Telecom for Dummies


By necessity, most news reports about media consolidation are so dry and technical, they put even the most attentive readers to sleep. But while we slumber, the Bush administration is busy ceding huge chunks of the once-public electronic media to a handful of corporate execs. And when the moguls achieve market domination, they will no doubt exploit it by jacking up the price of our cable, Internet, and phone service, and running competitors and critics out of business.

Given the speed of this consolidation—and the sudden flush of TV ads by Time Warner, AT&T, and Verizon—even the most apolitical of media watchers should take a minute to study how and why this game is being played. What follows is a brief (and by no means definitive) guide to the players and concepts involved.

Michael Powell: When it comes to media moguls, we tend to think of News Corp. chairman Rupert Murdoch and Viacom’s Sumner Redstone. But arguably the most powerful man in media, this year’s red-hot center, is Michael Powell, the Bush-appointed chair of the Federal Communications Commission.

Son of Secretary of State Colin Powell, the 38-year-old former army brat is a diehard with a pro-business agenda. In speeches, Powell has called regulation “the oppressor” and declared the FCC’s original mandate—serving the public interest—to be “about as empty a vessel as you can accord a regulatory agency.”

FCC: Powell’s turf is the subject of cover stories in the September issue of Mother Jones and the Voice in July, both by Brendan I. Koerner (click here to read the Voice article). In Mother Jones, Koerner writes that the FCC was founded in 1934 to protect consumers from monopolies and price gouging. But this year, the private sector’s desire to reverse that mandate has found a champion. Under Powell, the five FCC commissioners hobnob with corporate “clients” on expenses-paid trips to Cancun and Madrid—when they are not issuing decisions that will promote their clients’ monopolies and price gouging.

Kathleen Abernathy: Powell’s commissioner is a Bush-appointed Republican lawyer and former lobbyist for several telecom companies. According to fans, the 45-year-old wife and mother is an “extremely well-liked individual” whose goal is to make the FCC more “customer-friendly.”

Astroturf: Slang for think tanks with innocuous-sounding names like Alliance for Public Technology and Keep America Connected. While these groups churn out ads and studies that purport to represent the interests of rural and minority consumers, in fact, they are funded by a consortium of telecom companies that are hell-bent on deregulation for their own benefit.

Cross-ownership rules: Traditionally, these rules were meant to ensure that no single media company would control too many properties in the same market, but today they are more honored in the breach than in practice. In July, the FCC suspended one such rule so that Murdoch can now legally own two TV stations and one newspaper in New York. The decision was zapped by a New York Times editorial, which called it a threat to media diversity and a spur for “other news organizations to explore the acquisition of multiple outlets in the same geographic area.”

Ernest Hollings: This South Carolina Democrat and chair of the Senate Commerce Committee is the most outspoken critic of deregulation on Capitol Hill. In a hearing two months ago, he mocked Viacom’s Mel Karmazin for suggesting that FCC regs are seriously hurting profits in the broadcast industry. Hollings has since introduced a bill that would enforce current regs and require the FCC to conduct a study of the market before it abolishes any more restrictions on media consolidation.

Reed Hundt: Author of You Say You Want a Revolution, a memoir recounting his 1993-to-1997 tenure as FCC chair, Hundt gives good quotes to the press. He told Mother Jones that, as commissioner, “You’re really struck by the pressure of the lobbying. . . . It’s ubiquitous, it’s personal, it’s hard-edged. It’s also seductive.”

Robert W. McChesney: Author of Rich Media, Poor Democracy, McChesney is the leading liberal critic of profit-driven media culture. Arguing that politicians and industrialists have conspired to silence any public debate over consolidation, McChesney sees democracy as seriously threatened by the trend toward “concentrated, conglomerated, and hypercommercialized” media.

Monopoly: The holy grail for every big media company. Currently a handful of companies are vying to monopolize the markets for cable TV and high-speed Internet service, with the help of Congress, the FCC, and the federal courts. The top dogs in the cable world are Viacom and AT&T, each of which now controls more than 40 percent of the market. The market for high-speed Internet access, or broadband, is now dominated by AT&T, which offers cable access, and the Bell companies, which offer access by DSL, or digital subscriber lines.

1996 Telecommunications Act: This historic bill accelerated the pace of media consolidation. In one provision, the act requires the FCC to review industry regulations every two years, with a view toward their eventual repeal. It also repealed cross-ownership laws for radio. As a result, according to Mother Jones, the radio industry has consolidated to the point where four companies control
90 percent of the ad revenue.

Billy Tauzin: Chair of the House Energy and Commerce Committee, this Louisiana Republican is big media’s best friend on the Hill. He recently introduced the Tauzin-Dingell bill, which would allow Bell companies like Verizon to give customers only one choice for high-speed Internet access while maintaining a monopoly on local phone service. In his previous job as chair of the House Telecommunications Subcommittee, Tauzin was wined and dined by Murdoch; and in December 1999, Time Warner cosponsored Tauzin and his wife on a $19,000 trip to Paris. His daughter is a former employee of the National Association of Broadcasters and his son is a lobbyist for BellSouth.

Tribune Company: Last year, the Tribune acquired Times Mirror, a deal which gave the company a TV station and a newspaper each in L.A., New York, and Hartford, Connecticut. In July, Tribune exec Jack Fuller lobbied Congress to loosen the cross-ownership rules, arguing that such a move is essential if the industry is to sustain the quality of its news coverage.

Gloria Tristani: A Clinton appointee to the FCC, Tristani plans to resign imminently, though her term does not expire until June 2003. Her departure leaves three Republicans and one Democrat on the FCC, all appointed by Bush, who will now appoint a Democrat to replace her. Of course, not all Democrats are curmudgeons. David Goodfriend, a Clinton-era FCC adviser, has said that only a “pretty cynical” observer would think that going on corporate junkets could bias the agency’s decision-making. Wonder how many times he went to Cancun?