Thought Leadership

The Telecommunications Act of 1996

History

The Communications Act of 1934 was the statutory framework for U.S. communications policy, covering telecommunications and broadcasting. When the act was enacted the Federal Communications Commission was created (FCC or “Commission”).

The FCC was to implement and administer the economic regulation of the interstate activities of the telephone monopolies and the licensing of spectrum used for broadcast and other purposes. However, the Act explicitly left most regulation of intrastate telephone services to the individual states.

The 1970’s and 1980’s saw technological advances, changes in U.S policy and several legal procedures such as court decisions. This allowed competitive entry into some telecommunications and broadcast markets.

The goal of the Telecommunications Act was to open up markets to competition by removing unnecessary regulatory barriers. However, the deregulations have led to a concentration of media ownership with fewer broadcasters competing in regional markets and the elimination of many local, independent and alternative media outlets.

Introduction of the Telecommunications Act of 1996

The objective of this act was to revise the old rules which were based on The Telecommunications Act of 1934.

The Telecommunications Act of 1996 came into being when an amendment was made in the Communications Act of 1934. Bill Clinton, the erstwhile President, signed the act which was considered to be a vital step towards the future of telecommunications. It was the first major reform of United States telecommunications law in nearly 62 years. This was also the first time that the internet was included in broadcasting and spectrum allotment and hence was considered to be all the more important. However, a provision called “Cable services” which allowed for media cross-ownership was highly criticized.

The objective of the new law was to let anyone enter any communications business. In addition, it was meant to allow any communications business to compete in an extremely open market.  

Major Provisions

The 1996 Telecommunications Act is divided into seven sections:

1.Telecommunications Services

This section helps to outline the general duties of the telecommunication carriers as well as the obligations of all Local Exchange Carriers (LECs) and the additional obligations of Incumbent Local Exchange Carriers (ILECs).

2.Broadcast Services

It outlines the granting and licensing of broadcast spectrum by the government, including a provision to issue licenses to current television stations to commence digital television broadcasting, the use of the revenues generated by such licensing, the terms of broadcast licenses, the process of renewing broadcast licenses, direct broadcast satellite services, automated ship distress and safety systems, and restrictions on over-the-air reception devices

3.Cable Services

It outlines the Cable Act reform, cable services provided by telephone companies, the preemption of franchising authority regulation of telecommunication services, video programming accessibility, and competitive availability of navigation devices.

4.Regulatory Reforms

The Regulatory Reforms section outlines regulatory forbearance, a biennial review of regulations, regulatory relief, and the elimination of unnecessary Commission regulations and functions.

5.Obscenity and Violence

It outlines regulations regarding obscene programming on cable television, the scrambling of cable channels for nonsubscribers, the scrambling of sexually explicit adult video service programming, etc. It also gives a clarification of the current laws regarding communication of obscene materials through the use of a computer.

6.Effect on other Laws

This section outlines the applicability of consent decrees and other laws and the preemption of local taxation with respect to direct-to-home sales.

7.Miscellaneous Provisions

Outlines provisions relating to the prevention of unfair billing practices for information or services provided over toll-free telephone calls, privacy of consumer information, pole attachments, radio frequency, etc.

Distinction

The Telecommunications Act of 1966 makes a significant distinction between providers of telecommunications services and information services. The distinction comes into play when a carrier provides information services. A carrier providing information services is not a 'telecommunications carrier' under the act. For example, a carrier is not a 'telecommunications carrier' when it is selling broadband Internet access. This distinction becomes particularly important because the act enforces specific regulations against 'telecommunications carriers' but not against carriers providing information services. With the convergence of telephone, cable, and internet providers, this distinction has created much controversy.