But let’s not dismiss too quickly the federal government’s potential role in promoting good news coverage. Here are 10 steps that the US government *could* take that would significantly help entrepreneurs trying expand the news coverage of their local communities. And none of them involve direct subsidies or payments to the news industry.

1. Protect Net Neutrality

The Internet has nearly eliminated the barriers to entry for start-up publishers, enabling the explosion of new information sources across the Internet. If we need better sources of local information, the solution is not to allow telecom companies to extract tolls and demand payments from publishers to allow access from readers. That will merely reduce the number of voices available to consumers while further enriching telcos. Corporate media was cutting local news coverage before the Internet. Silencing websites won’t bring back that coverage. It will only reduce the possibility of finding replacements.

2. Expand broadband coverage

The smaller the market, the harder it becomes for a local publication to earn the income it needs to operate as a viable business. The digital divide makes small communities even smaller. Universal access to broadband would make every household part of its local digital marketplace, expanding opportunities for publishers and helping increase the possibility that a professional, responsible news publication in that community could be a financial success. The government can help expand broadband coverage not by caving to the demands of telecos (who are holding broadband expansion hostage to kill net neutrality, for example), but by laying its own fiber lines, establishing public WiFi networks, and by demanding more from companies bidding for broadcast spectrum.

3. Digitize public records and put them online in open formats

You might have noticed that we have millions of un- and underemployed workers in America today, many with digital skills. We also have decades of public records that remain available only in printed form, or in archaic electronic formats. Why not create a WPA-style computer workforce to digitize the nation’s public records and to publish them online, in open formats? Not only would this effort put many thousands of Americans to work, it would create a repository of more easily retrievable public information, allowing citizens (and reporters) easier access to our government.

4. Pass a national shield law, with explicit protection for online publishers

The First Amendment belongs to everyone, not just to print and broadcast reporters. Unfortunately, the shield laws that provide legislative support to the First Amendment vary from state to state, and some courts are unwilling to apply their protections to anyone other than old-school print and broadcast reporters. A federal shield law, with an explicit protection for online publishers, could help create a more hospitable legal environment for start-up news publishers.

5. Regulate transaction fees

Like many retailers, I lose a chunk of every payment made by my customers who use debit and credit cards. While it’s reasonable to expect to pay a bit for the convenience of these forms of payment, given the small number of megabanks that now control the credit card industry, we need government oversight to keep fees reasonable. Congress is taking steps to help this happen, which will reduce operating costs for all small businesses, including start-up news publishers.

6. Revisit COPPA

The Children’s Online Privacy Protection Act sounds like a worthy piece of legislation – no online service can collect personal information from someone under age 13 without that the explicit consent of that child’s parent or guardian (and an email or Web form consent doesn’t count). In practice today, however this act is violated so often as to make the drinking age look like a widely respected law. And it’s not the publishers undermining the law. It’s the kids. Many online community publishers spend way too much time finding and deleting user accounts from kids who lied about their age to register on a website. Creating digital media has become a normal part of life for kids under 13. It’s time to revisit this law and create a new solution that protects kids, parents and publishers. The law should mean something. When this many people violate it, the law is reduced to charade and farce.

7. Ditch the FTC’s “blogger endorsement” rule

This attempt to force truth in advertising is a confusing mess and its inconsistent enforcement has become a joke. If payola disclosure’s important, let Congress pass a law mandating it for everyone – bloggers, newspaper reporters, celebrities and anyone else who publishes. But good online publishers shouldn’t have to worry themselves with jumping through legal hoops that less considerate people get away with ignoring.

8. Model zoning reform

Continuing on the topic of widely ignored laws, zoning laws in many communities make running a business from your home (even a remotely hosted website) illegal. With telecommunity becoming more popular, the lines dividing home from work are becoming more blurred. While zoning remains a local issue, the federal government could encourage local communities to revisit their zoning regulations to encourage the development of online businesses. The first step would be to eliminate restrictions against running from one’s home office a business that employs no one from outside the family on site.

9. Remove payroll tax cap and reduce rate

My last two recommendations would help create a more viable environment for all job creation, not just in online news. Too many digital entrepreneurs are caught by surprise their first year, when they’re hit with the bill for the “self employment tax” – the share of Medicare and Social Security taxes typically paid by employers. When you’re self-employed, you’re on the hook for that share, as well as your regular share as an “employee.”

These so-called payroll taxes are regressive, as they are charged only on the first $106,800 of income. Eliminating the cap would raise additional money to fund these programs, potentially allowing an overall reduction in the payroll tax rate. That would reduce the self-employment tax, making digital entrepreneurship more attraction to journalists thinking about starting up, just trying to make a middle-class income for themselves and their family.

10. National health care

Even more than payroll taxes, the biggest non-income expense for many start-up businesses is health care. I personally know many journalists who’ve stuck with unsatisfying newsroom jobs rather than starting out on their own because of the health benefits. Ever-increasing health insurance premiums effectively serve as a private industry “tax” on job creation in the United States. A national health care plan that divorces health insurance from employment would encourage people and businesses to create jobs by eliminating health insurance as a direct expense of creating (or maintaining) a job. At the very least, opening Medicare to all who wanted to enroll and pay the premiums would create some much needed competition for companies such as Wellpoint, which enjoy near-monopolies in many communities on health policies for the self-employed.

Egypt’s crumbling regime has resorted to traditional techniques for silencing reporters, including beatings and arrests. (Reporters also have been assaulted by pro-government thugs during the ongoing anti-government protests.) But it was the Egyptian government’s action to cut access to the Internet early during the protests that also should prompt journalists around the world to take a closer look at their government’s attitude toward controlling the Internet.

Even here in the United States, there’s far from political unanimity on how the government should address the Internet. Consumer advocates want to the Federal Communications Commission to expand to wireless services its rules blocking Internet providers from slowing access to content providers who don’t pay telecommunication companies an extra fee, beyond hosting and bandwidth charges. The telcos want the government to butt out and quit preventing them from finding new ways to make money to maintain and expand their networks. The Department of Homeland Security is shutting down websites (including ones outside the US) that link to live streams of copyrighted televise broadcasts.

And some members of Congress have proposed legislation that would allow the government to shut down parts of the Internet in a “national emergency.”

Sen. Susan Collins (R-Maine) told Wired.com last week that she might reintroduce the Protecting Cyberspace as a National Asset Act of 2010 in this Congressional session. The bill is designed to legally enable the federal government to shut down parts of the Internet under cyber attack – creating an effective firewall between comprised networks and the rest of the Internet.

I can’t imagine not wanting to preserve the integrity of the Internet in a time of crisis, when efficient communication can become even more important. But giving anyone in the federal government a “kill switch” for the Internet ought to concern any advocate for free speech, especially in light of what Egypt has done.

The bill contains a provision against censorship, but, as Wired.com pointed out, similar language in the Patriot Act didn’t stop the feds from using that legislation to spy on interest groups.

The definition of an attack changes with your point of view, as well. I’m certain that the Mubarak regime in Egypt considered the outpouring of support for change in that nation an “attack” on its national security.

Throughout history, people have made money and achieved power by controlling access points in commerce, including ports, portages, mountain passes, and roads. In recent times, others have earned money and power by owning access points for the passage of information, such as the town’s printing press, a broadcast license or, later, cable TV franchise.

While restricting the flow of people, goods and information through access points can enrich those who control those points, opening access helps spread that wealth among a larger population, often creating additional wealth in the process.

It’s ridiculous to insist that the U.S. government stay out of the Internet. Heck, it created the thing. Like interstate highways or global air and sea traffic routes, the Internet’s too important to allow it to fall under the control of a handful of corporations.

Or a few government officials.

That’s why I believe that government’s role in the Internet ought to be:

• Protecting open access to this information marketplace, preventing service providers from denying access to publishers.
• Promoting the expansion of Internet access to more people.
• Promoting the expansion of bandwidth across the Internet.
• Promoting the establishment of more redundancy within the Internet, to improve reliability and minimize the effectiveness of both cyber attack and censorship.

Regardless of your opinion on those points, I hope that the revolution under way in Egypt will inspire more online publishers to speak up when politicians debate regulation of the Internet. This issue means too much to us as business people, and too much to us as leaders in the communities we serve, for we to keep quiet and leave these decisions to others.

What’s happening in Egypt also reminds us that brave reporters risk their lives to bring the rest of us the news. We owe it to them, as well as to their audience, to do everything we can to ensure that the news they report can and will get out to the rest of the world.

AT&T’s announcement this month that it will end unlimited data plans for its smartphone and iPad subscribers is expected to lead to similar announcements from other wireless providers. And Comcast’s continuing efforts to throttle certain traffic from its home Internet customers shows that bandwidth battles are not limited to the wireless Web.

Internet Service Providers clearly don’t want to continue offering a one-price-buys-everything option. ISPs have shown that they favor a pricing model where certain users have to pay more to use more bandwidth.

While there’s some logical appeal to the idea of making the heaviest users of the Internet pay the most for their use, metered traffic online creates profound challenges for online content producers.

Think back (if you’ve been online for more than a decade) to when online services such as Prodigy and CompuServe charged by the minute. How much time did you spend online back then, compared with today? One might argue that the availability of more powerful devices and connection plans have enabled people to spend more time online. But one also could argue that without unmetered access, there’d have been much less, and perhaps no, demand for such online capacity.

With unmetered online access, developers and entrepreneurs are developing a wide range of bandwidth-intensive applications, from Netflix’s online streaming service for movies and television to Virtual Private Networks that allow companies to share data, video and audio among far-flung employees without having to buy their own telecom lines.

Of course, some of those new applications – especially Netflix’s – threaten well-established business models and practices at ISPs. Cable companies that make billions of dollars by selling people subscriptions to a set line-up of television channels (as well as by selling channel producers places on those line-ups), don’t want to see the likes of Netflix providing an alternative medium for watching TV shows. Telephone companies don’t want to see a dozen Skypes offering unlimited, flat-rate or free voice and video calling over the ‘net. For these corporations, bandwidth metering isn’t simply about cost containment on the ISP side; it’s a way to protect their core businesses from competition.

In an opinion piece in Salon last week, Dan Gillmor made a case for the federal government expanding broadband coverage through a comparison to U.S. postal subsidies for newspapers, which began in the 18th Century.

Allow me to add another analogy – the Rural Electrification Act. While the Post Office Act of 1792 encouraged the free flow of information around the young American nation, the REA helped lift millions of rural Americans out of poverty and into a national marketplace.

Rural electrification allowed rural households to have the power that they needed to light their homes, run machinery, refrigerate more food and work their land to a scale impossible before. It allowed them to escalate their level of economic activity, in addition to providing a higher standard of living.

Affordable comprehensive national broadband could do the same. Not only would it lead to a more informed citizenry, it would give the people of the United States an important tool with which they could become more engaged in a national (and international) marketplace.

Gillmor argued that the government’s subsidy of broadband would be a more appropriate way for the federal government to support journalism than to provide direct payment to establishment media.

I agree. Payments to establishment media fund a limited number of existing voices. Expanded broadband coverage – in both geographical reach and availability of more bandwidth to all – would create fertile ground for the growth of many more voices.

This is the battle that will be fought in the courts and in Congress over the next months, and years. Will we allow a limited number of broadband ISPs to use their market power to limit the bandwidth that consumers and producers may access? Or will we use the collective power of our government to expand bandwidth to more consumers, to create more entrepreneurial opportunity?

I’ve warned before that online publishers must not fall into the trap of acting like newsroom reports, afraid to take a stand on any issue. Access to bandwidth is the issue that will nurture, or kill, online news and information businesses in the years to come. If you’re publishing online, you need to fight for your access to bandwidth – and your potential audience’s access to it, as well.

With all of those extra responsibilities, do not forget about one other – one that directly conflicts with what you were taught as a reporter, but is nevertheless a responsibility that’s vital if you are to remain in business successfully.

You’ve got to get active, politically.

Decisions made by elected officials determine what information you can access, as well as who can access your publication, and how. They determine how much you pay in taxes, what infrastructure supports your business, as well as the same for your competition.

That’s why the news industry, for generations, has actively lobbied lawmakers to ensure that their decisions either help or at least minimize the harm to its companies.

But as an independent news publisher, you cannot rely on news industry lobbyists and established industry voices to represent your interests. Remember, those newspapers and broadcast and cable stations are your competition now. One characteristic of the environment that they are attempting to have government create (or maintain) is one in which it is difficult, if not impossible, to launch and grow successful competition to their businesses.

Fortunately for your current endeavor – though perhaps not for your former job – the news industry slept through that challenge in the 1990s, allowing the commercialization of the Internet in ways that made such competition inevitable.

But Big Media is fighting back now. Witness the attempt to gut “net neutrality,” the ability of the U.S. federal government to prohibit carriers from given traffic to certain parts of the Internet preference over traffic to other sites and services. A federal appeals court struck down the FCC’s ability to do that this week, potentially eliminating legal restrictions against Internet Service Providers demanding payment from you to allow your current readers future access your website.

As an independent news publisher, it is now very much in your economic interest to get on the phone and call your representatives in Congress, to ask that they make net neutrality a federal law, and to give the FCC the power to regulate ISPs on this issue.

It’s also in your interest as a reporter to get involved in local and state decisions about access to public records. In the Internet era, there’s a huge difference between “public records” that are available 24/7 on a public server in comma-delimited format, and “public records” that are available between 11am-1pm Mondays in a courthouse office, for physical inspection by someone not in possession of any electronic recording device.

Which type of public document would you rather deal with in your reporting? Remember, you can’t always count on your former colleagues in the traditional news industry to represent your interests here. With a newsroom of reporters who know shorthand, but no computer programmers on the newsroom staff, it’s conceivable that a newspaper publisher might not have a problem with the second option described above, and decline to push hard for legal changes to make the first a reality.

As an aspiring leader in your community, you should also take public stands on issues that affect the well-being of your community, whether they be school bond issues, commercial development plans or the police department budget. Whatever a newspaper publisher would have gotten involved with in the past, you, as a news website publisher, should consider taking on now. (See Amy Gahran’s excellent piece for KDMC’s News Leadership Blog, Going on the record: Civic engagement is for journalists, too!.)

Of course, that newspaper publisher assigned different employees to handle all those different tasks, and you might be going it alone now. But that’s no excuse to disengage from the political process that affects your livelihood… as well as that of the entire community you aspire to cover, and by doing so, represent.

So you will have to find a way to disclose what you do – to make clear to your readers what is reporting, what is advocacy and how one affects the other (or not). But don’t ever be afraid of losing credibility by engaging. I suspect that you’re more likely to put your credibility at risk if you fail to stand up for yourself and your readers. No one wants to follow a wimp.

So engage in local politics when you need to. And engage with your readers to let them know why you’re doing that, and how they can do the same to protect their interests.

After all, a community that’s engaged in its political process is one that going to want to read more about that process… building a larger potential audience for journalists’ work.

See, I told you that political engagement would serve your business’ interest!

Speaking to a fire hazard of computer programmers, Web producers and journalists at the University of Southern California’s Annenberg School for Communication last Thursday afternoon, Berners-Lee crammed a career’s worth (OK, maybe several careers) of wisdom and clairvoyance into a little less than an hour of accessible Netspeak. He waxed nostalgic on the Internet’s historical terrain, then prognosticated a Web future rooted in sociability, customization and, above all, user demands.

“We’ve got to keep building those wish lists, because they will inspire people who are doing the coding,” he said. “There are a bunch of geeks… who are itching to find a problem to solve.”

The moral: keep feeding the innovators. You never know what they might come up with, and there’s no predicting what bizarre idea might take off running.

“What if, just before wikis came out, somebody had said, ‘Hey, suppose there was a website that said: Anybody can edit this. Please be careful. It would be nice if this were an encyclopedia. Those are all the rules.’ You would not have invested. You would not have been the manager that said, ‘Yes, OK. Write it.’”

And per his road map, the Web’s uncharted territory is vast and ripe for discovery. As he has since day one, Sir Timothy Berners-Lee sees a blank, royalty-free canvas.

Berners-Lee on what’s in store:

We just hope that there is just a natural tendency to broader interoperability. That we will end up with a very powerful platform in the future. The sea of interoperability…. One of the things that you have to remember now is that we’re seriously thinking that the Web isn’t all there is… that downstream, there’s a huge amount of stuff. So that means that you don’t have to do your work looking to the Web as though it is the geographical terrain. You can do it as though it were something you can send back. Like undercooked beef. It’s OK to say, ‘The Web is fine, but what we really want is this.’ You know, ‘blogs are great. They’re interesting. But what if, instead, we had this?’ So the technical community needs to have feedback from people who are maybe being frustrated by how the Web is doing in all this.

If you go away today with any one thing in your head when it comes to the Web architecture, it’s that it is a universal space. It’s got to be there like a white piece of paper, for people to do other stuff on it. And the Web is great because of all of the creativity that other people have put in. It mustn’t control what other people want to do with it. It clearly has got to be able to work on any hardware platform.

There are some things we can worry about and some things we can get hopeful about. A lot of people are excited about virtual worlds; second lives and things. Some people are worried about the fact that my ISP might stop me from accessing all the new video sites because they are my cable company, and they want to be the person to decide what movies I watch this week. There are some slumps around there, but I think we’ll avoid them.

On digital humanity:

When you design something in the Web, there is a social side to it. The Web actually has protocols like http, but it’s got human protocols, too…. I make a link to another Web page because if I link to good Web pages, my Web page will become valuable. And if my Web page becomes valuable, it will be linked to. And if my Web page is linked to, it will become more read. And I like to be read! It all comes down to psychology. Sometimes it comes down to money, OK? ‘I like to be read because I get cash.’

It’s not a web of computers, it’s a web of people. It’s people that make links, it’s people that follow links. People are affected by many things in what we do; in the policies we should enact — or that we should tweak, or that we should interpret. There’s psychology at the base. There’s a large amount of mathematics about it. There’s a very, very large number of disciplines around websites, and there are great people in the spaces and doing great things who probably don’t know each other. So one of the motivations of Web science is to get people in these disciplines talking to each other.

On creativity:

The creativity has always been the exciting bit for me. We do our software design in such a mechanical, mathematical way. We analyze it and we use software engineering tools. But the actual creative leap to how we’re going to do the thing, or the fact that we will write the program in the first place, is done subconsciously by a mechanism that we cannot analyze. It is not provided to us. We do not have a portal, we do not have the debug access to a brain that allows us to figure out how it was we came to it.

Individual creativity is very special, but group creativity — when we do things together, which is what we actually have to do to solve all these big problems — is even more interesting. And one of the reasons I wanted to make the Web a big sandbox is that I wanted it to be a tool for group creativity. I wanted us to pool all our thoughts and brainstorming together so that we will somehow make our combined brains be slightly less stupid than our individual brains.

On social networks:

These social networking sites are starting to develop new ways of actually determining how you trust friends, and friends of friends have a different status than friends or friends of friends of friends…. One of the things they’re doing is creating new forms of democracy. Or new forms of meritocracy…. It kind of works, but maybe we can improve on it. And maybe, out there in the Web, we will end up producing a new social mechanism, which will improve on the existing democratic systems we’ve got today, and we’ll be able to run the country better. How about that? Run the world better. Don’t aim low! OK?

On inventing the Web:

Inventing the Web was actually rather straightforward. It was the sort of thing you could do on the back of an envelope and code up in two months. But explaining to people that it was a good idea—helping them get over all their misunderstandings of what it was supposed to be, was very difficult.

Because it was a paradigm shift, the difficulty of explaining the Web in the first place was that we didn’t have the vocabulary like “link” and “click.” So I could show someone a Web page and click on it and, tah-dah! Another window would open with a different Web page. So what? No big deal.

What they couldn’t understand was what was really interesting about this link was that this one really could have gone anywhere; to any data you could imagine being out there and conceivably interesting. Now the fact that pretty much anything you could imagine existing out there has got a high chance of being on the Web. And the fact that that link could have been there was just really difficult for people to understand.

In our meetings I wanted us to build the Web as a collaborative design so that we would always leave pointers back to why we made decisions. We would always leave pointers back to the documents we’d read when we had our meetings. So that somebody coming in would be able to understand. Somebody who’s going to reverse a design decision we’d made can find out why it was made; find out what they’re going to damage. And also, when they leave, they don’t have to do the big debrief and explain to everyone what they’ve done, because it’s there. They’ve woven it into the group…. So the first Web browser was an editor. It was designed really to be a collaborative thing.

On Gopher:

It was way more popular than the Web. Taking off exponentially, with I think maybe a sharper time constant. The University of Minnesota then announced that, by the way, they might be licensing the material. You might have to pay royalties. They were toast. Overnight. And people were putting a huge amount of pressure on me to get something from CERN. And CERN, to their huge credit, did produce, 18 months later… a document that declared that CERN would not be charging royalties on the World Wide Web. And that’s why it happened. That’s why it took off.

On bobsleds:

There’s a phase at the beginning of a bobsled run when you’re pushing. The whole team is pushing. And it’s really hard because the bobsled has in fact got some inertia. And then it picks up speed. And then in the later phase, you’re all in the bobsled steering, and things like that. But there’s a very important transition phase when you stop pushing and jump in. And for the Web, that was about 1993. So I was concerned in 1993 and started sort of rushing talking to people about what sort of consortium we would do. And eventually the result was the World Wide Web Consortium.

The Justice Department bought the industry line that it needs to be allowed to charge publishers more to serve their content faster than others, in order to raise money for capital expansion of the Internet. From the department’s press release:

“The Department also noted that differentiating service levels and pricing is a common and often efficient way of allocating scarce resources and satisfying consumer demand. The U.S. Postal Service, for example, allows consumers to send packages with a variety of different delivery guarantees and speeds, from bulk mail to overnight delivery. These differentiated services respond to market demand and expand consumer choice.”

Make no mistake: The battle over net neutrality is a battle over control of the content on the Internet. Those attacking net neutrality want to return to the pre-1995 era, when high distribution costs, such as the postal service’s differentiated service and pricing levels, created a formidable barrier to entry for publishers, preserving corporate control over almost all entertainment and news media.

Those supporting net neutrality, myself included, point to the explosion in people-powered media over the past decade, which was made possible by the unprecedented ability of individuals, anywhere, to publish to a global platform, on an equal footing with corporate media.

Yes, publishers who serve millions of readers each day ought to pay more to have their content on the Web than those who serve dozens. But they already do. The industry’s plan, however, would charge individual publishers different rates for bandwidth based on negotiated deals. AT&T, for example, could cut a deal with Fox News, serving its content to subscribers at a faster rate than that of the New York Times. And people-powered sites from DailyKos to Free Republic would be left with the digital scraps, their readers waiting while AT&T gives higher priority to requests for webpages from its corporate partners.

Here’s another analogy: Let’s contrast the Internet, with its current policy of net neutrality, against cell phone networks, where telecoms can decide which content to deliver. Which offers you more content, more powerful services and at lower cost? Which allows you, personally, to speak to more people around the world, at next to no cost?

It’s no contest. That’s why publishers and consumer advocates from across the ideological spectrum, from MoveOn to the Christian Coalition, have endorsed the continuation of net neutrality. The Internet is the ultimate manifestation of the Enlightenment ideal of a marketplace of ideas. In an era of newsroom cutbacks, it provides a ever-needed check on abuses of government and corporate power. Not to mention a place for people of all tastes, backgrounds and affinities to celebrate their culture. If the Bush administration is going to do the bidding of corporate America, defenders of the public interest must urge Congress to defend this larger coalition of public and private voices.

We would not have the diversity of voices and services available on the Web today were the Internet not developed under a policy of net neutrality. Which makes the words of one Justice Department official in endorsing net neutrality’s end so ironic.

“Consumers and the economy are benefitting from the innovative and dynamic nature of the Internet,” said Thomas O. Barnett, Assistant Attorney General in charge of the Department’s Antitrust Division. “Regulators should be careful not to impose regulations that could limit consumer choice and investment in broadband facilities.”

Precisely. Which is why the U.S. Federal government should leave the Internet the way it is, and not permit telecoms to decide which websites they will serve to us on their backbone networks.

At this writing, it appears as if the Bancroft family, which owns controlling shares of stock in the Dow Jones conglomerate, may be close to directing its board to negotiate the price of a final sale. Meanwhile, mogul Sam Zell has been buttonholing members of Congress in his effort to get waivers from the Federal Communications Commission that would permit the ownership of newspaper and television properties within the same market.

Both pending sales have met with criticism from activists and observers concerned about media consolidation. The editors of the Columbia Journalism Review spoke for many in the industry when they likened Murdoch to a scorpion, and pleaded, “We hope [the Bancrofts] find a way to keep this American treasure away from Rupert Murdoch, who will smile even as he raises the stinger.” The United Church of Christ and a coalition of civil rights and other groups have petitioned the FCC to stop Zell from obtaining the waivers that would make the Tribune bid possible.

While these issues have grabbed the headlines, the battle lines over media consolidation spill into other regulatory skirmishes over such issues as Internet radio, cross-ownership rules and the Net Neutrality debate. The debate has further intensified with advent of digital television in 2009, because the FCC will be auctioning off the portions of the broadcast spectrum currently used for analog television.

OJR spoke with two experts on media policy who differ strongly on consolidation and a host of other issues.

Mark Fratrick is an economist who has worked on broadcast regulation issues at the Federal Trade Commission and the National Association of Broadcasters. He is currently vice-president of BIA Financial Networks, a Virginia-based consulting firm. Craig Aaron is the press liaison or Freepress.net, a non-partisan think tank on media issues. Here’s what they had to say about the Dow Jones sale and several other issues related to preserving competition in the media marketplace. Their contrasting views highlight the ways in which technological change is creating new competitive realities and reshaping old debates about the tension between the media’s public service responsibilities and the economic imperatives of capitalist enterprises.

Issue: Dow Jones sale

Fratrik thinks Murdoch won’t sacrifice the Wall Street Journal on the altar of either profit or his brand of politics because to do so would be bad business practice. “I don’t think that Mr. Murdoch would seriously alter the quality and integrity of the Wall Street Journal. That integrity, that quality, that brand name is what the Wall Street Journal is. And Mr. Murdoch buys assets in order to improve the value of those assets and the value of his holding company. I find it hard to believe he would put that in serious jeopardy by diminishing the quality of such a thing.”

Issue: Net Neutrality

FreePress.net is one of the key players in the Save the Internet coalition, proponents of “net neutrality.” Net neutrality advocates say broadband providers are looking for ways to force consumers to pay extra fees for high-speed internet access and other premium services. They want Internet access to be treated as a public resource, much as telephony was 100 years ago. In the early decades of the 20th century, industry leaders and public policy makers made universal telephone service a priority, leading to a chain of business moves and legal decisions that culminated in the Communications Act of 1934.

In 2006, the Communications Opportunity, Promotion, and Enhancement (COPE) Act (HR 5252), a bill that provided for some net neutrality protections passed the House but died in the Senate.

Aaron worries that without FCC action, consumers could find their internet access restricted in the same way that cell phones are limited now. “If you look at your cell phone plan, there are a lot of restrictions in place. Network neutrality is not allowed. They [wireless access providers] can interfere with who gets to you and what kind of information you can get. So we’re looking to ensure network neutrality.”

That argument doesn’t sit well with experts such as Fratrik, who describes himself as “very free market-oriented.” In fact, Fratrik exclained, “Net neutrality makes my hair hurt!” Fratrik echoes the industry-led “Hands Off the Internet” coalition, which argues that “Net Neutrality” is “expensive and unnecessary. Net neutrality opponents say that current laws already provide adequate protections for consumers. Further, they say, the changes that Neutrality advocates want would add expense without benefitting consumers.

It’s not easy to find analyses of the issue that don’t lean to one side or the other. Project Censored has accused the mainstream media of largely ignoring the net neutrality debate in 2005 and 2006, calling it the most censored story in its 2007 list. The issue may get more coverage as the 2008 Presidential election approaches, especially since several candidates have already declared themselves in favor of Net Neutrality.

Issue: Concentration of Media Ownership

The Telecommunications Act of 1996 loosened some of the rules on, for example, how many radio stations a company could own, both nationally and locally. To Fratrik, that regulatory relief was essential: “I think that the competitive environment that both radio and television stations now find themselves in… is incredibly remarkable. Without the deregulation of the ’96 Act, … broadcasters would be even in a worse position than they are now.”

The actual development and implementation of regulatory rules in the years since 1996 has been contentious. In a 2004 decision in the case Prometheus v. FCC, the Third Circuit Court of Appeals stopped plans announced by the FCC in 2003 to further loosen caps on the number of radio, newspaper and broadcast outlets that can be owned in one market. In 2006, the FCC announced that it was seeking public comment on how to respond to the order. In 2004, Rep. Maurice Hinchey (D-NY) introduced the Media Ownership Reform Act, which would roll back much of the deregulation of the last two decades, break up some media conglomerates, and re-introduce the Fairness Doctrine. So far, the bill has not made it out of committee.

The transition to digital television brings a new twist to the consolidation debate with the FCC’s forthcoming auction of the analog bandwidth that over-the-air television broadcasters won’t be using any more. Digital television, which will become standard in 2009, also promises to create a host of opportunities for new interactive media services. FreePress.net’s Craig Aaron is worried that, “the way the auction is taking shape, it very well could be that the same companies that already dominate our broadband market – the phone and cable companies. Phone companies, in particular, are in a position to swallow up this spectrum.”

FreePress.net and its allies are urging the FCC to follow “open access rules” that it says will lead to greater consumer access, more innovation, and more marketplace competition. Those rules include requiring licensees to make bandwidth available, at wholesale rates, setting aside a portion of the spectrum for unlicensed wireless services, and ensuring that customers will be able to connect to wireless services without having to purchase a device endorsed by their wireless carrier. They also support passage of the Wireless Innovation Act of 2007, which would turn these recommended rules into law.

Issue: Diversity of Media Ownership

One of the reasons, the Third Circuit ruled against the FCC in the Prometheus case is because it rejected the FCC’s claim that it could loosen ownership restrictions without further eroding the diversity of media ownership. That lack of diversity remains a serious issue.

Aaron and others point to the June 2007 report, “Off the Dial” as evidence of the the persistently low representation of women and people of color among the owners of the nation’s broadcast outlets. According to that report, African Americans, Latinos and Asians own only 7.7 percent of the nation’s full-power commercial broadcast stations, despite representing about one-third of the US population. An October, 2006 study, “Out of the Picture,” found people of color similarly scarce among commercial television station owners. Women constituted just under 5 percent of television station owners, despite the fact that just over half the US population is female.

Fratrik says diversity of ownership and opinion is “always a valid concern.” However, he adds, “how it should be handled is another question, insofar as how you may hamper the ability of certain stations to operate for not allowing groups to acquire properties, troubles me. I think it’s a very good concern; I think it’s an important part of a democracy. It’s also an important part of communications policy. I’m always fearful if that is the primary driver in some proposals.”

Fratrick added, “If you just look at over the air broadcasting as your group of outlets, then there may be not as much diversity as one would like, but on the other hand, I think the broader media environment should be the environment, what we refer to as the media ecosystem that one should look at. Given the thousands and really unlimited number of outlets that one has available, I think there’s a tremendous amount of diversity.

“I think the current regulatory scheme is fine, insofar as providing enough diversity in that broader media ecosystem, that broader marketplace. I’m thinking of satellite radio, I’m thinking of the Internet, I’m thinking of video-on-demand, cable systems, the hundreds of newspapers, blogs – every day there’s a new avenue.”

“Not everybody has a broadband connection to the Internet, and not everybody has cable, and certainly not everybody subscribes to satellite radio. But when I take a step back and ask, what’s available to the American consumer, and what’s available for free, what’s available for a fee, what’s available online, I’m just wondering, what else more can we be doing?”

Aaron has some ideas that he thinks will lead to more diversity among media owners. “Well, he says, “you could lower the ownership caps, for a start. You can create incentive systems for those properties to be sold to under-represented communities.”

The Outlook

While Fratrik doesn’t expect MORA any bill like it to surface any time soon, he adds, “I’m always concerned when Congress talks about this, because I’m always fearful that they may come back and re-regulate, and I think that would be an unwise decision.”

Freepress.net disagrees. Aaron maintains that whether it’s the Internet, the wireless spectrum, cable or satellite, “they’re all a part of the public airwaves. And it’s the FCC’s job to make sure these airwaves are used in the public interest. And the public interest is lower prices, more options, more space to get faster Internet service, to connect their devices and do different things. Unfortunately, the history of media policymaking has largely gone in a different direction, and that’s taken this great public resource and privatized it in a way that it doesn’t serve the interest of everybody, and it does serve the narrow interest of a few big companies.” Aaron insists that the policies he and his colleagues recommend will yield “benefits in terms of new services, new products new competition.”

Whatever your philosphical predisposition, one thing is clear: the decisions taken by the FCC in the coming weeks and months will go a long way toward shaping the media environment for both journalists and news consumers for years to come.