BOB GARFIELD: Satellite radio is a different animal. Because it is not over the air, the rules that govern traditional broadcasts don't apply. But content on satellite radio isn't entirely immune from federal regulation. In fact, the very founding of satellite radio a mere seven years ago depended on the promise that it would not air local content. But last month, XM Radio started offering local traffic updates and weather reports. XM contends it's not violating its license, because the local content is being offered nationally. For instance, listeners in Seattle can tune in to the channel for traffic in Philadelphia. But the National Association of Broadcasters, trying to protect the turf of its member broadcast stations, doesn't see it that way, and this month it formally complained to the FCC. Its beef, says former FCC chief economist Thomas Hazlett, is that XM and Sirius Radio pose a mortal threat to local programming.

THOMAS HAZLETT: The irony now is that to protect local programming we, in fact, outlaw local programming by satellite radio, [LAUGHTER] and the question that now comes to us is: what constitutes national programming; what constitutes local programming.

BOB GARFIELD: Well, it's a question for King Solomon. In your judgment, is this programming national or is it local?

THOMAS HAZLETT: In terms of content, the programming is local. In terms of transmission technology or distribution, it is national. The implications are very large here, and I think that the FCC is going to want to rely on regulation of the transmission technology and stay away from content regulation. That's certainly what the satellite radio operators are hoping.

BOB GARFIELD:Let's talk about the NAB for a moment, the National Association of Broadcasters. They're making a number of arguments, mostly about localism and about how the media conglomerates, in this case Sirius and XM, are a threat to local radio all over the country and so forth. Isn't it on the verge of being hilarious that the, the very organization that has so supported Clear Channel and other omnivorous media conglomerates is suddenly championing the rights and needs of local radio audiences?

THOMAS HAZLETT: Many of these arguments do belong on the Comedy Channel, which I believe is available on satellite radio. [LAUGHTER] You know, as an old member of the Federal Communications staff said years ago in looking at all the various arguments, he said, boy, with all this talk about the public interest, there must be a lot of money at stake somewhere. But to define localism only in terms of geography is really to deny what the technology allows us to serve in terms of consumer tastes and, and preferences. That is to say, there are a lot of types of programming out there, whether they be in the music fields or the informational market, where on satellite you really do get a choice of perspectives. This kind of diversity really does allow different communities of interest to have their favorite channels, their favorite shows, their favorite content. Localism does not have much to do with geography any more.

BOB GARFIELD:I remember in the mid to late '60s, with cable television really in its infancy, that the NAB and maybe others in a coalition were telling people to "save free TV" and sign petitions and to make sure that our free TV signals would be protected by the government, all for fear of this burgeoning cable colossus. Well, [LAUGHS] 40 years later, it looks like it didn't do any good. There's something more than 75 percent penetration of cable television in this country. Is this all inevitable? Is satellite radio inevitably going to win this battle?

THOMAS HAZLETT: Who knows? At this point, satellite radio is struggling for financial viability, so I think it's too early to say game over, [LAUGHS] satellite wins. Right now, really, all the chips are on the side of the table where the local radio stations are sitting. But, in some ways, both satellite radio and cable satellite TV have been reactions to regulatory decisions to offer relatively few free, over the air broadcasting alternatives. There have been choices made to explicitly limit the number of local competitors, both in TV and radio. In the early television market, the regulators killed off a fledgling fourth network, the Dumont Network, simply by issuing too few licenses that were financially viable for operations in the early TV market. In the radio markets now, you find that the regulators haven't learned all that much over the past 40 years. Rather than backing up and saying as regulators, what are the real public goods we can provide? Limiting interference, allowing an orderly marketplace to proceed and offer these various choices to customers at reasonable prices. Instead of doing that, they become very much aligned with the markets that exist, and almost implacably become foes of emerging technologies or emerging markets which would challenge those existing structures.

BOB GARFIELD: Defenders of the status quo, in other words.

THOMAS HAZLETT:Exactly, and even chairmen of the FCC have commented that FCC in some ways is properly interpreted as forever captured by corporations.

BOB GARFIELD: All right, Tom. Thanks a lot.

THOMAS HAZLETT: Thank you.

BOB GARFIELD: Tom Hazlett is a senior fellow at the Manhattan Institute and a former chief economist at the FCC. [MUSIC UP & UNDER]

BROOKE GLADSTONE: Coming up, a somewhat compressed history of American media, from the Revolution to five minutes ago.

BOB GARFIELD: This is On the Media, from NPR.