The Case For Abolishing The FCC

Over at Slate, Jack Shaffer makes a persuasive case for eliminated the Federal Communications Commission:

Suppose Congress had established in the early 19th century a Federal Publications Commission to regulate the newspaper, magazine, and newsletter businesses. The supporters of the FPC would have argued that such regulation was necessary because paper-pulp-grade timber is a scarce resource, and this scarcity made it incumbent upon the government to determine not only who could enter the publications business but where. Hence, the FPC would issue publication licenses to the “best” applicants and deny the rest.

Whenever an aspiring publisher pointed out that timber wasn’t scarce, that huge groves of trees in Canada and the western territories made it plentiful, and that he wanted to start a new publication based on this abundance, an FPC commissioner would talk him down. He’d explain that just because somebody had discovered additional timber didn’t mean that the scarcity problem was over, it only meant that timber was relatively less scarce than before. He’d go on to say that the FPC needed to study how best to exploit this new timber before issuing new licenses.

Based on the notion of scarcity, the FPC would have evolved a power to prohibit licensees from using their paper for anything but publishing the kind of print product the FPC had authorized—no using that licensed paper to print party invitations or menus or handbills or facial tissue, the FPC would mandate.

Sounds absurd, doesn’t it ? Well, it is, but it’s a pretty close analogy to what the FCC has been doing for the past seventy years. The question is why such an absurd regulatory system is permitted to continue.

Of all the arguments that have been advanced in favor the FCC and government regulation of the electromagnetic spectrum, the on that continues to resonate is the idea that the radio spectrum is a “public good” and that access to it must be regulated by an entity such as the FCC to prevent the so-called “tragedy of the commons” that would result from allowing unregulated access.

As Shaffer points out, though, this argument doesn’t make sense given the ways in which technology has changed the ways in which we use the spectrum:

Almost everywhere you look, spectrum does more work (or is capable of doing more work) than ever before. For instance, digital TV compresses more programming in less spectrum than its analog cousin. As the processing chips behind digital broadcasting grow more powerful, spectrum efficiency will rise. Ever-more efficient fiber-optic cables have poached long-distance telephone traffic from microwave towers, and this has freed up spectrum in the microwave spectrum for new use by cell phone companies.

Other examples of spectrum efficiency: Low-power broadcasts of all sorts allow the reuse of spectrum, as everyone who uses a Wi-Fi router at work or home or listens to a low-power FM radio station knows. New technologies that share spectrum without interfering with existing licensed users exist (see this short piece about Northpoint Technology). In this bit of advocacy, an industry group gee-whizzes about the spectrum efficiencies promised by cognitive radios, smart antennas, ultrawide-band devices, mesh networks, WiMax, software-defined radios, and other real-world technology. The spectrum-bounty possibilities are so colossal that some members of the “media reform” movement even subscribe to them. The Prometheus Radio Project, best known for promoting low-power FM radio, accepts one estimate that spectrum capacity may increase 100,000-fold in coming years.

If the spectrum cow can give that much milk, why do we need regulators to ration the airwaves as parsimoniously as they do?

The answer, of course, is that we don’t. Instead of regulating the spectrum based on ideas from the 1930s that no longer hold any water, we should allow broadcasters to have private property rights in the radio frequencies that they use. Rather than leaving it up to bureaucrats in Washington, let contracts and legal precedent determine issues like boundary lines and what happens when one parties’ use of their piece of the spectrum interferes with another parties’ right to use their spectrum, which is exactly what Shaffer proposes:

Technology alone can’t bring the spectrum feast to entrepreneurs and consumers. More capitalism—not less—charts the path to abundance. Hazlett and others, going back to economist Ronald H. Coase in 1959, have advocated the establishment of spectrum property rights and would leave it to the market to reallocate the airwaves to the highest bidders. Such a price system would tend to encourage the further expansion of spectrum capacity.

Owners would be allowed to repurpose the spectrum they owned—using, say, AM radio frequencies to carry pictures—as long as they didn’t interfere with the spectrum of others. Companies in control of spectrum would even be free to subdivide their frequencies and rent it out to customers by the minute for the broadcast and reception of data.

Sounds good to me.

H/T: The Volokh Conspiracy

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  • Adam Selene

    Doug, you missed the real issue, the one that keeps the FCC in existence. The censors of the Right and the Left want to make sure no one can be indecent. Mrs. Grundy, of all political flavors, is alive and well. She’s fully aware that killing off the FCC kills off a huge amount of her power, and she is determined not to let that happen. If anyone starts to really move forward on FCC elimination, expect to hear cries of “for the sake of the children”!

  • Timothy West

    am radio does not have enough spectrum space to do anything but serve up narrowband content. certanly not pictures.

    most commenters on media and the FCC dont have enough knowledge of what they regulate to have an informed opinion about what can and should be done.