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Pai Calls for Reassessment of Media Marketplace

Outgoing chairman asks why broadcasters should have special rules at all

The outgoing chairman of the Federal Communications Commission is asking why broadcasters should be covered by special media ownership rules at all.

“We need a fundamental, intellectually honest reassessment of what the media marketplace looks like now, where it’s going and what this means for consumers,” said Ajit Pai, speaking to the Media Institute Tuesday.

He noted the huge growth in ad revenue for digital platforms over the past decade compared to other media. The result, he said, is that broadcast media are subject to far more regulation “to guard against [their] supposed market power” than companies that are now far bigger than they are.

“In 2020, for example, Google and Facebook are each expected to bring in more ad revenue than every TV and radio station in the U.S. combined,” Pai said.

Pai, a Republican, has made regulatory reform and streamlining one of the themes of his tenure. But he thinks bigger changes are called for.

He said Congress should expand the FCC’s “forbearance authority” so it could eliminate outdated rules for video providers, and also consider “a top-to-bottom re-write of the Cable Act.”

More dramatically, “I also believe that the federal government needs to fundamentally rethink the very concept of media ownership regulation. … We don’t have special rules about how many social media outlets you can own. We don’t have special rules for how many streaming services you can own. We don’t have special rules limiting how many Americans your internet platform can reach. Indeed, our so-called media ownership rules don’t contain ownership rules for much of the media, and in particular those parts of the media that are growing fast. For some reason, the only ones we have are for broadcasters.”

The problem, he said, is “a fundamental refusal to grapple with today’s marketplace: what the service market is, who the competitors are and the like. When assessing competition, some in Washington are so obsessed with the numerator, so to speak — the size of a particular company, for instance — that they’ve completely ignored the explosion of the denominator — the full range of alternatives in media today, many of which didn’t exist a few years ago.”

He said when determining a company’s market share, “a candid assessment of the denominator should include far more than just broadcast networks or cable channels. From any perspective… it should include any kinds of media consumption that consumers consider to be substitutes,” Pai said.

“When you ask the intellectually honest questions, the answers raise serious doubts about whether the FCC should have media ownership regulations at all,” he concluded.

“If general competition law is good enough for other sectors of our economy, why not the broadcast industry?”