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The Telecommunications Act of 1996

Get Your Act Together

The Telecommunications Act of 1996 was America’s first successful attempt at seriously reforming regulations on telephone and broadcasting companies in more than six decades. It was also the first piece of legislation to address Internet access in the United States. This set of laws was part of a larger movement to encourage competition among the businesses involved in a variety of industries. When President Bill Clinton signed the new Telecommunications Act, he expected this greater sense of competition to make the benefits of technology and distance communication more easily available to all members of the public. Although there was some controversy in the wake of its passing, the Telecommunications Act of 1996 marked the beginning of a new era for telephone, broadcasting, and Internet services.

Background

The precursor to the Telecommunications Act of 1996 was the Communications Act of 1934. This Great Depression-era legislation had established the Federal Communications Commission (FCC) to regulate all of the sectors within the communications industry. The FCC initially regulated telegraph, radio, and telephone communications, but expanded its oversight into the cable television and satellite industries as new forms of media technology developed. Some of its responsibilities included issuing broadcasting licenses, ensuring that communications signals did not cross with each other, and fining broadcasting companies that violated rules. Over time, the FCC began taking a more active role in preventing explicit content from being broadcast on the radio and on television. The FCC still maintains most of these responsibilities today. As a result of the Telecommunications Act of 1996, the FCC lost some regulatory abilities even as it gained others. Previous deregulation-minded measures, including the breakup of the Bell telephone monopoly in the 1980s, were the inspiration behind the Act. At the same time, however, the government felt that it was necessary to keep some regulations in place to ensure that free competition could flourish.

Goals of the Act

The main goal of the Telecommunications Act was to free up the market in the communications industry. President Clinton, Vice President Al Gore, and a majority of the members of Congress supported the Telecommunications Act because it would give members of the public more choices in terms of the telephone services and media they could enjoy at home. This increase in choices would in turn allow Americans to subscribe to various communications services at prices they could afford. Since the Internet had become an important part of many Americans’ lives by this time, federal leaders also wanted to place regulations on it that would protect children from stumbling upon pornographic material. In addition, they hoped to make television more family-friendly by giving parents advanced warnings about the types of content programs might contain.

Major Provisions of the Act

Although its primary goal was to deregulate the communications industry, the Telecommunications Act introduced some new regulations as well. These regulations were mainly introduced to prevent companies from becoming monopolies. The Act specified that a parent company could not reach more than thirty-five percent of the national television audience with its stations. It should be noted, however, that this number had previously been just twenty-five percent. The Act also kept certain predetermined rules in place; for example, it stated that a parent company could still not own both a newspaper and a broadcasting station in a single market. These stipulations were meant to ensure that different ideologies remained well-represented in the media. Although it encouraged competition among cable companies, the Telecommunications Act set out some new television-related rules as well. The FCC would ensure that new televisions contained “V-Chips,” devices that enabled parents to keep their children from accessing offensive content. Television stations were also encouraged to display on-screen ratings for their programs. The Telecommunications Act also laid out a plan for all schools, libraries, and hospitals to have Internet access by the year 2000 so that more Americans would be able to use the web as a learning tool. In addition, it set rules against child pornography and other objectionable content on the Internet. Out of all the sectors in the communications industry, telephone services saw the most deregulation. The Telecommunications Act eliminated a number of old laws that had kept these companies from fully competing with one another.

Enactment

Congress approved the Telecommunications Act on January 3, 1996. On February 8 of that year, President Clinton signed it into law. The Act was the first United States law to be signed electronically. It was also the first to be signed within the walls of the Library of Congress. After the President signed it, it went into effect immediately.

Claims Made in Opposition/Criticisms of the Act

One of the major criticisms of the Telecommunications Act was that even though it was supposed to encourage competition, it allowed mergers to occur in several sectors of the media. Its V-Chip provision and its recommendation for ratings on television shows also faced opposition. Some politicians and members of the public saw these ideas as too regulatory or as an invasion of privacy. Some individuals and groups also saw the Act’s provisions against indecency on the Internet as a violation of free speech.

Issues For the Future of Telecommunications

Despite the advancement in multiple areas of telecommunications, technology evolves at a much more rapid pace than legislation. There are a wide area of topics that many interest groups, consumers, policy makers, and businesses in the industry would like addressed in new legislation to update or replace the Telecom Act of 1996. At the time of the Act’s signing, broadband did not exist, nor did the iPhone, the iPad, Google or Facebook.  The rapid evolution of the Internet as a communications platform is transforming entire Industries. Furthermore, VoIP was at its infancy and cloud-based phone systems didn’t exist at all. As a result, many aspects of today’s telecommunications issues were either not addressed or are poorly handled by the legislation and need a rewrite of the regulations to reflect the modern reality. Some of the topics that many would like addressed are: Net neutrality, broadband reclassification, peer-to-peer network regulation, mesh networks, and bandwidth throttling to control piracy. Additionally, as newspapers continue to face a more difficult business climate and more people get their news from web-based sources of information and social networks, some argue that the regulations around station and newspaper ownership should be revisited.

Wired for the Future – This page discusses the ways in which President Clinton’s signing of the Telecommunications Act was monumental in and of itself.
Summary of Telecommunications Act – This outlines President Clinton and Vice President Gore’s vision for the Telecommunications Act and provides a brief overview of its provisions.
Telecommunications Act of 1996 – This page from the FCC offers a summary of the Act and provides links to its full text and other information about it.
Fact Sheet: Telecommunications Act of 1996 – This discusses how much support the Act received in Congress and what effects it was expected to have.
The Telecommunications Act of 1996 and Its Impact – This page talks about how the Act affected markets within the communications industry.
Telecommunications Act: Competition, Innovation, and Reform (PDF) – This document discusses the reasons for the Act and what it aimed to do in certain industries.
Statement on Signing the Telecommunications Act of 1996 – This is an electronic copy of President Clinton’s thoughts on the Act and what he expected it to do for the country.
Excerpts of the Telecommunications Act of 1996 Relating to Disability Issues – The Telecommunications Act laid out new rules to ensure that people with disabilities could more easily access television and other forms of media. This page highlights some of those guidelines.
The Communications Act of 1996– This page offers a variety of links pertaining to the Act, including its history and proposed legal challenges to some of its provisions.
Confusion in the Wake of the Telecommunications Act of 1996 (PDF) – This document discusses how courts should review cases that are affected by the provisions of the Act.
The Telecommunications Act of 1996 and Its Impact on Catholic Schools (PDF) – The Telecommunications Act required schools to start offering Internet access to students. This paper talks about the difficulties private schools, especially Catholic ones, expected to face in obtaining funds to make that change.
The Telecommunications Act of 1996 and Digital Television – This page talks about the FCC’s licensing process for new types of television service.
The Telecom Act: Beyond the Hype – This article offers an alternative view about whether the Act was really a move against regulation.
The Effects of the Telecom Act of 1996 on AT&T and the Telecommunications Industry – This article discusses the Act as a piece of legislation that deregulated the communications industry as a whole, but places particular emphasis on how it affected phone companies.
The Telecommunications Act of 1996: The Challenge of Competition (PDF) – This paper provides valuable information on how the idea of deregulating the communications industry evolved.