Because the 1934 Act does not enumerate specific powers to regulate networks, the FCC has sought to regulate the relationship between affiliated stations and broadcast networks. Following the promulgation of the FCC’s Chain Broadcasting Regulations, major radio and television networks challenged the Commission’s authority to promulgate such rules. Their 1943 suit, National Broadcasting Co., Inc. et al. v. United States (319 U.S. 190) resulted in the Supreme Court upholding the constitutionality of the 1934 Act as well as the FCC’s rules related to business alliances. In its opinion, the Court pointed out the broad and flexible powers granted to the FCC by Congress. The FCC has used the network case as a precedent to justify its broad discretionary powers in numerous subsequent rulings.
The FCC promulgated the seven-station rule, multiple-ownership and cross-ownership restrictions, and cable television-broadcast television cross-ownership rules to promote a diverse group of owners and opinions in various markets and geographical areas. But as the FCC licensed more radio and television stations, restrictions that limited ownership to a few stations made less sense to the FCC. Thus, recognizing greater market competition, the Commission relaxed ownership rules in 1985. Subsequently, the FCC eased restrictions on the following areas:
- Duopoly and Syndication
- Financial Interest Rules
- Limits on Commercials
In the U.S. Supreme Court case of National Cable & Telecommunications Assn v. Brand X Internet Services, the high court ruled that the FCC acted within its discretion in deciding to classify “high speed Internet connections” as non-telephonic. In so finding, the Court ruled that cable providers do not have to allow ISPs to use their services.