Telecommunications Act

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TELECOMMUNICATIONS ACT

TELECOMMUNICATIONS ACT of 1996 represented a bipartisan effort to overhaul the nation's telecommunications laws. It encouraged deployment of new telecommunications technologies and promoted competition among providers of local telephone service, between local and long distance telephone companies, and among providers of cable and broadcast television programming. The act in large part replaced the Communications Act of 1934, which was enacted at a time when technology was less mature and telephone and broadcast telecommunications were largely compartmentalized.

The Telecommunications Act significantly restructured local and national telephone markets. Local phone service had long been considered a natural monopoly. States typically awarded an exclusive franchise in each local area to a specific carrier, which would own and operate the infrastructure of local telephone service. By the early 1990s, however, technological advances made competition among local carriers seem possible, and the act ended the regime of state-sanctioned monopolies. The act prohibited states from enforcing laws impeding competition and imposed on existing local carriers a number of obligations intended to encourage competition. The most prominent of these duties was the requirement that such carriers share their networks with potential competitors. In exchange for opening local markets to competition, the act removed restrictions that prevented local carriers from providing long distance telephone service. By removing limitations on competition in both the local and long distance markets, the act made it possible for telephone companies to offer integrated long distance and local telephone service to the public.

The act also made significant changes to the regulation of cable and broadcast television in order to encourage competition. One of the more important changes was the authorization of telephone companies to provide cable television services. The act also eliminated the regulation of cable television rates, except for basic broadcast service, and liberalized prior restrictions on "over-the-air" television broadcasters that limited the number of broadcast stations that any one entity could own.

In addition to its provisions encouraging competition, the act contained controversial rules regarding obscenity, indecency, and violence on cable and broadcast television and on the Internet. It pressured television networks to establish a rating system for their programs, and required manufacturers of television sets to install "V-chips," circuitry that would allow viewers to block violent or sexual programming. The act also required cable television operators that provide channels dedicated to sexually oriented programming either to completely scramble the channel or to limit the channel's programming to nighttime hours. In 2000, the Supreme Court struck down this latter provision in United States v. Playboy Entertainment Group, saying that the provision regulated speech protected by the First Amendment and that the provision was not the least restrictive means of protecting children from inadvertently viewing offensive programming.

The most contentious of the act's provisions sought to protect minors from "indecent" communications on the Internet through the use of criminal penalties for people sending such communications or for providers of Internet service that knowingly facilitated such communications. This part of the act was controversial in part because it regulated not only obscene communications, which do not receive constitutional protection under the First Amendment, but also those that were "patently offensive as measured by contemporary standards." The Supreme Court struck down this provision within a year after it was passed. In the 1996 case of Reno v. American Civil Liberties Union, the Court explained that the regulation of nonobscene communication was a content-based restriction of speech and that such a restriction merited careful scrutiny. The Court, troubled by the possible "chilling effect" the provisions would have on free speech, held that the provisions were too broad, vague, and undefined to survive constitutional challenge.