Regulatory Rush Hour

Washington was awash last week in laws, bills and proposals that are certain to change the way most companies in the TV industry do business.

On June 15, surrounded by beaming legislators and FCC Chairman Kevin Martin, President Bush signed the Broadcast Decency Enforcement Act, the product of high-profile slips by the networks, such as Janet Jackson's Super Bowl reveal, and an administration intent on boosting fines to get broadcasters' attention.

Now broadcasters face a $325,000 top fine for each incidence of profanity or sexual content, a sum that will reach into the tens of millions if the FCC continues on its course of levying the maximum, as it did for CBS' Without a Trace and other TV shows last March.

Public broadcasters, hit with a fine for a blues documentary by the FCC, have already changed the way they do business. The Public Broadcasting Service has asked program producers to go beyond bleeping out profanities to actually blurring the lips if the speaker is facing the camera. The service wants to “protect member stations from the now catastrophic financial sanctions and expensive litigation associated with FCC indecency-enforcement activity,” says PBS President Paula Kerger.

Veteran First Amendment attorney John Crigler expects to see other networks do the same: “The inevitable consequence is to suppress material that is not indecent.”

Broadcasters would not comment on the record, in part because they have essentially spoken with one voice—the Big Four networks and affiliate associations. Their message is “See you in court.” Broadcasters believe that their chance of winning a court battle over the new law is more credible with the argument that an indecency fine can mean “real money.”

Broadcasters must be elated, though, at what the FCC plans for the industry in the digital spectrum. Last week, Martin signaled his intention to vote June 21 to reverse two earlier FCC decisions—neither one his—and require cable to carry TV stations' multiple digital broadcast signals, instead of just one replication of their primary analog signal. Reigning wisdom is that he would not have put it on the agenda if he didn't think he had the three votes to pass it.

Favorable multicast must-carry rules would force cable operators to carry broadcasters' new digital channels. Congress could have something to say about it. The powerful chairmen of the House Energy & Commerce and Telecommunications Subcommittees—Joe Barton (R-Texas) and Fred Upton (R-Mich.)—respectively, told Martin not to reverse the two decisions. The FCC was right the first time, they said, and he would be usurping their authority.

Also on the agenda at the June 21 meeting is the long-awaited launch of a review of its deregulatory media-ownership rules remanded by a federal appeals court almost exactly two years ago. That review is expected to get a greenlight, since it is simply launching a process that will take many months.

The Senate version of video-franchise reform, which also includes a number of key TV issues, such as content-protection technology and other digital-transition issues, is also nearing completion. The bill will be marked up June 22, but it must then pass the full Senate and be reconciled with a much different House bill. A draft of that bill may contain slightly tougher language on net neutrality, the hot-button issue whose definition has become central to the debate. Generally, net neutrality is about the degree to which network providers can discriminate in the provision of Internet service.

Almost everyone is in agreement that companies should not be able to block access to sites, devices or software. But how and whether content providers should be allowed to pay more for increased bandwidth and security to deliver, say, video services is the crux of the issue.

Net-neutrality backers see differential pricing and service as a threat to the openness and innovation of the Internet, but cable and telco networks argue that it is a solution in search of a problem. Cable operators insist there is no justification for a common-carrier–type regulation, which would discourage capital investment and slow the rollout of broadband.