Adelstein Says Media Mergers Deserve More Scrutiny than Telecom
Media mergers need to be held to a higher level of scrutiny than telecom acquisitions, Comr. Adelstein told reporters at a news conference Wed. “It has a direct impact on our free exchange of ideas and on our very democracy. The other mergers have impacts on our marketplace,” he said.
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Adelstein was critical of the FCC’s handling of the media ownership rules. The Commission declined to file an appeal to the 3rd U.S. Appeals Court, Philadelphia, ruling remanding FCC’s major rules on cross-ownership of newspapers and broadcasters and the concentration of broadcast ownership in local markets. “I think it should have been an embarrassment to the Commission that the court found our rules weren’t sustainable,” Adelstein said. Since the ruling, the FCC hasn’t acted on improving a diversity index, which the FCC based much of its rules on, and the court found was flawed. Adelstein said the Commission should be conducting more studies and field studies: “You would think we would go back to a real soul searching analysis.”
Until there is certainty in the marketplace of the impact on mergers, no more mergers or waivers should be granted unless the companies prove that what they're doing is serving the public interest, Adelstein said: “It’s so important that we don’t allow any additional mergers to take place until we know the broader impact on the media industry and the people who rely on that for a diversity of ideas.”
Separately, Adelstein applauded the N.Y. Attorney Gen. Office’s investigation into the industry’s use of paying independent promoters to guarantee air play: “Every time you look under a rock you find more things underneath. We have to more progressively look at this.” Several weeks ago, Adelstein received an e-mail from a consumer over a so-called payola scheme at a radio station. He wouldn’t provide further details. Last month, Adelstein prompted the FCC to investigate whether conservative commentator Armstrong Williams broke the law by failing to disclose that the Bush Administration paid him to promote the No Child Left Behind Act (CD Jan 18 p1). That investigation is continuing, Adelstein said.
Adelstein Voices Reservations About Level 3 Petition
Adelstein said he has “procedural” concerns about Level 3’s access charge petition because the issue it raises might be better considered through a separate proceeding, rather than a forbearance petition. Adelstein said Level 3’s petition requires a “far-reaching decision… with implications for the overall intercarrier compensation regime as well as universal service.” To consider the petition “in isolation seems to be problematic,” he said. The Level 3 petition seeks to eliminate access charges on IP traffic that terminates on the public switched telephone network. An aide said later that Adelstein hasn’t decided how to vote on the petition but at this point is only expressing some concerns.
Adelstein said Chmn. Powell hasn’t circulated the Level 3 item yet but he would expect to see something by March 1, since the agency has a March 22 deadline to act. Forbearance petitions are considered automatically approved unless the FCC acts on them by deadline. “We need to be very careful about this,” Adelstein said. “To do this in a piecemeal fashion may undercut any other efforts we want to make in the broader intercarrier compensation and IP enabled services dockets.” VoIP is “a fabulous technology” that the FCC wants to encourage, Adelstein said, “but we don’t want to encourage it through any means that would [lead to] regulatory arbitrage.”
Asked about the group of telecom mergers pending FCC review, Adelstein said the FCC must judge each one separately but at the same time keep in mind a “holistic” view, looking at how each affects the others. He also told the media that the wireless termination order (CD Feb 23 p1) should be released “very soon, in a matter of days.” On another issue, he said he was very eager for the FCC to “get to the bottom” of Vonage’s concern that some LECs are blocking its service. Such action would “undercut the basic openness of the Internet,” he said. Vonage hasn’t filed a formal complaint but the agency is considering whether it has the authority to intervene on its own, he said. “The allegation is this is being done by LECs,” he said. “That gives us certain authority we might not have in another context.”