The reason is simple. The venerable FCC, created in 1934, is no longer necessary.
Its justification for existence was weak 70 years ago, but advances in technology since then have eliminated whatever arguments remained. Central planning didn't work for the Soviet Union, and it's not working for us. The FCC is now an agency that does more harm than good.
Consider some examples of bureaucratic malfeasance that the FCC, with the complicity of the U.S. Congress, has committed. The FCC rejected long-distance telephone service competition in 1968, banned Americans from buying their own non-Bell telephones in 1956, dragged its feet in the 1970s when considering whether video telephones would be allowed and did not grant modern cellular telephone licenses until 1981--about four decades after Bell Labs invented the technology. Along the way, the FCC has preserved monopolistic practices that would have otherwise been illegal under antitrust law.
These technologically backward decisions have cost Americans tens of billions of dollars.
More recently, the FCC has experienced a string of embarrassing losses, when its grand telecommunications plans were repeatedly vetoed by the courts. A majority of the commissioners want to force local phone companies to pay government-mandated rates when long-distance providers like AT&T and MCI use their phone lines. A federal appeals court recently shot down that scheme and gave the Bush administration until June 15 to appeal to the Supreme Court. There's already talk about higher telephone bills becoming a campaign issue this fall.
Meanwhile, the FCC is hard at work, trying to figure out how to muzzle Howard Stern and make a national example of Janet Jackson's right breast. Commissioners are planning how to order voice-over-Internet Protocol (VoIP) companies to comply with arguably unlawful wiretapping requests from the FBI.
There's already talk about higher telephone bills becoming a campaign issue this fall.
These signs warn of an agency that is overreaching. If the FCC had been in charge of overseeing the Internet, we'd likely be waiting for the Mosaic Web browser to receive preliminary approval from the Wireline Competition Bureau. Instead, the Internet has transformed from a research curiosity into a mainstay of the world's economy--in less time than it took the FCC to approve the first cell phone licenses.
Even ardent supporters of the FCC should admit that there's less justification for its existence after the Telecommunications Act of 1996, which removed some barriers to competition. Local phone customers don't need to worry about the Bells' monopolistic practices, because they effectively aren't monopolies anymore. Cable customers don't need to worry much about monopolistic practices because of satellite TV. Eventually, fiber connections will transport every kind of data.
Historical justification
The original justification for existence of the FCC was to rein in an unruly marketplace. That thinking dates back to the 1920s, when Commerce Secretary Herbert Hoover, an engineer by training, was worried about the unregulated new industry of broadcasting. Hundreds of radio stations had been launched, and the only requirement was that they register with the Commerce Department.
Conflicts began to arise. The Navy complained of the "turbulent condition of radio communication." But courts were already undertaking the slow but careful common-law method of crafting a set of rules for the new medium. An Illinois state court decided in 1926, for instance, that Chicago broadcaster WGN had the right to a disputed slice of spectrum, because "priority of time creates a superiority in right."
But Hoover and Congress didn't give the courts a chance. The Radio Act of 1927, followed by the Communications Act of 1934, gave the FCC unlimited power to assign frequencies, approve broadcasters' power levels and revoke licenses on a whim. The FCC already enjoyed the power to regulate telephone lines and eventually would accumulate the authority to regulate cable as well.
Abolishing the FCC does not mean airwave anarchy.
If the FCC had been in charge of overseeing the Internet, we'd likely be waiting for the Mosaic Web browser to receive preliminary approval from the Wireline Competition Bureau.
How to do it...
In his excellent 1997 book "Law and Disorder in Cyberspace," Manhattan Institute fellow Peter Huber describes how the privatization process could work. Huber proposes that the government sell off standard units of spectrum--10kHz for AM radio, 6MHz for television, 25MHz for cellular, 40MHz for PCS--using existing geographical contours for each type of frequency.
"Once the standard parcels are defined, they can be sold to the highest bidders," Huber writes. "To keep for how long? Forever. Just like land." If just one UHF (ultrahigh frequency) television station in Los Angeles were permitted to transfer its spectrum to a third cellular provider, Huber estimates, "the overall public gain would be about $1 billion, or so the government itself estimated in 1992." Wireless technologies would be huge winners, if the spectrum were privatized.
What if disputes over spectrum arose? The answer is simple. Whoever owned the rights to that slice of virtual real estate would locate the illicit broadcaster, march into the local courthouse and get a restraining order to pull the plug on the transmitter. Trespass is hardly a new idea, and courts are well-equipped to deal with it.
One fear is that some predatory monopolist, a Microsoft of the airwaves, would end up owning all of the spectrum. That won't happen. First, the market value of the spectrum would approach $1 trillion, out of the reach of any individual corporation. Second, antitrust laws would remain on the books. The Department of Justice could wield the Sherman Antitrust Act to challenge unlawful conduct and block mergers.
Now is the perfect time to ask whether the FCC should continue to exist. Congress is considering revisions to the 1996 Telecommunications Act, and some courageous politicians are wondering out loud whether the hundreds of pages of legalese are still necessary.
Abolishing the FCC does not mean airwave anarchy.
It's true that imagining a telecommunications world without the FCC is not easy. But imagining a telecommunications world not dominated by Ma Bell was difficult two decades ago, and it was not easy for the Eastern European countries to imagine life without the Soviet Union.
Since then, those formerly communist nations have privatized resources formerly owned by their governments, with remarkable results. Estonia is Europe's new economic wonder: revenue from state-owned property is a smaller percentage of the economy than it is in the United States, and its economy is growing more than twice as fast as ours.
That should be a lesson. It's time for the FCC to go.
Biography
Declan McCullagh is CNET News.com's chief political correspondent. He spent more than a decade in Washington, D.C., chronicling the busy intersection between technology and politics. Previously, he was the Washington bureau chief for Wired News, and a reporter for Time.com, Time magazine and HotWired. McCullagh has taught journalism at American University and been an adjunct professor at Case Western University.
Yeah, so while the scenario plays out in the courts over months if not years the offending signal continues to broadcast. Warranted they could get an injunction until the trial pans out, but any delay could result in customers not receiving a signal.
Also companies are not equipped to locate rogue signals. The FCC has a specialization in tracking down interfering signals and handling reports. Asking companies to do this themselves would be a monumental task, one that only a handful of companies could even undertake.
Let us not kill of the FCC. Major surgery to remove Powell would be appropriate, however.
Nice article.
Thanks, Fletch
The government could own blocks of spectrum and open them up for free use by individuals and/or businesses. This is similar to the way the government owns national parks and allows everyone to use them.
Under this model, nothing would necessarily need to change with how people use what is now unlicensed spectrum.
The Bells wanted to have their cake and to eat it too -- envisioning giving up maybe 10% to 15% of their market in return for long distance relief and then to crush the little 10% or so that the competitors had gotten and life would go back to monopoly status, but with Long Distance service, for the Bells.
Now the fight is on for VOIP and the Bells WANT the FCC to regulate it so they can partake of the same fruit of more efficient technology. State by state legislation (strictly to gain taxation, mind you) threatens to impede rollout and growth and benefit only the cable companies and non-regulated internet providers. Who do the Bells look to for help? The FCC.
The biggest problem with the FCC is that it has the responsibility to try to mediate between competing platform providers. Cable companies who are becoming VOIP telephony providers threaten the Bells. Bells who lay fiber and run TV programming threaten the cable companies. Wireless Internet providers threaten the Bells as well as broadcasters. Broadcasters threaten the cable companies. And vice versa in all of these cases.
With the convergence of technology, which to the world is a good thing because it brings efficiencies and lower costs, entrenched players are threatened by formerly non-competitive media providers. The FCC has to walk a fine line in trying to enable growth and technological development yet the various constituancies are all likely to feel threatened and will lose some of the exclusivity that they enjoyed for years and which they may have paid for at a high cost to enjoy (such as owning a frequency, having a license for one of only a few slots in a market, etc.) With that kind of mission, ALL parties are going to ***** and moan and feel like they are the clear loser to any FCC decision. That is why we see all this stuff in court where, unfortunately for the little competitor or newcomer, court battles are unreachably expensive for all but the most well-heeled entrenched monopoly. So the little guy tends to lose there.
What I have seen about the FCC is that in a world of huge monopolies and entrenched interests, the FCC has lately been firmly on the side of the little guy with a new technology (like telephone competition, VOIP, wireless 802.11x service, internet alternative distribution of video content, etc.) The FCC seems to basically be trying to mediate the entrenched interests from crushing these new services before they can get a foothold and prove their worth in the marketplace. I have seen this over the past 10-15 years so this may indeed be a change in overall FCC policy which is why the Bells have taken so much to court in the last few years after years of quiet compliance.
As for selling the spectrum in little sections, for some technology, that is not a feasible policy:
1)larger slices of the spectrum are needed,
2)there are already companies who paid huge sums in previous auctions for spectrum who would ***** at having their investments cheapened,
3) and without a doubt, the same way Ma Bell accumulated small phone companies over the years to create ATT, the same thing would happen over time to these slices of spectrum so we would end up with an oligopoly of the airwaes and shut out the little guy with a good idea (again!)
Also, in terms of product development, can you imagine every wireless phone manufacturer having to own a piece of the US spectrum in order to make a product that doesn't interfeere with somebody's ownership rights to some slice of spectrum? It weems better to make it all public spectrum and let technology sort out how to prevent blockages, automatically search for free spectrum, and then the FCC could regulate abusers and take no quarter for those who would impede a competitor.
The courts are ill prepared to know the various issues and ripple effects surrounding an individual company's complaint and have caused more harm by rolling back competition to accomodate a Bell's demands than can be estimated. Unfortunately, the nature of the court system is a case by case scenario rather than a broadly viewed policy forum. I will say that having the court system there is a good check and balance system as the framers of the Constitution intended and it seems to work to force changes when the FCC fails to act on a pressing issue. Without the court system ruling that there is a right for local or long distance telephony competition, we wouldn't have even had the Telecom Act of 1996 or the previous rules for Long distance competition, among other things. But courts should never be looked at as an alternative rule-making entity.
Get rid of the FCC? That's like closing the Patent Office. Much as the FCC may impede and deny and be a roadblock, the little guy would stand no chance whatsoever without it.
Tamra Burgwardt
716-874-6704
I don't believe we should rid ourselves of the FCC completely, maybe just reorganize it. Somewhere on the line of having it oversee the release of new products that could potentially harm a person, like my drug example.
Having the FCC regulate thing like cell phones, what company is dominating what market, what Howard Stern discusses on the radio, or things of that nature are ludicrous. People in third world countries get the pleasure of enjoying new technology well before Americans do. America should be at the top of the food chain when it comes to newly release technology, not forced to wait on FCC approval.
Thank you.
I'm curious as to what the Third World nations have that is better tech than in the US. Many of htese nations have issues getting power and plumbing to the majority of their citizens. Do they have superior GPS technology? Better cell phones? Faster, better, more powerful computers and internet access?
Imagine everyone living within reach of a radio signal had the ability to communicate with everyone else.
Imagine rather than having to worry about how much "bandwidth" is enough, everyone had unlimited access to bits so that the size of what you communicate simply didn't matter.
You know the effect the Internet has had on how we live and work together? Multiply it by hundred.
Opening the spectrum would turn a federally-managed permissions system into an open market for ideas and creativity. The effects on our democracy and economy should not be underestimated.
http://www.greaterdemocracy.org/OpenSpectrumFAQ.html
this piece is somewhat misguided claiming
that it should be abolished. What's needed is
a recasting of its role in a modern world, and
especially legislation breaking up evil empires
like Clear Channel. We actually need more
regulation in this area, not less.
Saying all regulation is bad is like saying you
don't need referees in a football game. It's
simple-minded.
Even today, as the FCC attempts to deal with the entrepreneurial spirit in the highly controversial BPL (broadband over power lines) initiative, the FCC is trying to determine what standards to apply, however inefficacious they will necessarily be for such a fatally flawed technology. Without an FCC, the ill-conceived and poorly implemented BPL dragon would breathe with consuming fire a virtual utterance of, death to licensed services.
What we need now is good leadership, common sense, and restraint at the FCC. The messenger would have us abolish the FCC and let economic forces rule tyrannically, thereby limiting freedom. Let us be a great nation, but be not extreme. Let?s not throw the baby out with the bath water! Kill BPL. Throw Powell out!
The FCC is needed for a few reasons. One of course is to manage spectrum. The current system *is* obsolete, but people like Huber and Gilder don't really understand it either. The current wireless group at the FCC is doing a good job with their initiatives, in face of opposition from vested licensee interests, who would rather get chattel rights to spectrum (and thus exclude unlicensed operation, even if non-interfering, or charge top dollar for it).
But more importantly, regulation is needed in order to demonopolize. The old telco monopolies remain powerful. They only interconnect to competitors because they're required to -- they don't need the CLECs, but the CLECs need access to their subscribers. Getting rid of a monopoly requires *more* regulation than keeping one. The ILECs, of course, want an *unregulated* monopoly, where they can rape and pillage the consumer. This FCC is not doing its job (unless it views its job as making work for lawyers), but an effective FCC is necesssary.
If we abolish the FCC and displace all the relevant debates into the realm of anti-trust enforcement, one key question arises: will those anti-trust laws ever get enforced?
The DoJ certainly has the might, but it is subject to political influence and, given a monopolist-friendly administration, might never act. Private parties might sue, but anti-trust litigation is prohibitively expensive (think of all the lengthy discovery and trial processes + expert costs), and, given tort reform, class action suits over slamming regulations might simply get nowhere.
One can always, of course, devolve standing to state public utility commissions, but their jurisdiction is pretty limited by the US Constitution to intra-state matters, and Internet services, including Internet-based telephony is likely strictly federal jurisdiction.
So, if you combine tort reform with abolition of the FCC (all of which Mr. Huber favors) consumer interest simply never gets served.
Furthermore, if it does come to litigation, the plaintiffs will have to bear the costs as the alleged telephone monopolist simply raises rates on its consumers to finance the litigation. This is so because tort reform would likely limit the ability for plaintiff's attorneys to get contingency fees.
In short, if the FCC is gone and extensive tort reform is implemented at the federal level (as is likely) what you've got is the closest 21st century America will come to economic feudalism. With growing consolidation across the media and telecommunications industries, consumers will effectively become serfs in the hands of a cartel that controls cable, wireless (most wireless companies are, after all, not start-ups but either spin-offs or joint ventures of either ILECs or entrenched CLECs), and fiber (it is, after all, the Bells who will lay out and are laying out all the fiber).
In short, Mssrs. McCullagh and Huber have to choose between tort reform or abolition of the FCC, as far as consumer interest is concerned, the two are mutually exclusive.
That last part was a joke. We don't need governmental controls over decency, and most of us don't want the ones that exist.
Remo
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http://www.thepetitionsite.com/83/petition-for-the-abolishment-of-the-fcc
- by kfm187 November 20, 2008 6:09 PM PST
- Uh-oh, looks like somebody might have missed Econ 101. Market-based allocation for finite network-based goods does not work. It's called the hold out problem.
- Like this Reply to this comment
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(23 Comments)Without the FCC, you could be your sweet patootie that I and others like me would be squatting on small homesteads of spectrum, using our little sections to stop providers from being able to offer nationwide service... unless they pay us $$$$$$$.
Besides, you seem to admit that some unlicensed spectrum is necessary and useful, and that the government would have to buy and sell this spectrum as necessary and set up the requirements for operation therein. Well, you've just pretty much reincarnated the FCC right there...