more in broadband. He can amplify on that.

But to me the country has the right to know that these mergers are about delivering the new platform of broadband to all Americans so that we can have thousands of new jobs on this new platform and millions of new jobs and thousands of new companies. That's what we ought to be hearing.

TERENCE SMITH:

Congressman, you had most of the major telecommunications executives in the country in front of you and your committee yesterday. What about this point that Reed Hundt has just raised? Did that come out and do you have any sense of confidence about it?

REP. JOE BARTON:

Well, it did come out, but I think that several points need to be made. Originally telecommunications in this country was a monopoly because there was one phone line, and there was really one company, AT&T. That company was divested into the regional Bell operating companies, and then some local smaller telephone companies.

So you had over the air, you had long distance phone companies and you had local phone companies. What you're seeing and those both had to be regulated. When we passed the Telecommunications Act in 1996, the theory then was that the long distance companies would compete with the local phone companies. That hadn't happened. What has happened is that we've got competition between cable coming into the home, telephone lines coming into the home, and businesses, and more and more wireless coming into businesses and homes.

So these mergers are companies coming together that are going to provide a bundle of services, and you have the potential for three different competitors into everybody's home or business. One would be by telephone, one would be by cable, and one would be by wireless. That will actually be more competition than we've ever had, but it will be competition by bigger companies and it won't be the kind of competition that we envisioned in the Telco Act of 1996.

It will be good for consumers because that kind of competition will increase investment, get more broadband, more powerful communication, telecommunication services to more people sooner, and that's a good thing for the American economy and the American consumer.

TERENCE SMITH:

Very briefly in the time we have left, a good thing for the consumer?

REED HUNDT:

The country should know that Congressman Barton is the leader in promoting wireless broadband, that he has a great plan to have a whole bunch of spectrum be dedicated to wireless broadband. That would be part of a response to these mergers.

TERENCE SMITH:

All right, we'll have to see as well whether the new chairman brings up the question of media ownership and goes through that whole thing again. But in the meantime, Congressman Barton, Reed Hundt, thank you both very much.

REED HUNDT:

Thank you.

REP. JOE BARTON:

Thank you.