The Federal Communications Commission (FCC) was created by the Communications Act of 1934, which called for a government agency to be established to regulate in the public interest interstate and foreign communications by radio and wire. As communications technologies evolved, the FCC gradually took on greater regulatory responsibilities, and today regulates the following media: telephone, radio, television, satellite, and to some degree, the Internet. Within individual states, the FCC shares regulatory powers with state agencies.
Among other things, the FCC is responsible for the organized development and subsequent operation of broadcast services, as well as regulating competition among communications companies. Part of this task involves assigning frequencies of the broadcast spectrum to certain services, licensing providers of such services, and enforcing communications-related laws.
In the 1990s the commission was at the center of sweeping telecommunications regulatory reform legislated under the Telecommunications Act of 1996, the first major revision of U.S. telecommunications law since the 1930s. The 1996 act provided a framework for deregulation and increased competition in the U.S. telecommunications industry to be overseen by the FCC.
The origins of the FCC can be traced back to legislation as early as the Wireless Ship Act of 1910, when radio communication was new. Subsequent laws were passed to regulate the ever-evolving broadcasting business. The Radio Act of 1927, created at the insistence of President Calvin Coolidge, helped to regulate the rapid growth of AM radio stations, which were quickly crowding the airwaves.
An outcome of the Radio Act of 1927 was the creation of the Federal Radio Commission, which was established to oversee the radio broadcast band. This ultimately resulted in the loss of broadcast licenses to many operators, simply because there were too many stations operating.
The U.S. communications industry continued to expand, and at the urging of President Franklin Delano Roosevelt, a government committee was convened to study communications regulatory issues and offer recommendations on the best method of monitoring this rapidly growing business. The committee concluded that Congress should "establish a single agency to regulate all interstate and foreign communication by wire and radio, including telephone, telegraph, and broadcast," according to the U.S. Government Manual. This agency was to be called the Federal Communications Commission (FCC).
The FCC is an independent government agency with a direct reporting relationship to Congress. Its regulatory jurisdiction includes all U.S. states and territories.
FCC commissioners are appointed by the president, confirmed by the Senate, and serve five-year terms. Since 1983, when the number was reduced from seven, there have been five commissioners directing the FCC. The president also appoints the FCC chairman from one of the five commissioners and determines the length of the chairman's tenure within the five-year appointment. Regulations attempt to minimize partisanship on the commission. The maximum number of commissioners allowed from the same political party is three, and none are able to have any financial interest in matters that relate to the FCC's jurisdiction.
The FCC is divided into six major operating bureaus: Common Carrier, Wireless Telecommunications, Mass Media, Compliance and Information, International (includes satellite regulation), and Cable Services. In addition, there are 10 staff offices, consisting of Managing Director, General Counsel, Inspector General, Engineering and Technology, Plans and Policy, Legislative and Intergovernmental Affairs, and Public Affairs, Administrative Law Judges, Communications Business Opportunities, and Workplace Diversity.
Specific FCC functions include assigning frequency, power, and call signs for radio; allocating spectrum space for AM and FM radio, as well as VHF and UHF television broadcast services; designating sign-on/sign-off times and operating power for broadcast stations. Although the FCC is prohibited from censoring most programming content, it does, however, regulate material deemed indecent or illegal (which includes, for example, cigarette advertising), some aspects of programming for children, and political campaign advertising.
The FCC limits the number of broadcasting outlets that may be owned by a single entity and reviews these regulations biennially. The effect of telecommunications reform has been toward loosening such restrictions. In 1996 the FCC removed the upper limit for the number of TV stations that could be owned nationally, provided that the combined viewership does not exceed 35 percent of all U.S. households. Within local markets restrictions are much tighter to prevent a media monopoly. In general, the same company may not own a TV station along with a newspaper, a second TV station, a cable system, or a radio station. Radio station ownership rules tend to be more liberal, allowing up to eight stations in a single market depending on the total number of stations serving that market. As with television, there is no limit on the number of stations a company can hold nationally.
Through its Cable Services Bureau, the commission licenses cable television systems and regulates cable pricing, technical standards, and programming. Pricing is only regulated when local cable competition does not exist according to FCC definitions. The FCC requires that certain local broadcast programming be made available through cable systems and that at least one noncommercial channel be carried on every cable system. The agency also mandates that cable systems have a formal equal employment opportunity program, monitors compliance, and investigates claims of discrimination.
All forms of telephony, including local, long-distance, and wireless, fall under the FCC's purview. This area in particular has been subject to considerable reform under the deregulation of the 1990s. The FCC is gradually allowing local service providers, such as the regional Bell operating companies (BOCs), to offer long-distance services once they demonstrate that their respective markets are open to local competition; long-distance companies can also enter local markets. Deregulation has likewise allowed a number of BOCs to merge with other BOCs. The FCC also regulates pricing of telephone network services to prevent local monopolies from charging exorbitant fees to access their networks. Wireless communications like cellular phones and personal communications systems (PCS) are much less regulated, and providers of local and long-distance wire service are permitted to also offer wireless packages.
The FCC also holds a major stake in the development of emerging communications technologies. Two of the most important currently are the Internet and digital television. The largely unregulated Internet presents a complex regulatory environment because of its diffused technical and competitive structure. The FCC's policy has been decidedly hands-off, but the agency has statutory powers to control many aspects of Internet service, including pricing, competition, and some content. FCC officials have been very cautious, however, not to encourage a monopoly system as was done formerly with telephone service; the commission's leadership continues to favor a largely unrestricted Internet. Significantly, this laissez-faire approach to the Internet was not a new stance for the FCC—one of its commissioners claimed the agency had a 20-year history of shaping the free Internet by choosing not to regulate it as it became commercially viable.
The FCC played a stronger role in the development of digital television (DTV), but it again deferred many decisions to service providers. It created a timetable for the roll-out of DTV and the eventual elimination of analog television broadcasting. With early digital broadcasts starting in 1998, the FCC created a transition period extending through at least 2006 for broadcasters and consumers to convert to digital equipment. The FCC planned to review the end date periodically to ensure minimal disruption of service. The technical standards for DTV were left up to industry groups and companies to negotiate.