10 Unforeseen Effects of Deregulation


Face the Music

In the 1930s, government officials believed that the airwaves were an important new resource that should belong to the public. So they set up the Federal Communications Commission (FCC) to guard the public interest in the new medium of the day: radio. The FCC regulated how many radio stations one company could own. It encouraged local ownership. It issued broadcasting licenses and renewed them only if given proof that the station served the public.

By the 1990s, the Internet, cable TV and other technologies had changed the game. With the thought that a freer market would encourage new developments and improve service, Congress passed the Federal Telecommunications Act of 1996. For radio, that deregulation meant companies could own more stations in the same market -- and as many as they wanted nationwide.

The result? A few large companies own most commercial radio stations. Clear Channel is the giant, owning more than 850 stations across the country [source: Clear Channel]. These few companies control the music you hear on the radio. Their stations tend to play the same things, even across somewhat different formats. That's why no matter where you tune in, you're likely to hear the same songs.

The consolidation also makes it hard for new musicians to break in to the radio market. They already have enough trouble dealing with consolidation in the recording industry. And don't expect to hear local musicians on radio stations.

Deregulation doesn't always mean fewer choices. Some people may think it means too many. Read on to find out why.