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Wrong Way to Reinvent Media Part 2 - Broadcast Spectrum Taxes [Thierer- PFF]

Wrong Way to Reinvent Media Part 2 - Broadcast Spectrum Taxes [Thierer- PFF]

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Published by Adam Thierer
Part 2 in a series of essays from the Progress & Freedom Foundation (www.PFF.org) about the dangers of proposals to have the government play a greater role in assisting media operators, supporting journalism, or expanding public media. In this installment, Adam Thierer, President of PFF, discussed proposal to impose a tax on broadcast spectrum licenses to fund public media or "public interest" programming. He argues that such a tax would be fundamentally unfair to broadcasters, who are struggling for their very survival in the midst of unprecedented marketplace turmoil. Moreover, such a tax is unnecessary in light of the many other sources of “public interest” programming available today. Finally, even if the government creates or subsidizes wonderful, civic- and culturally-enriching content, there’s no way to force people to consume it. Nor should government force such media choices upon the public. There’s no good reason for government to be socially-engineering media choices through taxes, he says.
Part 2 in a series of essays from the Progress & Freedom Foundation (www.PFF.org) about the dangers of proposals to have the government play a greater role in assisting media operators, supporting journalism, or expanding public media. In this installment, Adam Thierer, President of PFF, discussed proposal to impose a tax on broadcast spectrum licenses to fund public media or "public interest" programming. He argues that such a tax would be fundamentally unfair to broadcasters, who are struggling for their very survival in the midst of unprecedented marketplace turmoil. Moreover, such a tax is unnecessary in light of the many other sources of “public interest” programming available today. Finally, even if the government creates or subsidizes wonderful, civic- and culturally-enriching content, there’s no way to force people to consume it. Nor should government force such media choices upon the public. There’s no good reason for government to be socially-engineering media choices through taxes, he says.

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Published by: Adam Thierer on Mar 29, 2010
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09/28/2010

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Progress on Point 
Volume 17, Issue 2 March 2010
1444 EYE STREET, NW
SUITE 500
WASHINGTON, D.C. 20005202-289-8928
The
Wrong
Way to Reinvent Media, Part II:Broadcast Spectrum Taxes to Subsidize Public Media
by Adam Thierer*
In an ongoing series of essays, we
re discussing proposals to have the government play a
greater role in the media sector in the name of sustaining struggling enterprises or “saving journalism.”
Washington policymakers are currently considering what, if any, role governmentcan and should play in assisting media operators, supporting journalism, or expanding publicmedia. For example, the Federal Communications Commission (FCC) recently kicked off a new
effort with a workshop on “
.
Likewise, the Federal Trade Commission (FTC) has hosted two worksh
ops on
Meanwhile, the Senate has already held hearings about
“the future of journalism,” and Senator Benjamin L. Cardin (D
-MD) recently introduced the
,” which would allow newspapers to become nonprofit
organizations in an effort to help them stay afloat
but also curtail their political editorializing.Part I of this series examined proposals to fund media content via a tax on consumerelectronics, broadband service, or cell phone bills.
1
Other essays will address proposals to taxprivate advertising revenues to support public media; directly subsidize out-of-work journalists;expand postal subsidies; and to prop up or bail out failing media entities. A wrap-up essay willthen focus on some potentially constructive policy reforms that could assist media enterpriseswithout a massive infusion of state support or regulation of the press.This essay will discuss proposals to impose a tax on broadcast spectrum licenses to funnelmoney to public media projects or other
“public interest” content
or objectives.
2
Such a taxwould be fundamentally unfair to broadcasters, who are struggling for their very survival in themidst of unprecedented marketplace turmoil. Moreover, such a tax is unnecessary in light of 
Adam Thierer is President of The Progress & Freedom Foundation. The views expressed in this report are hisown, and are not necessarily the views of the PFF board, fellows or staff.
1
Adam Thierer & Berin Szoka, The Progress & Freedom Foundation,
The Wrong Way to Reinvent Media, Part 1:Taxes on Consumer Electronics, Mobile Phones & Broadband 
, PFF P
ROGRESS ON
P
OINT
2
This essay is condensed from a chapter that appeared in a new book from Congressional Quarterly Press.
See
:
 Resolved, Broadcasters Should be Charged a Spectrum Fee to Finance Programming in the Public Interest, Pro:Norm Ornstein, Con: Adam Thierer 
, in Richard J. Ellis and Michael Nelson, D
EBATING
R
EFORM
:
 
C
ONFLICTING
P
ERSPECTIVES ON
H
OW TO
F
IX THE
A
MERICAN
P
OLITICAL
S
YSTEM
(2010) at 53-69.
 
Page 2 Progress on Point 17.2
the many other sources of 
“public interest” programming
available today. Finally, even if thegovernment creates or subsidizes wonderful, civic- and culturally-
enriching content, there’s no
way to force people to consume it. Nor should government force such media choices upon thepublic. T
here’s no good reason for government to be
socially-engineering media choicesthrough taxes.
Why the “Public Interest” Regulatory Regime Can’t Continue
 
There’s always been a bit of mythology surrounding so
-
called “public interest” regulation of 
broadcasting in America.
3
Those who advocate expansive regulatory obligations for licensedradio and television operators typically claim they
re directing the content or character of broadcasting toward a nobler end
a sort of 
noblesse oblige
for the Information Age. At times,their rhetoric takes on a fairy-tale quality as lawmakers and regulatory adv
ocates speak of “thepublic interest” in reverential and fantastic terms, all the while deftly evading any attempt to
define the term. Indeed, while public interest regulation has been considered the cornerstoneof communications and media policy since the 1930s, at no time during these seven decadeshas the term been adequately defined.
4
 
Former FCC Commissioner Glen Robinson has argued that the public interest standard “is vague
to the point of vacuousness, providing neither guidance nor constraint on the
agency’s action.”
5
 And Nobel Prize-
winning economist Ronald Coase argued 50 years ago that “The phrase… lacks
any definite meaning. Furthermore, the many inconsistencies in commission decisions havemade it impossible for the phrase to acquire a definit
e meaning in the process of regulation.”
6
 
3
 
See generally 
Adam Thierer, The Progress & Freedom Foundation,
 
M
EDIA
M
YTHS
:
 
U
NDERSTANDING THE
D
EBATE OVER
M
EDIA
O
WNERSHIP
4
Adam Thierer, The Progress & Freedom Foundation,
Why Expansion of the FCC’s Public Interest Regulatory 
Regime is Unwise, Unneeded, Unconstitutional, and Unenforceable
, Testimony Before the Federal
Communications Commission Hearing on “Serving the Public Interest in the Digital Era,” March 4, 201
5
Glen O. Robinson,
The Federal Communications Act: An Essay on Origins and Regulatory Purpose
, in A
 
L
EGISLATIVE
H
ISTORY OF THE
C
OMMUNICATIONS
A
CT OF
1934 3, 14 (Max D. Paglin ed., 1989). Likewise, Lawrence J.
White has noted that, “The ‘public interest’ is a vague, ill
-
defined concept. Under the ‘public interest’ banner
the Congress and the FCC have established far too many protectionist, anticompetitive, anti-innovative,inflexible, output-limiting regulatory regimes and have unnecessarily infringed on the First Amendment rights
of broadcasters.”
See
Lawrence J. White,
Spectrum for Sale
, T
HE
M
ILKEN
I
NSTITUTE
R
EVIEW
(June 2001) at 38.
Seealso
William T. Mayton,
The Illegitimacy of the Public Interest Standard at the FCC 
, 38 E
MORY
L
AW
J
OURNAL
715,716 (1989).
6
Ronald H. Coase,
The Federal Communications Commission
, 2 J. L. & Econ. 1, 8
 –
9 (1959). Even supporters of 
broadcast regulation such as Paul Taylor and Norman Ornstein admit that, “
neither in the 1927 [Radio] Act norin the 1934 [Communications] Act, nor subsequently, did Congress define clearly what actions by broadcasters
would represent managing their stations in the public interest.” Paul Taylor & Norman Ornstein,
New AmericaFoundation,
 A Broadcast Spectrum Fee for Campaign Finance Reform
, S
PECTRUM
S
ERIES
W
ORKING
P
APER
 
No. 4,(2002) at 6.
 
Progress on Point 17.2 Page 3
And that is still true today. Simply put, the public interest
standard 
is 
all since it has no fixed meaning; the definition of the phrase has shifted with the political windsto suit the whims of those in power at any given time.
7
Nonetheless, the public interestregulatory regime remains with us and continues to apply to licensed broadcast radio andtelevision operators.Regardless of the rationale used to advance public interest regulation
public spectrumownership, licensing, scarcity,
8
9
 
or “public enlightenment”—
it is hard to explainwhy we have singled out broadcasters for unique regulatory obligations while operators of other media platforms have been given a free pass. Such regulatory asymmetry is moredifficult to justify today in light of rising competition for many new platforms and players.
10
 And it is difficult to believe that Congress or the FCC could concoct a constitutionally-defensiblerationale f 
or extending “public interest” regulation to new media platforms.
11
Indeed, effortsto do so for both old (newspapers, print) and new (Internet, video games) media have failedwhen tested in the courts. And, practically speaking, even if expansion of the old regime wasdesirable, it would be exceedingly difficult to do so in light of the sheer scale and volume of new media that would need to be covered.
12
 
Spending Money Instead of Imposing Mandates?
The combination of these factors has forced many traditional public interest regulatoryadvocates to reconsider the wisdom
or at least the practicality
of the old broadcastingregime. One alternative that has received increasing attention in recent years would seebroadcasters largely relieved of their public interest obligations and charged instead an annualfee for their use of the airwaves. The proceeds from such a spectrum fee or tax would then beused to subsidize a variety of programs or content. For example:
7
 
See
Adam Thierer, M
EDIA
M
YTHS
:
 
M
AKING
S
ENSE OF THE
D
EBATE OVER
M
EDIA
O
WNERSHIP
Is the Public Served by the PublicInterest Standard 
? T
HE
F
REEMAN
The Illegitimacy of the Public Interest Standard at the FCC 
, 38 E
MORY
L
AW
J
OURNAL
, 1989, at 715-69.
8
 
See
John W. Berresford, Federal Communications Commission,
The Scarcity Rationale for RegulatingTraditional Broadcasting: An Idea Whose Time Has Passed 
, FCC Media Bureau,
 
S
TAFF
R
ESEARCH
P
APER
the scarcity rationale as “outmoded,” “based on fundamental misunderstandings of physics and economics,”and “no longer valid.”
 
9
Adam Thierer,
Why Regulate Broadcasting: Toward a Consistent First Amendment Standard for theInformation Age,
15 C
OMM
L
AW
C
ONSPECTUS
10
 
See
Adam Thierer & Grant Eskelsen, The Progress & Freedom Foundation, M
EDIA
M
ETRICS
:
 
T
HE
T
RUE
S
TATE OF THE
M
ODERN
M
EDIA
M
ARKETPLACE
, Summer 2008, www.pff.org/mediametrics. 
11
Thierer,
supra
note4. 
12
 
Id.
at 7-12.

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