Last week’s decision by the Federal Communications Commission to end net neutrality on a 3-2 party line vote, may, in the long term, not inspire innovation and competition as proponents says it will do, rather, it could choke the life right out of the Internet in ways that one only need go back to the Telecommunications Act of 1996 to see a pattern.
What is net neutrality? It’s really pretty simple. Internet Service Providers (ISPs) have to keep the spigot wide open for everyone paying for their service. It also means those same ISPs, whether they be Verizon, AT&T or others, couldn’t block content you wanted to see or speed up or slow down the connection.
It also regulated them as a utility, like your phone service. The ISPs provided the on-ramp to the highway, but you could go anywhere you wanted — and, at least on the Internet — as fast as your connection would allow you to go. Now, with net neutrality ended that could come to an end. But will it? Maybe, but holding onto customers is, in our opinion, going to be the prime directive. Some people believe the world, as they know it, is coming to an end. It won’t, but for sure, consumers will have another target on their backs aimed squarely at their wallets. And we’re sure there will be some shenanigans. Companies have already been caught throttling (slowing down) Internet speeds on some users.
Are there parallels in the Telecommunications Act of 1996? Certainly. Ownership limits were lifted nationally and locally. What did that mean? Local ownership of radio stations virtually disappeared particularly in larger cities. To use Clear Channel (now iHeart Media) as a guinea pig, although there are several other examples from Cumulus to Sinclair.
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In 1994, Clear Channel operated 36 radio stations and 10 TV stations. By June 1996, four months after the act went into effect, the company operated 70 radio stations and 16 TV stations with 34 acquisitions pending. Now the company has 858 stations.
Vanishing in the mist with local ownership went local control of programming and operations. It’s estimated that due to the Telecommunications Act of 1996, 10,000 radio-related jobs disappeared. Certainly, technology played a part. Your local morning DJ may be sitting in Dallas, New York or Miami.
Financially, it hasn’t been all boom for the largest radio companies. Last month, Cumulus, owner of 446 radio stations, filed for Chapter 11 bankruptcy protection. Also last month, iHeart, in a filing with the Securities and Exchange Commission stated, “management has determined that there is substantial doubt as to the company’s ability to continue as a going concern for a period of 12 months following November 8, 2017.” The company’s creditors are trying to push it, according to Wall Street Journal, into chapter 11.
Not to be accused of the pot calling the kettle black, newspapers have done basically the same thing over the course of the last few decades, transitioning from family ownership to corporate ownership. This newspaper was once owned by Peyton Anderson. He sold to Knight Newspapers in 1969. That company became Knight-Ridder in 1974 and in 2006 was acquired by McClatchy which operates newspapers in 29 markets.
Like radio and newspapers, television, has also experienced consolidation. Sinclair Broadcast Group operates 193 TV stations, 589 channels in 89 markets. All media, no matter the delivery method, have been profoundly impacted by the Internet.
Television stations, once the primary source for viewing content are having to compete with cable and Internet-only providers over a plethora of devices not yet invented in 1996. Radio stations could not have foreseen satellite radio and streaming services, nor could large record store chains, long gone now, could have predicted the iTunes store and music downloads.
With that in mind, it’s hard to predict what the end of net neutrality will bring to the nation. The environment will still be competitive and with no one ISP holding a stranglehold over its customers, what we may see is a repeat of the cellular wars where, once cellphone numbers became portable, different service providers had to work to keep their customers’ business, through extra deals, offers, data or viewing options. And that war continues to rage. Customers have caught on and it’s difficult, even with all the advertising, to beat word-of-mouth, about a particular plan’s advantages.
We won’t go into Disney buying Fox deal that, if it’s approved, will impact all of the above. That’s just too much for one editorial.