The FCC's jurisdiction isn't
free-floating, though. The governing statute -- the Communications Act
of 1934, as amended -- gives the agency authority to do specific things
in specific situations to specific actors. In particular, if an entity
is engaged in the provision of "telecommunications" to the public for a
fee, it is subject to the obligations set out in Title II of the Communications
Act. If it is engaged in "broadcasting," then it is subject to certain
of the obligations set out in Title III of the Act. If it is a "cable system,"
then it is subject to the obligations of Title VI.
Title II (which was derived
from the Interstate Commerce Act of 1887), imposes obligations on folks
who provide interstate "telecommunications." That term covers ordinary
telephone service, as well as other services in which a company moves a
customer's information from point A to point B. It doesn't matter whether
the company uses wires, terrestrial wireless or satellites to transmit
the information. A company providing telecommunications to the public for
a fee is referred to as a "communications common carrier" or a "telecommunications
carrier," and is potentially subject to a whole bunch of regulatory obligations,
including rate regulation, rules designed to protect customer privacy,
and various taxes and tax-like obligations. In practice, the FCC has found
ways to avoid imposing many of these obligations in competitive markets.
Title II also imposes special obligations on incumbent local telephone
companies, and on Bell telephone companies in particular. A firm is exempt
from all of these requirements to the extent it is providing an
"information service" (that is, a service involving not only the transport
of information, but also its manipulation or the provision of new information.
Lexis and Westlaw are information services.)
Title III (which was derived
from the Radio Act of 1927) imposes obligations on all folks who engage
in "radio transmission," which is to say, any form of communication over
the airwaves. For the most part, folks engaging in radio transmission need
a license from the FCC. In addition, Title III imposes some special obligations
on firms engaging in "broadcasting." That term covers ordinary over-the-air
radio and TV (together with any other communications over the airwaves
"intended to be received by the public"); it does not, however, cover DBS.
Historically, the FCC has granted broadcast licenses only after an extensive
public-interest inquiry, although recent trends and legislation have made
the licensing process more mechanical. The statute bars "indecent" broadcast
programming.
Title VI (the Cable Communications
Policy Act of 1984, as amended) imposes obligations on "cable operators."
It structures the relationships between cable operators and local governments,
and sets out a bunch of cable-operator obligations including the obligation
to carry public-access channels and local TV signals.
The FCC plainly has authority
to regulate the telephone or cable systems that your packets traverse in
order to get from your home to the Internet. [This is important. One of
the most important components in the Internet's growth in the U.S. was
the FCC's decision that ISPs need not pay per-minute "access charges" for
their connections to local telephone networks. Increasingly, though, these
issues are getting more complicated. Imagine a bunch of friends, each signing
on to his or her ISP and surfing on over to yahoo.com. One uses a dialup
connection, over ordinary phone lines. One has a cable modem, so that her
packets travel over cable television plant. A third uses a Ricochet wireless
modem. A fourth has a subscription with DirectPC, and gets his downloads
via a satellite dish. Each of these connections is subject to a different
regulatory regime. To the extent that the user is doing the same thing
in each case (and doesn't care much about the underlying transmission medium,
except insofar as it gives him a faster or slower connect speed), it's
not obvious that treating them differently makes a lot of sense.]
I want to focus here on a different issue, though: What authority does (or should) the FCC have over communication using the Internet? To what extent should the FCC be able to assert regulatory authority on the ground that the service is "really" broadcasting, or telecommunications, or whatever? With respect to each form of Internet communication, it makes sense to ask two questions.
Make sure your computer has a sound card. (Computers sold today for home use usually do; I don't know about the ones in the law school library.) Now check out NPR Online, and listen to the news for a minute. (Look over on the left-hand side of the page to get news in Quicktime, RealAudio, and Windows Media formats.) Take a look at RadioTower.com, which lists over 1300 "radio stations" available on the Web, or RadioJump!. Some of these stations are conventional radio stations that make their content available on the Web as well as over the air, but others are Internet only: They sound like the others, except that there's no radio station. Rather, the content provider is making the content available only over the Net. Or go to www.spinner.com, download the Radio@Netscape Plus plug-in, and then listen to one of the more than 175 "stations" Netscape programs.
Now spend a little time at Yahoo Broadcast and in particular check out the "TV" link. Watch some TV, if you can. If you can't, you might try CBS News -- click on the CBS i-Video tab.
Is this "broadcasting," under the statutory definition? (Hint: How is the transmission getting from the content creator to you?) If this isn't "broadcasting," then it follows that the "real" radio stations you can hear over the Web are subject to a completely different regulatory regime from the Internet-only stations. Should they be? What if, five or ten years from now, more people listened to "radio stations" over the Internet than over the air? How would it be appropriate for the FCC (or Congress) to react?
It's hard to push video over an ordinary dialup phone line, and the picture is primitive, but the situation is somewhat better if you have access via cable modem or DSL. With an even fatter pipe into the home, the picture quality could be better still. What would be the consequences if, ten or fifteen years from now, more people watched television over the Internet than over the air? How would it be appropriate for the FCC to react?
Come to think of it, if you're watching television over the Internet, should your ISP be considered a cable operator? (The answer under the 1996 Telecommunications Act is no. Should it be?)
As it turns out, the major legal obstacle to Internet broadcasting has come not from communications law, but from copyright law. Copyright law recognizes two sorts of copyrights in a musical work such as a popular song. The first is a copyright in the song itself; it vests in the folks who wrote the music and lyrics, and is usually licensed through ASCAP or BMI. The second is a copyright in the "sound recording." It protects the authorship involved in performing the song and creating the recording, and vests in the performers and recording engineers; as a practical matter they almost always sign it over to the record company. Conventional broadcasters need to get ASCAP and BMI licenses, but they don't need to license rights in the sound recordings. That is, they don't need to pay anything to the record companies -- the conventional understanding is that the record companies get sufficient promotional value from the radio play, and need no additional remuneration. But Congress, in the 1995 Digital Performance Right in Sound Recordings Act, as amended in 1998 by the Digital Millennium Copyright Act, set out different rules for webcasters. Webcasters must secure ASCAP and BMI licenses, but in addition Congress directed a copyright arbitration royalty panel, under the auspices of the Library of Congress, to set a rate that webcasters would pay the record companies for the privilege of disseminating over the Internet music in which those companies owned "sound recording" rights.
The panel's recommendation, substantially affirmed by the Library of Congress, plunged small webcasters into despair; as Amy Harmon explained in this New York Times article, many would have had to pay license fees substantially in excess of their total revenues. Newsweek headlined its item "Labels to Net Radio: Die Now." This more nuanced analysis came from the Future of Music coalition. Read all three accounts.
After extensive lobbying, Congress ultimately passed this bill. What does it do?
What should the legal system
do in response?