Selling advertisements for profit is the essential difference between commercial and non-commercial stations. Unlike its European neighbors, the United States does not provide a domestically-run radio network, leaving commercial radio as the dominant approach. By contrast, non-commercial stations run little or no paid advertising, requiring fundraisers and grants to support themselves.
Recognizing the reach of America's new broadcast medium, Congress passed the Federal Radio Act of 1927. The law created a new entity, the Federal Radio Commission, with broad regulatory authority. As radio evolved into a profitable industry, Congress stepped in again with the Communications Act of 1934. The most significant provisions required stations to operate "in the public interest, convenience and necessity," without spelling out the concept.
Defining if broadcasters were acting in the public interest fell to the renamed Federal Communications Commission. The agency gained power over license renewals, giving it major leverage in obscenity debates. Fearing they would be lost in the shuffle of new license applications, educational and political groups lobbied for their share of airspace. These efforts had little success until 1941, when Congress reserved a portion of the FM band for exclusive non-commercial use.
Reserving room on the dial has allowed several types of non-commercial stations to grow, says author and broadcaster Randall Davidson. Most are on the FM band with the stations from 88.1 to 91.9 mHz reserved for non-commercial use. Public stations are the most common example, and are either run by universities or local nonprofit groups. In large cities, community stations are more common, but rely on largely volunteer labor to operate. This situation leaves college and religious stations free to cater to smaller niche audiences.
Freed of major programming and record-keeping requirements in the 1980s, commercial stations also fought to lift ownership restrictions. Those efforts paid off with the Telecommunications Act of 1996. Companies could now own up to eight stations in a single market, with no limits on the total number. Within two years of the law's passage, nearly half of all U.S stations had changed hands. This figure reinforced opponents' fears of increased consolidation, while proponents suggested the market be given more time to work.