The Curious Case of ‘Competition’ in Broadcast Regulation
The Federal Communications Commission (FCC) recently kicked off its latest quadrennial review of broadcast-ownership rules, a statutorily mandated process to determine whether changes in the media marketplace obviate the need for the rules and if they still serve the public interest. Theoretically, this should encompass economic analysis of the competitive effects of the various technologies that compete with broadcasters for viewers’ time and attention. Unfortunately, that isn’t always the case.
The FCC’s broad public-interest standard has allowed the agency to take a different approach to competition policy than other regulators. In antitrust law, competition tests focus on the economics of a given product market, and whether consumers can substitute alternative products sufficient to restrain a given firm’s ability to act as a monopolist. While the FCC can take this approach, it has instead often defined the market so narrowly as to effectively require that new services be a complete substitute for the original, regardless of the competitive effects.
As then-FCC Commissioner (now Chairman) Brendan Carr lamented in his dissent against the 2018 quadrennial review:
[D]espite a record bursting with evidence of a vibrant media marketplace, the Commission continues to advance the fiction that broadcast radio and broadcast television stations exist in markets unto themselves.
Indeed, the commission’s rules often defy the economic realities of media markets and apply artificial restrictions on broadcasters that competitors do not face. The FCC should use the ongoing quadrennial-review process to clarify that competition analysis is not a policy question, but an economic one. The agency may find that, even if it fully accounts for competitive pressures from alternative technologies, some broadcast-ownership restrictions still serve the public interest. But it should not ignore obvious competitors and should undertake the same rigorous analysis as other competition regulators.