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December 2, 2008
Regulating morality
Outgoing Federal Communications Commission Chairman Kevin Martin is pushing for action in December on a plan to offer free, pornography-free wireless Internet service to all Americans, despite objections from the wireless industry and some consumer groups.
according to the Wall Street Journal.

I wonder who is going to decide what is pornography?

And does this mean drug abuse, domestic violence, gambling addiction, infidelity, negligent or reckless parenting, over-spending, etc. are okay?

June 18, 2007
UPDATE: Rural Phone Companies Promoting "Adult" Lines Sued

My recent post, Paying for Porn, notes that the FCC is looking into an alleged scam in which rural phone carriers are collecting huge federal universal service fees for connecting long-distance calls to "adult" chat lines.

Ever wonder which companies are alleged to have done this? Here's a list, complete with map, from The DesMoines Register. AT&T and Qwest have filed suit against them.

Telephone companies sued: Lawsuits filed separately by Qwest and AT&T allege seven Iowa companies have illegally collected fees. Copyright (c) 2007, The Des Moines Register.

June 7, 2007
Paying for Porn

The Federal Communications Commission is looking into a scam involving the attempt by local phone carriers in rural areas to collect more access fees from the major long-distance providers by increasing the number of calls from "adult" chat lines.

Rural carriers have long received fees (up to 5 cents per minute) from long-distance carriers for every call they connect. The original intent behind this, of course, was to ensure that rural citizens have (subsidized) phone access. So when you make a call from New York City to your grandparents in North Dakota, Verizon pays an access fee to your grandparents' local carrier for the connection. And the smaller you grandparents' local carrier is, the higher the per-minute fee it gets to collect. So, unsurprisingly, some small local carriers figured out that they more calls they connect, they more money they will collect.

Hence, some rural carriers decided to sell local area codes to adult chat lines. That way every time someone calls the adult line, the rural carriers get a connection fee. Revealing how out of control all of this has gotten, one Senate staffer said recently:

To illustrate the success this program has had, consider this: in July 2005, the rural phone company in Wayland, Iowa showed 40,000 minutes of long-distance calls received; in December 2006, they showed 10 million minutes. Of those calls, half were to the same four phone numbers, all adult chat lines.

Family advocacy groups are upset, because such calls to regular area codes can not be automatically blocked. At least with the old 1-900 numbers, parents could automatically block such calls.

We hardly needed one more example of the unintended consequences of regulation. But here it is anyway.

May 25, 2007
Bundles of Joy?

Many parents are fed up with violence on TV, and rightly so. This has led many social conservatives to weigh in on the side of a la carte regulation. Self-described "veteran of the culture war" Paul Weyrich of Free Congress Foundation has now joined the chorus.

Weyrich is certainly right to be appalled at the amount of time spent watching TV--so much so that he wonders if "the television set ha[s] become the equivalent of a parent." And yes, "it would be simpler if Americans could simply pick the stations we want and not take the channels we do not." We do not, however, have a right to demand that companies whose products we choose to buy package their product to our liking.

I'm reminded of a colleague's reflection that when he had to replace his child's purple crayon he had to buy an entire bundled package of crayons rather than just the one he wanted. This is a common business practice, and it is hardly conspiratorial. Companies must remain free to determine how to package their products.

I know the "just turn off the TV if you don't like the programming" response gets old. But as Weyrich notes, a Nielsen Media study recently showed that American homes have the TV for an average of 8 hours 11 minutes everyday. So the "I'm doing my part but the bad programming keeps coming through" hardly seems true. This is not to mention V-Chip technology, set top boxes, TiVo/DVR, etc.

And finally, as content choices become ever more available--nitch content of all sorts--consumers have more freedom than ever before to find the programming they desire. Network shows are regularly available online, and cable news is hardly the only (or perhaps best) way of finding out what is going on in the world.

March 20, 2007
Cleaning up the airwaves

A poll conducted by Kelton Research last month for TV Watch found a big majority thinks parents should do a better job controlling what their kids watch on TV -- and oppose a bigger role for the government.

It's Up To Parents to Exercise Greater Responsibility In Deciding What Their Kids Should Or Should Not Be Watching On Television 75%
The Government Should Expand Its Control Over Television Networks And Make Decisions About What Everyone Sees22%
Don't Know/Refused3%
Click here to read more.

Earlier this year, FCC Chairman Kevin Martin renewed his call for the cable industry to voluntarily offer a family friendly programming package and not require subscribers to pay for programming they consider unsuitable. Last month the FCC fined one broadcaster $24 million for violating the Children's Television Act (see, e.g., this). And this is not just about violence and sex during the family hour. Tomorrow, for example, the FCC will participate in the Task Force on Media and Child Obesity, meeting on Capitol Hill.

These initiatives are all well-intentioned and address serious problems, to be sure, but no one can be positive where this would lead. The government generally finds it hard to resist special interests and vocal advocacy groups, doesn't it? During the "golden age" of television, the emphasis wasn't just on decency but also on avoiding political controversy. Social conservatives may cheer the present Administration's commitment to religious values, but a future administration may have more interest in promoting someone else's secular values.

March 15, 2007
FCC is Backsliding

A Federal Communications Commission staffer reports that commissioners are considering a 30% cap on the number of households a single cable operator may serve. Multichannel News notes that a cap would primarily affect one company:

Citing Kagan Research, Comcast recently told the FCC that it serves 26.2 million subscribers, or 27% of the country's 96.8 million pay TV subscribers. Under a 30% cap, Comcast could, in a few years, find itself refusing service to customers seeking to sign up for its fast-growing voice-video-data triple-play bundle. The 30% cap would also effectively block Comcast from buying a cable company with more than 3 million subscribers.
If cable operators were the only source of video programming, it might make sense to have a rule like this. But, as everyone knows, they aren't. There are the broadcasters, the Direct Broadcast Satellite providers and now the big telephone companies and the Internet. It's hard to imagine any one company dominates this media galaxy. But if so, that's why we have the Antitrust Division.

Intuitively, some people feel if we have more cable TV owners and CEOs, it stands to reason we'll get more diverse views and programming. In reality, most investors and managers are motivated not by individual political, cultural or artistic agendas, but on serving customers, i.e., providing whatever sells. Others recall that, for whatever reason, back when we had heavy-handed regulation television seemed much more "tasteful" than it does today. But that's only because society's values used to be different. It's impossible to legislate taste and morality.

A 30% cable cap will allow the FCC to extort anything it wants from Comcast, the only cable company with a market share approaching 30%. Because, eventually, Comcast will need to seek a waiver. We don't know who will be running the FCC when that happens, nor what their political, cultural or artistic agenda may be.

November 30, 2005
à la carte (continued)

I agree, as usual, with my colleague Bret Swanson that regulating cable pricing is an awful idea and that the debate over à la carte is moot in any event.

Chairman Kevin Martin isn't proposing to require à la carte programming, but he is impatient with the cable industry for not doing enough, as he put it, to give parents more tools to navigate coarse programming. Re-regulating cable would be a disaster. Just remember back to 1992 when Congress and the FCC tried to regulate cable rates and almost bankrupted the industry. There are many smart people at the FCC, but the effort to protect consumers from cable rate hikes proved to be too complicated and Congress had to repeal the whole thing.

As a parent of two young children I have dealt with this problem by not subscribing to cable at all, but I realize that I am in the minority. For everyone else, there already are tools to block unwanted content. Right now, analog set top boxes allow parents to block designated channels. Digital set top boxes allow parents to choose between blocking unwanted channels or simply blocking particular programs or preventing any viewing at all during certain hours. And, most newer televisions contain a V-Chip inside which allows parents to block programs based on their ratings categories (unfortunately, the program ratings don't apply to advertising). Most consumers have or will acquire digital set top boxes and/or new TVs in order to be able to receive the digital broadcasts that Congress has mandated for the purpose of increasing federal revenues. The bottom line is that technology is solving this problem -- unless we eliminate the need for it with reckless regulation.

Chairman Martin also mentioned that he has asked the cable industry to voluntarily offer a family friendly programming package and not require subscribers to pay for programming they consider unsuitable. Everyone agrees that a family-friendly tier sounds like a good idea, but the cable industry is apparently not convinced that a market exists. Adam Thierer notes that a few years ago, DirecTV offered a "Family Choice" tier with about ten channels for just $5 dollars per month, but dropped it due to insufficient consumer demand.

Matt Polka, testifying on behalf of the American Cable Association, suggested a variation when he noted that some of the group's 1,100 members would like to move channels with indecent programming to a separate tier. "The problem is: They can't," according to Polka, "The wholesale practices of the media conglomerates prevent it." He said that indecent programming and channels are "tied" to broadcast channels through retransmission consent or to "must have" cable channels. In antitrust law, to "tie" means to offer to sell one product only on the condition that the buyer agrees to purchase a different product. It has nothing to do with discounts for bundled products. If tying arrangements are occurring, these companies should talk to their lawyers.

Like Bret, I don't think that the current cable tiers will ultimately be able to compete with the cornucopia of content that will be available on the Internet. I also think that the technological solutions offer more promise than is generally assumed. The technological solutions are frequently derided as too complicated for many adults to manipulate. If that's the issue, the industry is in the best position to work it out. Maybe the issue is that we don't like what other parents' children are watching. Draconian measures would be needed to solve that problem.

Dotted Divider Line

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