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Leonard Bernstein reportedly said that to achieve great things, two things are needed: a plan, and not quite enough time.

In that vein, the U.S. Supreme Court, by a 6-3 vote, has upheld the Federal Communications Commission’s interpretation of provisions of the Communications Act of 1934 that require state and local zoning authorities to act on certain wireless service providers’ antenna-siting applications within a “reasonable period of time.” More broadly, the Court’s decision addresses the degree of deference that reviewing courts must give a federal agency’s interpretation of statutory provisions that define the agency’s legal authority.

City of Arlington v. FCC involves a petition brought by certain state and local governments.  In 2009, the FCC issued a Declaratory Ruling establishing its interpretation of what constitutes a “reasonable period of time” for state and local governments to process antenna-siting applications under Section 332(c)(7)(B)(ii) of the Communications Act. The Declaratory Ruling acted on a petition filed by CTIA – The Wireless Association on behalf of certain wireless service providers. While state and local governments have legal authority to regulate the location, construction and modification of certain defined “personal wireless facilities,” the Communications Act places specific limits on this authority, such as the requirement to process wireless-siting applications within “a reasonable period of time.”

The FCC stated in the Declaratory Ruling that “unreasonable delays” in the siting process had “obstructed the provision of personal wireless services.” The FCC determined that a “reasonable period of time” is presumptively 90 days to process a collocation application and 150 days to process all other applications. 

The Petitioners challenged the FCC’s authority to interpret “ambiguous provisions” of the statute; here, relating to judicial review of wireless-siting decisions and a savings clause that provided that only those provisions in Section 332(c)(7)(B) “shall limit or affect the authority of a State or local government” over siting decisions. While the law requires reviewing courts to afford an agency a measure of discretion in the agency’s interpretation of ambiguous statutes, the Petitioners characterized the FCC’s action as that agency’s effort to interpret “its own jurisdiction.”

Generally, a reviewing court considers a federal agency’s construction of the statute it administers based on two principles: whether Congress has spoken directly to the precise question at issue, and if not, whether the agency has addressed the issue with a permissible construction of the statute. Justice Scalia, writing for the majority, rejected the Petitioners’ objection to the FCC’s interpretation of its jurisdiction. He stated that “judges should not waste their time in the mental acrobatics needed to decide whether an agency’s interpretation of a statutory provision is ‘jurisdictional’ or ‘nonjurisdictional.’ Once those labels are sheared away, it becomes clear that the question in every case is, simply, whether the statutory text forecloses the agency’s assertion of authority, or not.” Justices Thomas, Ginsburg, Sotomayor and Kagan joined in the opinion, and Justice Breyer filed an opinion concurring in part and concurring in the judgment. Justices Roberts, Kennedy and Alito dissented. 

The City of Arlington decision could shape other pending cases where the scope of the FCC’s regulatory authority is at issue.  For example, Verizon has a case before the U.S. Court of Appeals for the D.C. Circuit that challenges the FCC’s authority to regulate Internet Service Providers via the “Open Internet” rules.  Elsewhere, a separate pending case in the U.S. Court of Appeals for the 10^th Circuit involves petitions for review of the FCC’s “USF/ICC Transformation Order” establishing the Connect America Fund for federal broadband subsidies.  While these cases involve different facts and may lead to different results, there’s good reason to think that the City of Arlington precedent will be reflected in these and other future cases.  In the meantime, the decision confirms that providers whose services are covered by the statute now have additional legal support in seeking timely approvals for sites for towers and antennas.

Here’s an important announcement for gadget-laden air travelers: Federal Communications Commission Chairman Julius Genachowski reportedly has asked the Federal Aviation Administration to “enable greater use of tablets, e-readers, and other portable devices during flights.”  As travelers know well, the FCC and the FAA place significant legal restrictions on passenger use of portable electronic devices during air travel, particularly during takeoff and landing. The Chairman’s letter may open the aircraft door to a policy that releases public pressure and enables increased wireless gadget use during flights.

The FCC and the FAA have limited in-flight use of portable electronic devices due to concerns about potential wireless interference to aircraft systems used for navigation and communication. FAA rules largely prohibit the use of such devices in flights, with limited exceptions. In August, the FAA announced plans to review these regulations, and the agency has requested public comment. Reportedly, the FAA does not intend to expand the rules to include voice calls. Chairman Genachowski issued a statement in support of the FAA’s review last August, saying that “[d]ramatic changes in technology and society make it both appropriate and timely for the FAA to review whether updates to their rules are needed.”

Current FCC rules prohibit passengers from using cellular phones and other wireless devices on airborne aircraft. Several years ago, the FCC launched a proceeding to consider lifting this restriction, but the agency terminated the proceeding in March 2007, citing “insufficient technical information” on potential interference.  The FCC also coordinates closely with the FAA on air-safety matters, such as for towers near airports that require registration with the FCC and for certain wireless devices operating near Terminal Doppler Weather Radar systems. Safety issues are among the FCC’s highest enforcement priorities, which makes the news of the Chairman’s letter, and his apparent willingness to revisit these issues, particularly noteworthy.

As our travels and our productivity depend on increasing gadget use, it is a sign of the times that the FCC and the FAA are taking a fresh look at their regulations. Loosening the rules would require tackling some challenging safety and technical issues. As a result, air passengers awaiting rule changes should anticipate potentially long delays because the timing and scope of any new rules remain, at present, largely up in the air.

Today, the Federal Communications Commission’s broadcast indecency policy received, at most, a glancing blow from the U.S. Supreme Court. 

In a sharply limited decision, the Court, by an 8-0 vote (with Justice Sotomayor not participating) and for the second time since 2009, avoided difficult First Amendment questions about the FCC’s authority to restrict coarse language and nudity on broadcast television. In 2009, the Court held that the FCC’s adoption of the so-called “fleeting expletives” policy for broadcast indecency was neither arbitrary nor capricious in violation of the Administrative Procedure Act. This time, in  Federal Communications Commission, et al. v. Fox Television Stations, Inc., et al, the Court found that this policy, as applied to Fox and ABC, was impermissibly vague in violation of these broadcasters’ due process rights. The Court did not reach the First Amendment issues, choosing instead to vacate and remand the decisions of the 2nd Circuit that struck the FCC’s broadcast indecency policies on First Amendment grounds.

The Fox and ABC cases, which I’ve written about previously, involved challenges brought by broadcasters to the FCC’s broadcast indecency regulations. The broadcasters argued, among other things, that the Court should overturn its precedent in FCC v. Pacifica Foundation granting the FCC limited authority under the First Amendment to regulate broadcast indecency. While the Court today left the First Amendment issues open, Justice Kennedy, writing for the Court, found instead that the FCC “failed to give Fox or ABC fair notice prior to the broadcasts in question that fleeting expletives and momentary nudity could be found actionably indecent.” As a result, according to the Court, the FCC’s policy was impermissibly vague with respect to the broadcasts at issue here. In a brief concurring opinion, Justice Ginsburg wrote that “[t]ime, technological advances, and the Commission’s untenable rulings in the cases now before the court show why Pacifica bears reconsideration.”

Some initial observations:

1)      The FCC’s “Fleeting Expletive” Policy Still Exists. The decision explicitly does not address the constitutionality of the FCC’s current indecency policy “as expressed in the Golden Globes Order [issued March 18, 2004] and subsequent adjudications.” This Order adopted the “fleeting expletives” policy and apparently remains in force. The Court found that the FCC remains “free to modify its current indecency policy in light of its determination of the public interest and applicable legal requirements.”

2)      Timing of the Alleged Violation Is Critical.  The Fox and ABC broadcasts occurred prior to March 18, 2004. According to the Court, “the Commission policy in place at the time of the broadcasts gave no notice to Fox or ABC that a fleeting expletive or a brief shot of nudity could be actionably indecent; yet Fox and ABC were found to be in violation.” As a result, timing of a disputed broadcast is critical for purposes of determining the precedential effect of this decision on other cases.

3)      The decision is limited in scope on indecency. The Court treated “fleeting expletives and fleeting nudity” as part of the same FCC policy articulated in the 2004 Golden Globes Order. This determination enabled the Court to dispose of both cases via the same vagueness rationale, thus avoiding the First Amendment issues.

4)      The Court’s decision gives clues on how it could rule on the Janet Jackson case. The opinion does not address the FCC’s pending Petition for a Writ of Certiorari from the U.S. Supreme Court in connection with the Janet Jackson “wardrobe malfunction” case. The FCC is seeking review of a decision by the U.S. Court of Appeals for the 3rd Circuit, which found that the Commission acted arbitrarily and capriciously, in violation of the Administrative Procedure Act, when it fined CBS stations for violating the indecency policy. The FCC requested that its petition “should be held for [the Fox case] and then disposed of as appropriate in light of the Court’s decision.” In this regard, like the broadcasts for ABC and Fox in today’s decision, the Janet Jackson broadcast occurred prior to the March 18, 2004 release of the 2004 Golden Globes Order. As a result, “fair notice” is again at issue, particularly now that the Court has explicitly determined that the Commission’s policy extends to “fleeting nudity.” Given that the nudity depicted in NYPD Blue lasted about seven seconds and the "wardrobe malfunction" was clocked at less than one second, the Commission should have concerns about the impact of today's ruling on the Janet Jackson case.

5)      Processing the backlog of indecency complaints is a priority.  Big practical issues remain. For example, the FCC has a massive backlog of indecency complaints filed against broadcasters.  Such complaints often slow processing of applications and delay the closing of transactions. For now, observers must watch and wait to see how the FCC decides to proceed.  Expect the FCC to comb through the backlog of complaints and dismiss those cases built on “fleeting expletives” with respect to broadcasts that occurred prior to March 18, 2004.  The FCC could take the opportunity to dismiss those complaints that it deems to not implicate the agency’s current indecency policy.

In light of these developments, don’t expect the floodgates to open for the broadcast of coarse language or brief nudity on your local station any time soon. There are significant questions about how the Commission will enforce its indecency policies going forward. The hardest questions on broadcast indecency and the First Amendment will continue to be debated, but there’s every reason to expect that one day the Court will be asked to address them yet again.  In the meantime, stay tuned.

Disruption does not occur in a vacuum. Recently Henry Blodget and Dan Frommer considered whether technological disruption may lead to the "collapse" of the television industry given the recent track record of the newspaper industry. The debate centers on TV viewers’ changing habits, and the Internet, new video providers (e.g., Hulu, Netflix and iTunes) and non-TV displays (e.g., smartphones and tablets) factor heavily into this debate. Technology has enhanced time-shifting, and viewers watch much less programming live (or nearly live) or via a traditional TV.  Some viewers replace linear program streams with on-demand viewing. Reasonable minds can differ on the ramifications of these changes. What this debate lacks, however, is a thorough assessment of the role that the legal systems play in this heavily regulated space – systems that, for better and for worse, can limit and delay industry-wide disruptions. 

Video programming markets exist within an expansive, multilayered regulatory structure that shapes the options available to viewers. The structure affects access to programming, access to distribution facilities, the terms and conditions of programming rights and other aspects of production and distribution. While Blodget sees vulnerability in the network model amid alternative means for production, acquisition and distribution, Frommer argues that changes in the TV industry will “happen a lot slower than you think” due to factors such as network bundling contracts and carryovers of cable bundling to the Internet. Program suppliers (whether network or syndicated), broadcasters, cable operators, Internet-based video service providers and others compete in this marketplace, but Federal policy also plays a significant role.

Blodget and Frommer focus on the rise and viability of new à la carte competitors to traditional broadcast, cable and satellite providers. These outlets provide a variety of programming, but such providers have differing levels of bargaining power and must compete to negotiate for programming rights. These providers lack certain regulatory benefits available to cable and satellite companies. Federal law assigns certain rights (and certain burdens) to "multichannel video programming distributors," or MVPDs. To date, the Federal Communications Commission has declined to extend this definition to a category of providers that it calls “Online Video Distributors” (OVDs) which include providers such as Netflix, Hulu and others. In a pending proceeding, the FCC has sought public comment on the definition of “MVPD” due to the wide-ranging policy implications.

An MVPD classification gives a provider certain regulatory benefits with respect to access to programming. For example: 

• Under federal program access rules, among other things, cable-affiliated programmers must make their programming available to MVPDs on nondiscriminatory rates, terms and conditions. Classification issues, however, will impact the universe of parties in the marketplace. An “over-the-top” video provider, Sky Angel, filed a program access complaint against Discovery Communications and Animal Planet in a dispute over a terminated affiliation agreement. Although the complaint remains pending, in its initial ruling, the FCC's Media Bureau found that Sky Angel was not an MVPD because it did not provide subscribers with a transmission path. Extension of MVPD status to such providers would represent a dramatic change in the regulatory regime.

• Federal law provides, with limited exceptions, that no MVPD may retransmit the signal of a broadcast station without the station’s express authority.  Every three years, commercial broadcasters must contact their local MVPDs and must elect whether to have their broadcast signals carried by those operators in accordance with a retransmission consent agreement or to invoke statutory rights of mandatory carriage. In addition, FCC rules require MVPDs to honor broadcasters’ exclusivity rights with respect to certain network, syndicated and/or sports programming. At present, only MVPDs are eligible to seek relief from the FCC to resolve disputes with broadcasters over these rights. Again, definitions matter.

Even non-MVPDs have benefitted from FCC actions to stimulate access to programming by OVDs.  The FCC's approval of Comcast/NBCU joint venture involved several conditions designed to facilitate access by OVDs to programming owned by the joint venture. While the FCC may lack explicit statutory authority to mandate such access, if FCC approval is required for a specific transaction, the agency sometimes requires the transacting parties to adhere to behavioral, structural or other conditions to get such approval. The Commission’s actions in the context of Comcast/NBCU and the Sky Angel case are introductory steps, potentially toward addressing more significant changes down the road.

Of course, access to programming also requires consideration of the benefits and burdens of copyright laws. The Copyright Act grants copyright holders limited bundles of rights to their works, such as rights to perform their copyrighted works in public (which includes broadcast programming and retransmission of such programming on MVPD networks), rights to preclude others from making public performances of these works and rights to reproduction of those works. Qualifying MVPDs can obtain compulsory or statutory licenses to retransmit certain video programming without having to negotiate with many individual copyright holders whose programs are included in the video stream. Copyright law issues are front and center in a legal challenge brought by broadcasters against the launch of Aereo’s subscription-only Internet service. Aereo plans to offer subscribers specific bundles of broadcast network programming for a fee. The networks assert that Aereo’s service constitutes copyright infringement and argue that while other providers pay fees to license the content, Aereo does not. Once again, legal definitions and regulatory uncertainty over emerging technologies affect access to programming.

Notice that I’ve focused only on certain regulations involving access to programming. A much longer blog post would deal with other important regulatory structures: for example, media ownership, access to network facilities, local video franchising, equipment regulation and the regulator’s role in dispute resolution.  More regulation translates into regulatory uncertainty (for example, over definitional issues), higher transaction costs, more litigation and more intensive lobbying. The lesson here is that the government regulates the video programming industry much more heavily than the newspaper industry, so it’s difficult to translate the problems facing the latter into predictions about the viability of the former.

So between Henry Blodget and Dan Frommer, who’s right about whether the TV business is “starting to collapse”? I see that as a false choice given the unpredictability of this rapidly changing marketplace. The pace of change on the Internet can be dramatic, but where regulation and litigation are involved, the pace can turn glacial. Thanks in part to the legal system, I don’t expect the “TV business” to “collapse” but rather to continue to evolve incrementally, with competition, new and disruptive technologies and government action serving as major drivers.

Picture a world where each episode of Sesame Street is brought to you by a letter, a number and a candidate for public office.  

Thanks to a recent appellate court decision, some spending on campaign advertising soon may be directed to an unexpected source: noncommercial broadcasters, such as public radio and TV stations.  In addition, a recent FCC decision has paved the way toward requiring these broadcasters to post online their local public file information about such advertising.  Unless the decisions are significantly modified or stricken, expect these rules to resonate through a political process that relies heavily on broadcast advertising.

A three-judge panel of the U.S. Court of Appeals for the 9th Circuit decided 2-1 to strike federal laws banning the airing of public issue and political advertisements on noncommercial broadcasting stations.  The statute in question, 47 U.S.C. Section 399b, prohibits noncommercial educational stations from broadcasting any of the following: 1) advertisements for goods and services on behalf of for-profit entities, 2) advertisements regarding "issues of public importance" and 3) political advertisements.  The decision invalidates the ban with respect to the last two categories, but not the first. Accordingly, advertisements for goods and services on behalf of for-profit entities remain impermissible.

The appellant, Minority Television Project, Inc. is a noncommercial broadcaster. The FCC had fined MTP $10,000 for "willfully and repeatedly" violating Section 399b by airing paid promotional messages from for-profit companies.  MTP alleged that it had declined to broadcast public issue and political advertisements out of concern of potential FCC fines and forfeitures arising from Section 399b. 

MTP argued that Section 399b violated the First Amendment because the "restriction on advertising was not narrowly tailored to the government's interest in preserving the educational programs on public broadcast stations."  The government countered that the restrictions on advertising were necessary to "preserve the educational nature of public interest broadcasting." Specifically, the government argued that making public stations dependent on advertising would result in stations replacing "their niche educational programs with more popular programs which have greater mass-market appeal, thus endangering the broadcast of the educational programs for which public broadcast stations exist."  

The court considered whether the government’s “broccoli is good for you” rationale passed constitutional muster. The panel rejected MTP’s call to hold the government to the “strict scrutiny” standard of First Amendment justification that applies to other media. Instead, the panel applied the "intermediate scrutiny" standard, and the government was required to prove that Section 399b was “narrowly tailored to further a substantial government interest.” The opinion noted that in a pending case before the U.S. Supreme Court, major broadcasters have challenged the continued application of “intermediate scrutiny” analysis to broadcast speech. The response: “just as golfers must play the ball as it lies, so too we must apply the law of broadcast regulation as it stands today.” According to the panel, the government’s case failed intermediate scrutiny with respect to the bans on issues of public importance and the bans on political advertisements.

Many questions remain as a result of the ruling:

Will noncommercial broadcasters begin accepting political announcements?  Even if a noncommercial station decides to begin accepting political announcements, there are legal risks.  First, the ruling is not yet final because it is subject to further judicial proceedings.  The FCC has a limited period to seek rehearing of the panel's decision. Often, but not always, the full appellate court affirms the decision of a three-judge panel of the same court. The U.S. Supreme Court case may also affect the timing of a decision on rehearing, particularly in the event of a change in the applicable legal standards (such as intermediate scrutiny) upon which the 9th Circuit panel relied.   Also, the ruling applies only to states in the 9th Circuit: Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington. Noncommercial broadcasters in other states may find that courts in their jurisdictions would determine that they are not bound by the 9th Circuit’s decision.

Will Congress react to the court ruling and change the law? In effect, the panel invited Congress to revisit the law and to provide more evidence to demonstrate that the law is constitutional.  It seems unlikely that Congress would enact such legislation in an election year, assuming that a change in the law is a legislative priority.  Moreover, Congress likely would not intervene while the judicial process is ongoing.

How would the decision impact other rules? The ruling does not address other laws that relate to candidate appearances and advertising on broadcast stations.  For example, federal candidates have statutory rights of “reasonable access” to commercial broadcast stations, but noncommercial broadcast stations are exempt from this statute.  Stations that choose to accept an advertisement from a candidate for any public office are required to give "equal opportunities" to other candidates for the same office, and, unlike the case of the “reasonable access” rules, noncommercial stations have no statutory exemption.  A commercial broadcaster is obligated to provide a candidate the “lowest unit charge” of the station for the same class and amount of time for a given period prior to an election or primary.  If the ruling stands, the FCC would have to adopt rule changes to clarify how these rules would apply to noncommercial stations, which rely on public contributions, underwriting and similar sources of funds for station operations. 

Also noteworthy: last Friday, the FCC adopted new rules requiring broadcasters to post portions of their local public inspection file online.  Some of these requirements will apply to noncommercial television broadcasters effective July 1, 2014, including a requirement to place “any new political file material” on the Commission’s website.  At present, the new rules would not apply to noncommercial radio stations. While the FCC’s new rules don’t explicitly reference the MTP case, they ultimately may expand the scope of the materials that must be kept in the file and made available to the public.

If it’s true that “all politics is local,” then by extension local broadcast stations play an important role in the political process.  As the 2012 election year revs into high gear, many expect significant increases in political ad spending for the broadcast airwaves.

For many noncommercial broadcasters, it’s not easy being “green” or, in this economy, “nonprofit.” Many noncommercial stations may find that their local viewers are valuable targets for political advertisements. In light of funding challenges for such stations and the potential for new revenue sources, these recent legal developments may result in dramatic changes to the political landscape.