[IP] Why the FCC should die
Begin forwarded message:
From: Dewayne Hendricks <dewayne@xxxxxxxxxxxxx>
Date: June 8, 2004 6:10:01 AM EDT
To: Dewayne-Net Technology List <dewayne-net@xxxxxxxxxxxxx>
Subject: [Dewayne-Net] Why the FCC should die
Reply-To: dewayne@xxxxxxxxxxxxx
[Note: This item comes from reader Mike Cheponis. DLH]
Why the FCC should die
By Declan McCullagh
<http://news.com.com/2010-1028-5226979.html>
Story last modified June 7, 2004, 4:00 AM PDT
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It's time to abolish the Federal Communications Commission.
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.
In a sop to Hollywood, the FCC has decided that any device capable of
receiving digital television signals must follow a complicated set of
"broadcast flag" regulations. When those rules take effect in mid-2005,
they will put some PC tuner card makers out of business.
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.
What it means is returning to bottom-up law rather than the top-down
process that has characterized telecommunications for the last 80
years.
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.
At a hearing last month, Rep. Chris Cox, R-Calif., asked whether
"perhaps we should declare victory" and ditch the FCC. Beyond the
economic cost of missed opportunities caused by regulation, it would
also immediately save taxpayers $300 million a year.
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.
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