Stay Tuned for Telecom Titan Tussle

AUSTIN, Texas — Football fans here got a scare last month when a dispute between Rupert Murdoch’s Fox Television and Time Warner, which owns Austin Cablevision, threatened to cancel local cable broadcasts of Fox TV’s programming--including the National Football Conference championship and the Super Bowl. Fans of the Dallas Cowboys expect the team to be in both games.

Time Warner and Fox TV reached an out-of-court settlement that will allow Time Warner cable viewers to see the games and other Fox TV programs. But the brief panic sparked in cable-watching Cowboys fans is a harbinger of even bigger battles over the content of telecommunications--conflicts that are likely to be the dominant technology news stories of the coming year.

If 1995 was the year that brought consumers to the Internet, and 1996 was the year that big business discovered new electronic media--with fortunes won and lost overnight--1997 will be the year we’ll fight over what we see and hear, and how much we’ll pay and to whom for digital bits coming over the Internet, cable, telephone lines, wireless and satellite systems.

The Internet is often associated with the idea of “revolution.” Edmund Burke said, in the 18th century, “Revolution is the first step toward empire, by which power is conferred.” We’re starting to see the beginnings of empires in new technology.

Consider the following news items, which have either happened this year or are about to unfold in 1997:

* “Must carry”: In February, the Supreme Court agreed to review the “must carry” rule for cable operators. This is a federal regulation that requires cable companies to carry certain local TV broadcasts, and it is opposed, as a violation of 1st Amendment rights, by a coalition of cable companies, led by Turner Broadcasting.

Local broadcasters argue that without the “must carry” rule, cable companies will be able to pick and choose which programming they want to carry. A special panel of federal judges began hearings on the “must carry” rule in October, and a decision is expected in 1997.

* Cable porn decision: In June, the Supreme Court narrowly decided to allow cable companies to ban “indecent” or “patently offensive” broadcasts from commercial providers who lease channels on cable systems. The Clinton administration argued in favor of allowing such a ban, because such censorship would be imposed by a private business and not the government, thereby skirting 1st Amendment protections.

* The AOL “junk mail” decision: Last month, a federal judge in Pennsylvania ruled in favor of America Online and let the nation’s largest online service “filter” or block commercial e-mail, particularly “junk mail” from one notorious company called Cyber Promotions.

Many online users hailed this decision as relief from unwanted e-mail. But the judge’s reasoning was ominous: He said that because America Online is a private company and not a public forum, AOL has the right to control the content on its system.

* Industry concentration: Two weeks ago, Broadview Associates, a New Jersey-based mergers and acquisitions consulting firm, reported that a staggering 72% of North American telecommunications and information technology firms are planning some kind of merger or acquisition in 1997.

The capital costs of implementing a new media venture are rising significantly. Industry analyst Marc Riely: “If you don’t have the equity interest of a larger operator, or you aren’t backed by a media company like Disney or Time Warner, you’ll have a really tough time getting launched.”

The Telecommunications Act passed early this year was supposed to spur competition among local and long-distance telephone companies and cable operators, thus creating choices for consumers. What it has mainly produced so far, however, is dramatic consolidation in the radio industry and proposed mega-mergers in the telephone industry--developments that are likely to favor conglomerates over consumers.

* Copyright protection: Media giants are fighting for new copyright regulations that threaten the free exchange of information in cyberspace. If these industries have their way--and they’ve already succeeded in gaining approval for a global copyright treaty that must now be approved by Congress--access to information will move toward a “pay per view” arrangement in every medium, eroding our ability to foster an informed democratic electorate.

What these and other examples reveal is that the idea that U.S. telecommunications could evolve into a giant “town hall” or an “electronic Acropolis” of free, noncommercial speech mostly died in 1996. What we face now is a telecommunications industry rapidly being transformed into a giant, privately controlled shopping mall, and the struggle in 1997 will be over who gets to be the landlord.

Dedicated Internet enthusiasts, who tend to be naive about these trends, typically argue, “I’m on the Internet, with 75 million Web pages. It can’t turn into TV or anything like that.” They forget that we once said that about radio, cable TV, books and movie theaters--industries that are all now controlled by 10 or fewer players, with corresponding sterility and banality in the products they offer.

Throughout this sad story, citizens have become mostly mute bystanders, surrendering to industry arguments that this latest acquisition or merger or deregulation bill will actually spur competition and encourage diversity--even when the evidence mounts that exactly the opposite is taking place.

Recall the ancient Asian proverb: “When elephants fight, the grass gets trampled.”

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Gary Chapman is director of the 21st Century Project at the University of Texas at Austin. He can be reached at [email protected]