Radio broadcasting and telegraphy
Radio broadcasting and telegraphy are both in the media industry. The media industry is a business that is involved in keeping the people aware of the things happening around the world, generating new public interests, and also capturing their imagination through journals, movies, music, newspapers and radio broadcasts. It also plays a major political and cultural role in a country. The introduction of “radio and media industry internationalism both date from before 1914”(Jane 2005, 4). For example, public-service broadcasting in Britain dates from 1904. In 1912, the United States had introduced the “free for all” transmission which was as a result of the titanic disaster, demonstrating the importance of wireless transmission at an early age. The modern globalization of media industry is as a result of the nineteenth century internationalism. The process of globalization involved three steps. Firstly, some media industries, like newspapers, employed new technology and engaged in business activities which caused them to grow “regionally and nationally and became international.” Secondly, some media industries achieved success due to starting international thinking at an early time: for example, Monsieur Havas translating documents for the French government from other countries, Julius Reuter sending business “intelligence” to various national boundaries using pegions, among others. Thirdly, there are those industries which were international in their starting like the music and radio industries(Ibid).
In mid-1920s, broadcasting stations were operated by non-profit making institutions and organizations like universities, labor unions, colleges, among others whereby colleges and universities broadcasting stations were the dominating ones(Robert 1993,15). Other broadcasting companies were owned by department stores, automobile dealers, power companies and other private investors. Their main aim of operating the stations was not to generate direct profits, but to gain “favorable publicity for the owners primary enterprise” since not many of them thought of broadcasting as profitable in their own right. Only one-quarter of U.S stations sold airtime to the public for its own use whereby only 4.3 percent operated for commercial purposes(Ibid). This caused the industries to face economic instabilities.
Regulations governing the industries
Due to the economic instabilities that were facing these industries, the number of the stations fell due to lack of funds to run their activities. Discussions were made aiming on how to make broadcasting self sufficient. In 1925, subsidizing noncommercial broadcasters by the federal government was one of the regulations set(Robert 1993,17). Between 1929-1933, president Hoover called on the importance of the government to regulate radio stations for the interests of the public. He criticized how they were only maximizing on the profits and “amusement” of the listeners in their programming excluding educational fare and public affairs. In 1924, he called for “2% tax on radio sets sales” that would act as a pay for the best daily programs that were presented with high skills or exhibited good talent. He also asked the “major foundations” to give subsidies for programs that were educational. Since 1923, about seven bills had been introduced as a solution to permanent regulation of which they could not gather sufficient support. The main problem was whether the regulation of the broadcast was to remain in the department of commerce or have its own administrative agency that would be independent from other bodies. The existing regulation Radio Act 1912 was unconstitutional and had no defined criteria for licensing. He then discontinued all the regulations, a thing that caused new broadcasters, many of whom could not respect frequencies that others were using, to start operating, increasing wattage from 378000 to 674000 causing a chaotic scene. This forced the congress to pass the Radio Act 1927. It was mainly passed to effect stability to ether as a public domain. It was also meant to prevent monopoly by all the major stations including RCA. The radio act formed “five-member FRC on an interim” whose purpose was to maintain order to the air as well as giving licenses to broadcasters(Robert 1993,19). This resulted to effectiveness in broadcasting.
Another new rule was proposed by a commission due to several changes in the television market place. There were three broadcast networks that had largely dominated programming and this was unfavorable. The communications act (Amendment
of 47 CFR,1983,p.1024), did not agree with this dominion because “diversification of economic interests and power in this area was a cardinal principle of public interest standard found” in the act. The concentration of power was brought about by different and various causes. The FCC is an independent agency that is governed by five commissioners who are nominated by the president and must be qualified in certain professionals. It is in charge of regulating all the wireless services like issuing of licenses , allocating radio spectrum, among others. The FCC was limiting the number of producers. This was important because according to the commission, “success of independent producers would have a significant impact on the success or failure of the burgeoning UHF stations, most of which were independent stations.” and also, less producers meant less diverse programming(Mara 2004, 54). The FCC was required to promote a systematic communications service all over the nation at a recommendable price especially the years of depression. It was to respond to issues of the users and the providers involved in communications.
After 1896, Bell refused to sell its equipments to any independent company as it had engaged in price competition and had also failed in its attempt to renew patent protection. It also acquired some potential providers and other telephone equipment manufacturers. Bell lost most of its new areas to competition as it expanded its markets nationwide. Presence of competition in many of its markets caused low profit margins causing a drop up to 1906. This resulted to Vail being restored to office by a group of bankers in New York who had wanted to invest in the company in 1907. He set a strict set of policies like denying interconnections involving massive distances and actively merging the competitor’s telephone systems. He also brought an end to price competition. Bell then lost trust due to the resentment it had created. This caused the department of justice “to initiate antitrust proceedings against the Bell system.” The AT&T vice president N.C. Kingsbury in reaction to this introduced an agreement to “stop acquiring” independent companies that were competing directly. Independent companies that conformed to reasonable and fair procedures for hook up were guaranteed long-distance toll service by the commitment. As a result, Kingsbury commitment minimized competition between independent companies and Bell. Many attempts of coordination by independent telephone companies mostly proved ineffective hence the Kingsbury commitment proved disappointing to these companies.(Glen and Michael 2004, 403-407)
“A natural monopoly is arises when technology is such that economies of scale of operation which is so large in relation to the market that only one firm can operate efficiently.”(Gillian 2002, 169) natural monopoly is experienced in many areas of the media. It is mainly characterized by one supplier being favored by the market conditions whereby he is the only favorable supplier of a product to the market. It offers an efficient condition for innovation. It causes the companies to reap big profits and also allows them a chance of introducing new products to the markets hence overall technological and economic growth.
Media industries have become “dynamic, prolific and rich” since their services and products have become very popular to the public who are committing bigger amounts of their earnings to entertainment(David and William 2006, 5). Most products of the media and the entertainment industries are “knowledge-intensive” since they are availed by various teams of highly trained professionals who apply their creative talents, their diverse skills, and mastery of information technology to come up with them. Media industry is also facing rapid changes due to new technologies being involved. Most of the media companies are merging to diversify the range of their products and also to involve themselves with other non media businesses.(Ibid).
Jane, C. (2005), “Comparative Media History: An Introduction” Publisher: Polity (4)
David, C. and William, H. (2006), “The Business of Media: Corporate Media and the Public Interest ” Publisher: Pine Forge Press (5)
Robert, W. (1993), “Telecommunications, Mass Media, and Democracy: The Battle for the Control of U.S. Broadcasting, 1928-1935”Publisher: Oxford University Press US(15-19)
Mara, E. (2004) “Media Diversity: Economics, Ownership, and the FCC” Publisher: Lawrence Erlbaum Associates (54)
Glenn, R. and Michael, T. (2004) “The Demography of Corporations and Industries” Publisher: Princeton University Press (403-407)
Gillian, D. (2002) “Understanding Media Economics” Publisher: SAGE (169)
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