An extract from The Technology, Media and Telecommunications Review, 11th Edition


i Regulation of media distribution outlets generally

The regulation of media distribution outlets and content varies depending on the business model and technology being used. As previously noted, internet-based content delivery is very lightly regulated in the US. Traditional media outlets historically have been regulated more heavily by the FCC.

Regulation of content and content providers

The First Amendment to the US Constitution guarantees the freedom of speech, and limits the ability of the government to regulate the content of a broadcaster's programming, or content providers directly. Several decades ago, the courts recognised the FCC's authority to prohibit 'indecent' programming by free, over-the-air broadcasters, based on the government's interest in ensuring that scarce spectrum rights are used in a manner that serves the public interest, and the unique pervasiveness of broadcast media in the lives of Americans and their children. As discussed below, those rules do not apply to the CATV and satellite video and audio service providers whose coverage extends throughout the US. It is unclear whether the FCC's rules remain constitutional in today's media-rich market where many different media outlets serve the same household.

In recent years, the FCC has fined stations that aired 'fleeting expletives' (incidental words or gestures that are broadcast despite the reasonable precautions taken by the licensee to avoid indecent broadcasting). For example, in 2006 the FCC fined affiliates of the ABC and Fox networks millions of dollars for airing such material during their programming. Both networks subsequently challenged these fines in the courts. In June 2012, the US Supreme Court invalidated the fines on due process grounds, finding that the FCC had not fully articulated its rule against fleeting expletives until after the programmes in question had been aired. In taking this approach, the Court left open broader questions as to whether the FCC's 'fleeting expletives' policy violates the First Amendment or otherwise is unconstitutional.

Internet-based media platforms, including social media platforms, have long been shielded from liability by Section 230 of the Communications Act both for third-party (i.e., user-generated) content and for such platforms' good-faith exercise of editorial discretion to block or limit access to users' posts. In May 2020, however, the President issued an executive order articulating a narrow view of Section 230 immunity, and setting in motion a re-examination of the statute at the federal level, including at the FCC. Various groups have mounted legal challenges to the executive order.

Terrestrial broadcasting

Television and radio stations broadcasting video content for free to listeners and viewers via terrestrial radiofrequency spectrum are subject to extensive regulation by the FCC, which has exclusive licensing authority over such stations in the United States. Among other things, the FCC has adopted detailed technical rules governing this type of broadcaster, restricted their ability to air 'indecent' programming, imposed political broadcasting and other 'public interest' obligations on them and adopted multiple ownership restrictions. These regulations are largely premised on the idea that radiofrequency spectrum is a scarce resource, and thus the FCC should promote localism, diversity of ownership and service in the public interest.

Carriage of broadcast television programming by MVPDs and other parties

When Congress imposed a variety of obligations on cable operators with respect to their carriage of local broadcast television signals in 1992, it was concerned that the MVPD industry posed a threat to broadcast TV stations (given better transmission quality, greater choice of programming, etc.). Congress was also concerned that MVPDs would become the predominant means of distributing video programming to consumers, and then could use that market position to preclude local broadcasters from reaching those consumers effectively. To address this concern, Congress established a statutory framework allowing each over-the-air TV station, on a local-MVPD-by-MVPD-basis, to elect either 'must carry' status (ensuring mandatory carriage on an MVPD serving the local market of that station) or 'retransmission consent' (requiring an MVPD to obtain the station's consent before carrying its signal). This new right supplemented the compulsory copyright licence established in the Copyright Act, under which content owners receive a statutory fee from MVPDs in connection with their retransmission of broadcast signals, but MVPDs do not need the consent of those content owners.

Initially, most local broadcasters were unable to negotiate cash compensation in exchange for granting 'retransmission consent' to MVPDs; at best, they typically were able to negotiate 'in kind' deals, such as commitments from MVPDs to purchase advertising time. More recently, local broadcasters have begun to demand cash compensation, and many have indicated they would withhold 'retransmission consent' from an MVPD unless they are paid for the carriage of their signal. For example, in 2013, the CBS network declined to extend its grant on retransmission consent on existing terms, and carriage of that network on a major MVPD was disrupted in a number of major US markets for several weeks. However, in March 2014, the FCC took action that increased MVPDs' bargaining position somewhat; specifically, the FCC revised its rules to preclude the joint negotiation of 'retransmission consent' agreements by multiple broadcast television stations that are ranked among the top four stations in a local market and not commonly owned. The FCC explained that such action was necessary to ensure that broadcasters did not enjoy undue leverage in such negotiations. Nevertheless, disputes between MVPDs and broadcasters continue, and the FCC occasionally is called upon to adjudicate claims of 'bad faith' retransmission consent negotiations.

In addition to the 'retransmission consent' requirements described above, any party that retransmits broadcast programming must comply with US copyright law. Federal law creates compulsory licences allowing 'cable systems' and other MVPDs to retransmit such programming without obtaining specific licences from every relevant copyright holder in the programming stream. Other types of services do not benefit from this compulsory licence and must respect relevant copyright, as the US Supreme Court confirmed in June 2014 when it released its decision in American Broadcasting Cos v. Aereo, Inc, which involved a service that leased each subscriber an individual remote antenna that allowed that subscriber to receive broadcast signals and retransmit that signal over the internet for near-live viewing. The Court concluded that Aereo's retransmission of these signals constituted a 'public performance' of programming material that infringed on the rights of the copyright holders. The Aereo decision does not address how US copyright law could apply to other 'retransmission' services on a going-forward basis, and in particular does not fully resolve whether modest changes to the structure of an Aereo-like service (e.g., recording programming for later viewing instead of engaging in near-live retransmission) would change the outcome. Relatedly, a non-profit entity called Locast launched a service in 2018 that allows users to stream local broadcast television stations in exchange for voluntary donations, relying on an exception in the retransmission consent regime for governmental and non-profit entities seeking to retransmit signals with no desire for 'commercial advantage'. In July 2019, a number of programmers and broadcasters filed suit against Locast, challenging its non-profit status and alleging violation of US copyright laws; Locast, for its part, has filed counterclaims alleging that the plaintiffs are misusing their copyrights and are engaged in anticompetitive behaviour. The dispute has not yet been resolved.

Subscription media

Entities providing electronic media services by subscription – CATV, DBS service, subscription radio or even subscription over-the-air TV stations – generally are subject to less restrictive content regulation than terrestrial 'free over-the-air' broadcasters ('obscene' material is prohibited, but not material that is merely 'indecent'). Because subscribers pay for their service, by definition, arguments that they must be protected from unwittingly accessing 'indecent' content are less convincing. Subscription satellite radio providers and multichannel video programming distributors (MVPDs), such as DBS and CATV providers, remain subject to FCC regulation with respect to their use of radiofrequency spectrum and certain other matters. Moreover, terrestrial CATV operators are also subject to franchising by state or local authorities for the use of public rights of way.

Although states and localities in their role as franchisors frequently impose requirements on CATV operators (including to extract 'in kind' benefits, as described above), their authority to regulate CATV is limited in many respects by the pre-emptive effect of the Communications Act and the FCC's rules. The proper scope of states' and localities' authority over CATV operations is the subject of an ongoing lawsuit brought by Comcast and various programmers against the governor and attorney general of Maine, whose state legislature passed a law requiring all CATV operators in the state to provide all channels, and all programmes on all channels, on an 'à la carte' basis. The industry plaintiffs, which have challenged the state law on First Amendment and pre-emption grounds, successfully obtained a preliminary injunction in the United States District Court for the District of Maine. The state defendants appealed, and the United States Court of Appeals for the First Circuit heard arguments in the case in September 2020.

ii Internet-delivered video content

The regulatory status of internet-delivered video content turns in part on whether it can be considered 'video programming' under the Communications Act. This term encompasses 'programming provided by, or generally considered comparable to programming provided by, a television broadcast station'. Much online video content does not fall into this category, and as such lies outside the FCC's jurisdiction.

Also significant is the manner and form in which 'video programming' is delivered to the viewer. 'Video programming' may be subject to minimal regulation if it is incorporated into an 'information service' by virtue of the use of the internet or other broadband technologies as a delivery mechanism. Moreover, the FCC has identified a category of 'interactive television' services – defined as 'a service that supports subscriber-initiated choices or actions that are related to one or more video programming streams' – but it has not decided what requirements, if any, should apply to such services. The manner in which these classification issues are resolved can have significant implications in other regulatory areas. For example, IP-delivered video programming in the form of a traditional cable service arguably falls outside the scope of the FCC's net neutrality rules. Notwithstanding general uncertainty with respect to the regulatory status of internet-delivered video content, IPTV services delivered by telecommunications companies have been subject to franchising as 'cable' systems under some state and local requirements. To expedite competitive entry into the IPTV market, and to facilitate competition to entrenched CATV operators, several states have adopted state-wide franchising, and have pre-empted separate approval requirements in individual municipalities. The FCC encourages rapid approval of competitive franchising requests and has indicated that it may pre-empt states that do not promptly act on such requests.

iii Mobile services

Consumer demand for access to audio and video programming through mobile platforms is one of the primary drivers of increased demand for mobile broadband access generally. As noted above, the National Broadband Plan established a roadmap to free additional spectrum resources for such services, and the FCC brought these plans to fruition through the spectrum proceedings discussed above. The advent of these services, many of which would not use 'broadcast' spectrum, reflects increasing convergence in the communications industry, and has led to increased efforts to reconcile regulatory frameworks that treat similar services differently.