Week 7 News Post

Nestle Subsidiary to Settle FTC False Advertising Charges; Will Drop Deceptive Health Claims for BOOST Kid Essentials

Nestle HealthCare Nutrition, Inc., a subsidiary of Nestle S.A., the world’s largest food and nutrition company, agreed to drop deceptive ad claims about the health benefits of BOOST Kid Essentials drink--a nutritionally complete for children 1-13. A settlement resolving the FTC’s first case challenging probiotic ads was made (probiotics are natural bacteria known for helping with digestion and fighting bad bacteria).

Complaint charges from 2008 to 2009 were filed against Nestle HCN’s deceptive claims in TV and print ads for this drink. The probiotics in BOOST are embedded in the straw that comes with the drink which was featured in the ads. Ads claimed BOOST protects against colds and flu, prevents upper respiratory tract infections and reduces absences from school by strengthening the immune system. These claims that the probiotic drink would prevent kids from getting sick or missing school did not meet FTC scrutiny. The ads falsely claimed BOOST is clinically shown to reduce and protect kids from illness as well as helping them recover quickly from diarrhea.

Under the settlement, Nestle HCN agreed to stop claiming BOOST will reduce illness unless the claim is approved by the FDA; FDA approval is generally not needed for compliance with the FTC but they determined that requiring FDA pre-approval before Nestle HCN makes claims will provide clearer guidance and facilitate compliance. Nestle HCN also agreed to stop claims that BOOST will reduce sick absences and the duration of diarrhea in kids up to 13 if it is determined true by at “least two well-designed human clinical studies.” Nestle HCN is prohibited from making any claims about any benefits of probiotic and nutrition drinks unless claims are true and backed by competent, reliable scientific evidence. The FTC is helping parents by monitoring ads and stopping deceptive ones.

The Division of Advertising Practices is a division of the bureau and is the enforcer of federal truth-in-advertising laws focusing on: deceptive ads of fraud cure-all claims for dietary supplements and weight loss products, deceptive internet marketing practices for health issues, enforcement strategies for new ad techniques and media, ads of food to children like impacts on obesity, industry practices regarding marketing violent media, and alcohol and tobacco marketing practices. The puffery in this case was deceptive and advertisers did not have adequate substantiation for the claims made.

The FTC is made aware of potentially problematic ads by complaints from consumers, businesses, etc.; complaints were filed for a year about the claims Nestle HCN was making about BOOST. FTC investigations are generally nonpublic to protect the investigation and companies involved. A measure the FTC took to protect the public was a cease and desist order demanding Nestle HCN to stop the false health claims. A cease and desist order is contained within a consent order or a consent agreement. A consent order is for settlement purposes and does not constitute an admission of guilt by the advertiser. Nestle HCN agreed, so the FTC did not have to issue a litigated order to stop an ad claim filed in an administrative court. Substantiation gives the FTC authority to demand an advertiser prove its claims—to provide competent and reliable evidence for claims made. The FTC demanded Nestle HCN to sufficient evidence for their claims before they could be made again.

Article: http://www.prnewswire.com/news-releases/nestle-subsidiary-to-settle-ftc-false-advertising-charges-will-drop-deceptive-health-claims-for-boost-kid-essentials-98373589.html

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Week 7 Topic Post: Commercial Speech

Topic Overview

Commercial speech is the term used to distinguish ads proposing commercial transactions from other kinds of ads. Advertising means commercial speech. The Court affirmed the ability of governments to regulate advertising and suggested that a FA interest could be served by advertising a commercial proposal, and the interest could outweigh the government’s interest in regulating advertising. Determining the type of speech conveyed in ads are weighed between purely commercial speech and ads that contained factual material of clear public interest in addition to a proposed commercial transaction. Speech is not stripped of FA protections because it has they are paid commercial ads. While untruthful express could be regulated, the law is more tolerant of error and falsehood in a political content than of speech in the commercial arena. In the Central Hudson case, the court developed a test for bans and ruled that gov regulation is constitutional only if there is a substantial state interest that justifies the regulation, the regulation directly advances that state interest, and the regulation directly advances the state interest through the least speech restrictive means possible. Now there only has to be a reasonable fit between the regulation and state interest making it easier for advertising regulations to pass the test and be ruled constitutional.

A federal law prohibiting information about alcohol content appearing on product labels or in advertising to prevent strength wars failed the Central Hudson test. It failed because there are alternatives that would be less intrusive on the commercial speech’s FA protections. A law against advertising bargain prices on alcoholic beverages because it would increase consumption did not hold up in court ruling it fails to establish a causal relationship between its abridgment of commercial speech and achieving its goal of temperance. Withholding information about price does not work to decrease drinking.

There is a legitimate state interest in regulating tobacco advertising: preventing minors from accessing tobacco products. Regulations and restrictions on tobacco products upheld because the state’s interest was unrelated to the communication of ideas. Clinton the FDA to initiate steps to stop sales and marketing of tobacco to children and had the authority to regulate tobacco products. The industry agreed to stop billboard and transit ads and cartoons. The Public Health Smoking Act of 1969 required a ban on tobacco ads on broadcast TV and radio stations. Tobacco company free speech rights were not infringed because they had other advertising outlets.

While there is a substantial state interest for reducing the social costs associated with gambling, laws banning broadcasters from airing ad for legal casino gambling did not advance this interest and was not as narrowly tailored as could be. Prohibiting ads for private casinos but allowing it for others only steered gamblers to specific outlets rather than others.

Court found law prohibiting lawyer service ads in violation of the FA. The ruling emphasized it stopped short of granting a blanket endorsement to attorney advertising. Reasonable restriction pertaining to false advertising could survive the FA.

The Court upheld the right of corporations to communicate through purely political speech; political speech has more FA protection than commercial. In Nike’s case, speech was ruled commercial and could not be punished under state false advertising and unfair competition laws. Nike engaged in commerce, the intended audience was largely composed of potential Nike customers and the speech consisted of representations of fact of a commercial nature that were intended to maintain and increase sales of Nike products. Nike argued that although false, speech was absolutely protected by the FA because it was political in nature concerning discussions about factory working conditions and not commercial speech involving things like products and prices. The Court dismissed the case stating the plaintiff did not suffer sufficient injury to file a lawsuit. This case is seen as a missed opportunity for clarifying commercial speech.

Advertising is subject to regulation on the state level, but the federal gov has most responsibility mostly because ads cross state lines; falling under the Constitution’s commerce clause, Congress may also control it within FA limits. The Lanham Act prohibits any false/misleading description of goods, services, or commercial activities in any forum including ads and promos. It became the foundation for lawsuits as ads grew into comparative ads.

The FTC was established in 1914 as an independent agency that reports to Congress. It I headed by five commissioners nominated by the president, confirmed by Senate, each serving a seven-year term. One acts as chair and no more than three can be of the same political party. It protects consumers from unfair/deceptive practices by businesses and is the primary federal regulator of advertising. It has the authority to demand that advertisers substantiate accurate claims. The FTC included the Bureau of Consumer Protection, which protects against unfair/deceptive/fraudulent practices. The Division of Advertising Practices is a division of the bureau and is the enforcer of federal truth-in-advertising laws focusing on: deceptive ads of fraud cure-all claims for dietary supplements and weight loss products, deceptive internet marketing practices for health issues, enforcement strategies for new ad techniques and media, ads of food to children like impacts on obesity, industry practices regarding marketing violent media, and alcohol and tobacco marketing practices. Puffery is fine if it is not deceptive and if advertisers have adequate substantiation before a claim is made. A literally true statement can have deceptive implications when considered in the context of the whole ad even if it is not the only possible interpretation.

The FTC is made aware of potentially problematic ads by complaints from consumers, businesses, etc. FTC investigations are generally nonpublic to protect the investigation and companies involved. Measures are taken to protect the public.

Preventive measures: advertiser advice is requested in an opinion letter from the FTC. The advice does not bind the commission in any way but it can be an efficient way to avoid ad problems. Advisory opinions contain more info and are more official. It is placed in public record making the FTC accountable to its advice so opinions tend to be harsh with a heavy obligation to adhere to them. Industry guides outline policies concerning a particular category of product or service. They are intended to prevent future problems wtih testimonials, endorsements, etc. They affect celebrity endorsements and est. practices of broadcasters and new media companies. Endorsers are liable or false claims and “results not typical” disclaimers do not excuse endorsers or companies from responsibility. Material connections like payments must be disclosed, warnings to understand guidelines and guidelines are directed at nontraditional ads like celebrity endorsements. The trade regulation rule targets an entire trade allowing the FTC to deal with an entire group of advertisers at once. Under the commission’s voluntary compliance function, advertisers have the opportunity to comply with complaints that the judges to have merit.

Corrective measures: A cease and desist order demands the stopping of one or more advertising practices. It is contained within a consent order/consent agreement. A consent order is for settlement purposes and does not constitute an admission of guilt by the advertiser. Failure to sign it will likely generate negative publicity and the FTC is likely to impose severe penalties. If they choose not to, the FTC can issue a litigated order to stop an ad claim filed in an administrative court. If it is upheld, the advertiser may appeal to a fed court can result in serious fines. Substantiation gives the FTC authority to demand an advertiser prove its claims—to provide competent and reliable evidence for claims made. The FTC may require corrective advertising—to set the record straight in future ads or other kids on info distribution. Listerine was the first corrective advertising case. A court injunction or a restraining order can be used if ads are false/misleading and cause immediate harm (credit card claims for reducing debt).

The FCC is the primary regulator of advertising cut the FCC can deal with problem ads in broadcast media and the FDA can deal with ads for products within its influence at least indirectly.

Advertisers view Internet advertising as cost effective. Technology allows them to gather data on user activity for marketing purposes (data mining), which is controversial. The instantaneous nature of Internet ads have created fraud and unwanted ads across the Internet. The FTC monitors illegal practices on the Internet and enforces laws against fraud online advertisers in other media. The first deceptive Internet ad case was in 1994; ads advising consumers to take illegal steps to repair credit records. A consent decree required the advertiser to est. a compensation fund, not engage in future misrepresentations, to disclose future credit programs and to cooperate in FTC investigations. The FTC supports providing “do not track” options like cookie-blocking features to avoid targeting ads. In response to unsolicited, unwanted email or spam Congress enacted the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act under which ISPs, states attorney generals and federal agencies can pursue spammers in fed courts with criminal and civil penalties. The law prohibits the use of false header info in commercial email and requires unsolicited messages to include opt-out instructions. There is also protection against spam with unmarked pornographic material. Penalties include millions in fines and imprisonment. The FTC approved provisions in ’08 to strengthen enforcement.

37 states enacted anti-spam regulations to supplement fed law. The Court ruled the right to engage in anonymous speech was protected by the FA so a law prohibiting false routing info in emails infringed on this FA right.

Key Definitions

Puffery- ads that exaggerate the merits of products or services in a way that no reasonable person would take it seriously

Litigated order- FTC order to stop a specific ad claim

Industry guides- FTC measure that outlines the policies concerning a category of product or service

Trade regulation rule- statement by the FTC that outlines ad requirements for a trade

Substantiation- authority of the FTC to demand an advertiser prove claims made in ads

Corrective advertising- FTC requirement forcing an advertiser to include info in future ads that corrects false or misleading claims in previous ads

Important Cases

1.     Central Hudson Gas & Electric Corp. v. Public Service Commission of New York- ad ban test- Court reaffirmed the constitutionality of regulations forbidding untruthful and misleading ads and prohibition on ads that promote illegal products or services. Gov regulation is constitutional only if there is a substantial state interest that justifies the regulation, the regulation directly advances that state interest, and the regulation directly advances the state interest through the least speech restrictive means possible.

2.     Lorillard v. Reilly- ban on tobacco ads and sales within 1,000 ft of school and playgrounds- Court applied Central Hudson test and ruled ban restricted company’s FA rights and was too broad

Relevant Doctrine

Free Flow of Commercial Information

Supreme Court established several principles concerning advertising

-       Freedom of speech applies to both the speaker and recipient of info. There is a right to receive info.

-       FA protection had never been denied to speech merely because it was commercial.

-       Speech doesn’t lose it FA protection because money is spent to project it, as in a paid ad.

-       Speech does no more than propose a commercial transaction is not so removed from any exposition of ideas that it lacks all protection.

-       Consumer interest in the free flow of commercial info may be as high as, if not higher than, the interest in the day’s most urgent political debate. Even an individual ad, though entirely commercial, may be of general public interest.

-       Particularly in a free enterprise economy, it is a matter of public interest that economic decisions be intelligent and well informed

-       As with other categories of speech, some forms of commercial speech may be regulated. Untruthful speech, for example, has never been protected for its own sake. 

The Commercial Speech Doctrine

-       The gov may regulate advertising that it is false, misleading or deceptive.

-       The gov may regulate advertising for unlawful goods and services.

Even truthful, honest advertising for legal goods and services may be regulated if the following conditions are met:

-       The gov claims a substantial state interest to justify the regulation.

-       The gov demonstrates that the regulation directly advances the claimed interest.

-       The gov shows that there is a reasonable fit between the claimed interest and the regulation.

FTC: False and Misleading Advertising

The FTC Policy Statement explains false and misleading advertising from the commission’s viewpoint:

-       First, there must be a representation, omission or practice that is likely to mislead the consumer.

-       Second, we examine the practice from the perspective of a consumer acting reasonably in the circumstances. If the representation or practice affects or is directed primarily to a particular group the omission examines reasonableness from the perspective of that group.

-       Third, the representation , omission or practice must be a material one. The basic question is whether the act or practice is likely to affect the consumer’s conduct or decision with regard to a product or service.

FTC Mechanisms

Preventive Measures:

-       Opinion letters

-       Advisory opinions

-       Industry guides

-       Trade rules

-       Voluntary compliance

Corrective Measures:

-       Cease and desist orders

-       Consent orders

-       Substantiation

-       Litigated orders

-       Corrective advertising

-       Injunctions

Issues/Controversies

Commercial speech was outside the range of the FA until the court articulated the idea that advertising could be considered speech and was entitled to FA protection. Distinguishing ads as a commercial ad or an informational one as paid political speech sparked the need for determining what kinds of commercial speech would have FA protection.  Issues with determining the type of speech conveyed in ads were weighed between purely commercial speech and ads that contained factual material of clear public interest in addition to a proposed commercial transaction. Speech is not stripped of FA protections because it has they are paid commercial ads. The degree of protection for certain ads and the degree of tolerance for error and falsehood are also issues. There are many who question the fed government’s ability to enforce Internet restrictions and criticize the way the CAN-SPAM Act supersedes stricter state laws.

Questions/Concerns

My only concern is keeping up with FCC regulations. They will constantly be changing and applied differently as various mediums become more pervasive, flexible and ever changing. 

References:   

 Trager, R., Russomanno, J. & Ross, S.D. (2012), The law of journalism and mass communication. Thousand Oaks, CA: Sage Publications.
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Week 6 News Post

Verizon, FCC Battle in Court Over Net Neutrality, Site Blocking

Verizon v. FCC, U.S. Court of Appeals for the District of Columbia Circuit: Judges are hearing appeal by Verizon Communications of the U.S. government’s open Internet rules. They are focusing on the kinds of charges brought upon websites would be considered illegal blocking. The 2011 rules require ISPs to treat all traffic equally and give customers equal access to lawful content event.

Verizon is challenging the FCC regulations as an “excessive, ‘arbitrary and capricious’ intrusion which violates the company’s right to free speech strip it if of control over what its networks transmit and how.” Verizon’s attorney Helgi Walker says it is not credible that Congress would authorize these rules and believes the FCC lacks statutory authority. The Judge repeatedly asked if companies that provide Internet service could charge websites for access to those customers and if the websites refused to pay and the ISP refused to carry the website, is that blocking? The rules say you can’t charge to avoid blocking but you can charge. FCC General Counsel Sean Lev said no one is being told they can’t charge but the FCC would have concerns if a major website like Google paid a large sum to ensure faster access for their users. Verizon says it had a FA right to decide what websites its users had access to using chemical bomb making sites as an example. The judge said Verizon has said repeatedly that it is a conduit for others’ speech.

This case shows us the immediacy of FCC regulation and Internet cases today. The FCC has interpreted the law dealing with ISPs because it is so ambiguous. Interpretation is challenged as we have seen in this case and the FCC is still receiving backlash for their nondiscriminatory clause. The FCC failed to deal with network neutrality in their case against Comcast Corp. because it did not have the authority to do so according to the Court of Appeals. Instead, they adopted a rule forbidding ISPs from blocking lawful content and applications computers use nor may providers unreasonably discriminate in transmitting content. This is what Verizon is contesting against. They are saying it is a violation of the company’s right to free speech and control over what its networks transmit and how. If they struck down the nondiscrimination clause, would that mean they could charge websites for higher speeds and give priority access? Commercialization seems to be a concern for the Court. This case shows us how FCC rules are too weak and that there is a need to adopt a more direct and clear power of oversight. Is the nondiscriminatory clause really infringing on Verizon’s rights to determine what their users have access to as a company? Do they even have that right on the Internet which is a platform of free speech and completely protected by the FA?

Article:http://www.nbcnews.com/technology/verizon-fcc-battle-court-over-net-neutrality-site-blocking-8C11115171

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Week 6 Topic Post: Electronic Media Regulation from Radio to the Internet

Topic Overview

The Titanic sparked Congress to regulate wireless communication with the Radio Act of 1912 that regulated commercial radio. It required operators on duty around the clock and gave the US secretary of commerce the power to grant radio station licenses stipulating what frequency they would use. Power was not regulated so powerful stations could drown out smaller stations even if they did not use the same frequency. Chaos ensued until the Radio Act of 1927 that established the Federal Radio Commission (FRC) to issue or deny radio licenses and sassing frequencies to prevent stations from interfering with each other. The FRC could not censor radio content, the public owned the spectrum and the law required the FRC to make decisions on “public interest, convenience and necessity.” Radio needed oversight so Congress adopted the Communications act of 1934 giving the Federal Communications Commission (FCC) authority to regulate radio and TV. They can regulate cable TC and have jurisdiction over direct broadcast satellites.

The FCC is an independent federal agency bound by politics: the president appoints five commissioners to five-year terms and one of them as the chair/CEO. The Senate approves the nominees. Three commissioners may be from the same political party at any one time. The FCC operates under the Administrative Procedure Act which tells federal agencies how they can propose and adopt regulations. The FCC regulates all technologies using the electromagnetic spectrum, wireline and wireless telephone companies offering long distance services, enforce the Communications Act of 1934, grant license, and resolve disputes. Their rules and regulation affect entire industries. FCC members prepare a Notice of Proposed Rule Making explain what they plan to do and why which can be commented on before Report and Order. Final regulations become part of the FCC’s rules but can be challenged in a federal appellate court.  A federal court ruling takes precedence over an FCC decision. FCC rules have the effect of law.

Not all mass media need be treated the same way under the FA. Broadcasting uses the spectrum, a publicly owned natural resource only a few companies may use. The Court said the few companies using the spectrum have a special privilege, making it reasonable to regulate them. The spectrum prevents everyone who wants to broadcast from doing so. Spectrum scarcity is the reason courts give for allowing broadcast regulation. Not everyone who wants a license can have one because the spectrum can only accommodate a limited number of stations. Spectrum scarcity limits broadcasters’ FA rights. The Court said new technologies do not alter spectrum scarcity rationale.  Broadcast media are pervasive and they have greater influence on audiences and must be regulated.

Congress said it wanted public interest to come before station interests, but does not define public interest allowing the FCC to interpret and apply the phrase as the commission prefers. In the 80s, they decided public interest required deregulating the broadcast industry. The FCC turned to letting the market regulate broadcasting eliminating program requirements.

The FCC cannot censor content but they can set certain general programming rules like prohibiting hoaxes and regulating politician’s radio and TV appearances. Congress ensured broadcasters could not favor one candidate over another through Section 315 that guarantees equal opportunity (see relevant doctrine). FCC regulations explain that a legally qualified candidate is someone who has a publicly announced a bid for office, has their name on a ballot, or is a serious write-in. Use is defined as the candidate or their picture seen or voice being heard on a broadcast station or cable system and does not only apply to commercials. Congress adopted four exceptions to the use rule: regularly scheduled news programs, news interview program, bona fide news, or in a documentary if the candidate is not the primary focus. A candidate must request time from the statin or cable system within seven days of his opponent’s appearance. If they do not, the station or system does not need to honor it and they do not have obligation to notify opponents of candidates who use the station either. If one candidate uses the station or system without paying, opponents do not have to pay. Congress ensured politicians paid as little as possible through the lowest unit rate fare, equivalent to the rate the best commercial advertisers pay. Candidates must promise stations they will not refer to opponents in a commercial to reduce negative political advertising. They may refer to an opponent if the radio ad includes the candidate’s voice approving the commercial and a TV ad must show the candidate or their picture with a printed statement approving the commercial. 
 The lowest unit rate fare is in effect during the 45 days before primary and 60 days before general. Outside of these times, candidates can be charged regular advertising rates.

FCC regulations require commercials on a broadcast station to identify who paid for the ad. This applies to political candidates as well. Stations cannot edit or censor content so they are not responsible for what candidates say and ads must be broadcasted when they paid for it to be aired. Section 312(a)(7) requires ratio and TV stations to provide federal candidates with reasonable access and exempts noncommercial stations from complying with the section’s requirements. “Reasonable access” is not clear but a rule of reason is enforced. Broadcasters may not deny federal candidates time requested unless they cite a realistic danger of substantial program disruption.

If a station airs an editorial supporting a candidate, opposing candidates cannot request equal opportunity as stations have a FA right to support candidates. Section 315 doesn’t apply to ballot issues. Stations must keep records of requests they receive to broadcast political messages about candidates or about national legislative issues of public, political, or national importance. A 527 group may purchase ads focusing on political issues but can’t support or oppose individual candidates for elective office.

Congress and the FCC are still concerned about operating in the public interest illustrated by children’s programming rules. The Children’s Television Act of 1990 set general requirements for children’s programming on broadcast TV stations. The law does not apply to noncommercial stations or cable networks and limits commercial time before, during and after children’s programs on broadcast and cable TV. Programming must meet their educational and informational needs, are suitable for both adults and children and may promote TV children’s programs and support it in other ways. Ads are limited to 12 minutes per hour during the week and 10.5 minutes per hour on the weekends before, during and after programming meant for children 12 and under. Characters in children’s programs cannot appear in commercials before, during or after those programs. The FCC ruled that broadcast TV stations must carry three hours per week of children’s programming at least 30 minutes long, regularly scheduled between 7a.m. and 10p.m. local time weekly. The FCC can choose not to renew a license if stations do not meet these requirements. Internet websites can be shown during children’s programming only if it offers a substantial amount of program-related or noncommercial content, is not intended for commercial purposes, has pages clearly labeled to distinguish noncommercial and commercial sections, and does not immediately display a page used for commercial purposes. The FCC prohibits cartoon or live action characters in children’s programs in commercials selling products. The FCC does not act as a censor because they do not tell licensees what topics to address.

Stations may carry information about some, but not all lotteries,. They can carry information about contests sponsored by nonprofit groups or companies that do not sponsor lotteries as primary business. They can also carry casino ads if it is legal int eh state as well as station promotional contests. Ads must be honest and accurate and contests must be carried out as the ads describe.

The FCC forbids stations to broadcast a hoax. It is illegal to transmit a false distress signal or any fraudulent signal. The famous hoax was a 1938 radio drama by Orson Welles, “the War of the Worlds.” In 1992 the FCC adopted a rule prohibiting false reports of crimes or catastrophes that directly cause foreseeable, immediate, substantial and actual public harm.

The FCC adopted the fairness doctrine that states TV and radio stations had to air programs discussing public issues and include a variety of views about controversial issues of public importance. It is justified by the licensee’s responsibility to the public but was found in violation of FA rights and was eliminated. Two feature remained: the personal attack rule that required stations to provide free reply time to any person or group whose integrity, honest or character was attacked on the air and the political editorial rule that required them to give free time for a legally qualified candidate to respond to an editorial opposing the candidate or promoting their rivals.

Broadcasters must disclose when they are paid to air material. Product placement and video news releases comes under this regulation. Congress enacted tot anti-payola law in 1960 to make clear that taking money to play records violated FCC regulations and could lead to criminal punishment but it did not stop payola. Even when neither TV stations or cable channels received money to play VNRs, if a story that focuses too much on a product or brand in the programming needs to identify a sponsor.  

It is unlawful to broadcast in the US without an FCC license. Licenses allow stations to use apart of the broadcast spectrum for eight years and can be renewed for another eight years if the licensee has operated in the public interest, has not violated FCC rules or has not abused the law. They are not transferrable and can be auctioned (not for noncommercial stations). Licenses are obtained when criteria are met under the 1934 law and FCC regulations. No foreign corporations, no corporations rations with more than 20 percent ownership or a corporation controlled by another corporation with more than 25 percent foreign ownership because Congress did not want American media used for foreign propaganda. Licensees need good character, technical expertise and sufficient funds to operate a station. The FCC removed and changed ownership restrictions so now a single company can own five to eight radio stations in a metropolitan area and one company can own television stations reaching a maximum of 39 percent of the country’s television households. A company may also own two TV stations in the same community if no more than one of the station sis among the four highest-rated stations in the city, and at least eight independently owned commercial or noncommercial TV stations remain in the community.  Now, one owner could control a newspaper and a broadcast station in the same city if the station is not one of the four most popular TV stations in the city and at least eight independent major media voices (commercial and public full-power TV stations and major newspapers) remain in the metropolitan area. The FCC encourages stations to recruit members of minority groups and women as employees.

The FCC also oversees public broadcasting stations that must comply with mot of the same rules as commercial broadcasters. Corporations and individuals make financial contributions and may receive on-air acknowledgments, but there are no ads because advertisements on noncommercial stations are banned. The FCC prohibits announcements containing descriptions or exhortations to buy, rent or lease products and services. Public stations must adhere to objectivity and balance in all programs. The Court has allowed public stations to air editorials favoring or opposing public and political issues because they have important journalistic freedoms under the FA. Licenses to operate noncommercial stations are awarded by a point system based on ownership diversity, technical proposals allowing their signal to cover large areas and if the applicant is based within the community for which the license is being awarded.

Cable TV was born because some could not get a TV signal. Some CATV used microwave transmissions so the FCC had jurisdiction. The Court held that the FCC had a right ot oversee CATV because of its responsibility toward broadcasting. With distant signals and HBO, cable TV could offer programming not on local TV. Cable wires started to go across public rights-of-way (streets, sidewalks) and the FCC took control of pole attachment agreements to limit the rates pole owners could charge cable companies. The Cable Communications Policy Act of 1984 gave local and state governments and the federal government shared authority over cable. The Competition Act of 1992 responded to complaints of high rates by allowing the government to regulate rates cable systems charges. Competition would keep down rates and improve customer service. The Telecommunications Act of 1996 loosened these regulations to foster competition, deregulated cable rates and allowed companies to raise prices without government permission. Strict scrutiny was applied to cable content regulations. The Court said cable send signals by wire and not air so spectrum scarcity does not apply. They said cable systems had to fully scramble adult channels so programs could not be seen if signals bled or they could choose to carry adult programming only late at night. As a content-based law, the Court said shielding children form adult programming is a compelling government interest but subscribers an tell the cable company to block adult channels. Strict scrutiny is the proper test for content-based regulations applied to cable TV.

Cable TV needs local government approval to broadcast and must register with the FCC and obtain a franchise from the franchising authority where the system offers service. Franchises contain provisions like definite periods of time of 10 or fewer years and can be renewed. Franchise fees are charges cable companies pay to use public rights-of-way. A franchise may require a cable system to offer certain categories of programming such as children and news. If a company decides not to renew, the city must hold a hearing to make a decision. A renewal may be denied if the operator did not meet obligations, provided poor customer service and inadequate programming, does not have the financial, legal and technical ability to operate, and did not promise to meet the community’s future cable needs. Franchising authorities may not grant exclusive cable franchise. The FCC stepped into the process to ensure existing cable companies faced competition and adopted regulations to prevent franchising authorities form unreasonable preventing new cable providers from offering service. Congress allowed the FCC to limit the number of subscribers to one cable operator could serve to prevent an operator from monopolizing cable service or programming.

 Congress adopted must-carry rules to prevent stations not carried because they have no audience or advertisers from going out of business. The number of stations a cable system must carry depends on how many channels it has. It is required to carry the station on the cable channel number that is the same as the station’s on-air channel number. A local station may choose to negotiate with the system for carriage also known as retransmission consent. Cable systems could carry broadcast TV stations only with the station’s consent or under the law’s must-carry provision. Noncommercial station may not choose retransmission consent because they are under the must-carry provision. Must-carry rules are content neutral because they do not dictate specific programming. Congress saw PEG access channels as a way to allow the public, educational institutions and governments to access cable systems by permitting a franchising authority and a cable company to negotiate to set aside channels for public, educational or governmental use. Under intermediate scrutiny the law’s PEG provision was constitutional. The 1984 cable act prohibits cable operators from exercising editorial control over PEG or leased access programming. Nonduplicaiton rules allow a station carrying network programming to insist a cable system block duplicate network programs even if they don’t run at the same time. Syndicated exclusivity rules apply to specific programs stations purchase on a market-by-market basis. An FCC rule states a team may prohibit a local cable system from carrying the team’s home game. The law requires cable companies to sell programs to competitors to prevent them from developing programs they keep to themselves. Cable systems are also limited by the number of channels they can use to show programming controlled by the system’s owner. Congress limits the information cable systems are allowed to collect and distribute like names, addresses and phone numbers. They may not share the information without the customer’s permission unless it is necessary to provide requested programming and other services. Cable systems are required to give customers an annual written notice explaining their privacy rights as well.

Direct Broadcast Satellite (DBS) service was categorized by the FCC as a point-to-multipoint nonbroadcast service and relieved them of regulations broadcasters face to encourage it as a cable competitor but was turned down in court. The FCC imposed regulations, required them to use 4 percent of their capacity for educational programming and required them to comply with the same advertising limits during children’s programming applied to broadcast TV stations. Congress allowed satellite services but it must offer all high-definition signals from all stations in that city if the service offers one or more local stations in high definition.

The FCC has ancillary jurisdiction to regulate the Internet as of 2005 but has been accepted and rejected by courts since. The Court held that cable TV systems do not have to give customers a choice of ISPs. The Court said the law was ambiguous on this point and the FCC has a right to interpret that part of the law. The FCC decided each cable Internet access is an information service, not a telecommunications service permitting cable systems operators to choose what ISPs may offer high-speed Internet access through cable modems and prevents local cable TV franchising authorities from regulating high-speed Internet access through cable modems. The FCC tried to deal with network neutrality (ISPs blocking/delaying certain Internet transmissions to allow other messages to be sent more quickly) but the US Court of Appeals said they had no authority. So the FCC adopted ruled forbidding ISPs from blocking lawful content and applications the computers use nor may providers unreasonably discriminate in transmitting content.

The Court held that the Internet has complete FA protection. The Communications Decency Act (CDA) was used as a defense to prohibit using the Internet to transmit indecent patently offensive or material to minors, but unlike broadcasting, the Internet does not have any special characteristics that require decreasing its FA rights. The Internet is a unique medium that is not located in a particular geographical location, is available to anyone anywhere and is a vast platform to address and hear from a worldwide audience. As a communications medium, it includes traditional, like print and news, and nontraditional, like audio and video, communication services that are interactive and in real-time. The Internet has full FA protection, but does not protect obscene material in any medium.

Key Definitions

1.     FCC- An independent US government agency, directly responsible to Congress, charged with regulating interstate and international communications by radio, TC, wire, satellite and cable

2.     Broadcasting- over-the air and TV broadcasters use the electromagnetic spectrum to send signals to many listeners and viewers simultaneously

3.     Spectrum scarcity- the limitation that arises because only a certain number of broadcast radio and TV stations in a geographical area may use the spectrum without causing interference with other stations’ signals

4.     Franchise- contract/agreement between a government, usually a city, and a cable system operator

Important Cases

1.     Red Lion Broadcasting Co., Inc. v. FCC- FCC rule requiring a station to offer free time to an individual personally attacked by comments made on the station-audience right to hear both sides of the issue were more important than the licensee’s FA rights.

2.     Turner Broadcasting System, Inc., v. FCC - must-carry rules are not content specific- must-carry rules are content neutral because they do not dictate specific programming

Relevant Doctrine

How Section 315 Works

1.     If two or more legally qualified candidates

-       A legally qualified candidate has publicly announced her candidacy and has secured a place on the ballot or is serious write-in candidate

2.     Are competing for the same elective office and

-       In a primary election, the test is whether they are running for the same nomination, office and political party

3.     One candidate uses a broadcast station or cable system

-       Use is the candidate, candidate’s picture/likeness/voice (but not only the name) being on the station or system—regardless of whether the candidate discusses the election

-       But it is not a use if the appearance is

-       On a regularly scheduled newscast, news interview program, on-the-spot news, documentary (not primary focus)

4.     The station or system, if asked,

-       A candidate must make a request within seven days of his opponent’s use

5.     Must provide equal opportunity to the other candidate(s)

-       Equal opportunity to reach approximately the same audience for approximately the same amount of time

6.     At the lowest unit rate or a comparable rate

-       Free if the first candidate did not pay for the time

-       At the lowest unit rate if the ad runs 45 days before a primary/60 days before a general election

-       At rate comparable to other advertisers if ad runs outside eth lowest unit rate periods

7.     And without editing or censoring the candidate’s message.

Local Radio Station Ownership

The FCC’s rules say a licensee may control a maximum number of radio station licenses ina community, depending on the number of local radio stations

-       Communities with up to 14 radio stations: up to five, but no more than three AM or three FM stations, and no more than half the total number of stations in the community

-       Communities with 15-29 stations: up to six stations, no more than four AM/FM

-       Communities with 30-44 stations: up to seven stations, no more than four AM/FM

-       Communities with 45 or more stations: up to eight, but no more than five AM/FM

Issues/Controversies

Electronic media, especially radio and TV, must comply with regulations that are not applicable to print. They need to obtain a license from the FCC before broadcasting anything. Standards have been set to allow messages to reach their destinations without other messages interfering. The Internet is largely unregulated by either the FCC or other government agencies and has full FA protection. Definitions and categorizing broadcast mediums is difficult and wavering because of the changes in new media. Congress said it wanted public interest to come before station interests, but does not define public interest allowing the FCC to interpret and apply the phrase as the commission prefers.  Another example is that “reasonable access” is not clear but a rule of reason is enforced. Broadcasters may not deny federal candidates time requested unless they cite a realistic danger of substantial program disruption. The justice system has to adapt to the rapid changes in technology in order to apply a standard to media.  Until then Courts, the FCC and broadcasting system operators are dealing with issues case-by-case and learning along the way.                                                                                                                                          

Questions/Concerns

My main concern is that standards, rulings and regulations are constantly changing. I understand that the increasing speed and volume of new media communications is moving faster than courts can handle, but the Court needs to make decisions now because technology is only going to evolve more. These issues are not going to go away. In fact, they are only going to grow because the Internet and mass broadcasting media are going to expand and become permanent parts of human society.

References:   

 Trager, R., Russomanno, J. & Ross, S.D. (2012), The law of journalism and mass communication. Thousand Oaks, CA: Sage Publications.
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