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FCC is not needed

http://news.com.com/Why+the+FCC+shou...3-5226979.html

Quote:

Why the FCC should die
June 7, 2004, 4:00 AM PT
By Declan McCullagh

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.
There's already talk about higher telephone bills becoming a campaign issue this fall.
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.
Abolishing the FCC does not mean airwave anarchy.
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.

biography
Declan McCullagh is CNET News.com's Washington, D.C., correspondent. He chronicles the busy intersection between technology and politics. Before that, he worked for several years as Washington bureau chief for Wired News. He has also worked as a reporter for The Netly News, Time magazine and HotWired.

It is easy to convince me of a thing like this. Not only has the FCC been unconstitutionaly overstepping its bounds, but I am traditionally a person who has a pretty steep test before we spend money (continue) to spend money on anything. I don't see the FCC performing any fuctions that can't be performed by the private sector better.

I'd be interested in hearing what the TFP thinks.

Personally, I believe that the private sector can handle most functions in a more efficient manner than the federal government. The FCC is certainly no exeption to that belief. But, then again, that is one of the basic tenants of the Libertarian party, of which I belong, so that should come as no surprise.

More than the FCC, I fear Clear Channel. If parcels of broadcast "bandwith" were to go to the highest bidder, I fear Clear Channel would own everything.

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Originally posted by Derwood
More than the FCC, I fear Clear Channel. If parcels of broadcast "bandwith" were to go to the highest bidder, I fear Clear Channel would own everything.

I'm not sure that could really work that way. While it is possible for a specific company to own these types of things, it would be difficult for a company as I understand it to exploit that. In other words, lets say ClearChannel were to buy a whole bunch of new licences for new "broadcast bandwidth" as you put it, none of our radios today would be able to recive the new transmissions.

The best way they can take over the airwaves if they really want to do it is to buy all the stations in one area. There are pretty big fixed costs in setting up a station (transmitter, equipment etc.). Since there are hundreds of frequencies on an FM dial for example, it is not too efficient to buy each ot those. Instead they just make sure the fixed costs are too high to get in to the market as a small organization taking over an existing radio station without buying all new crap.

They did it here in San Diego. There was a station at 92.1 that started to show up on the Nielson charts. It was a good station and it was independant. They bought it and shut it down. They don't run it anymore at all. The 92.1 frequency in SD now carries a repeat of
another Clear Channel Country music station.

It is effective. In San Diego, if you look at the dial, there are 14 Clear Channel stations and very little in the way of other choices.

I listen to a lot of NPR these days.

I don't have as much faith in the private sector as some. However, the FCC drives me insane. If they could keep monopolies from forming, it would be great to drop the FCC totally. i just hate the mommy/nanny aspect and the way it slows down all technologies...

Problems:

Having a spectrum of FM radio stations is very convienient. Under this system, most of the FM dial would be full of data traffic. All old FM auto-scan radios would be basically useless. Negative externalities.

Same problems with over-the-air TV.

You can pull out all the problems with land ownership. Notice you have to pay property taxes on land, the government can sieze it, etc. Because they don't make more land, unlike chairs.

The attempt to get broadcast HDTV out there is another thing the market might do poorly. Not many people want an HDTV set until there are stations broadcasting HDTV, and nobody will broadcast HDTV unless there are people picking it up. You get a convex-down demand curve that has two points of stability, one with nearly nobody having HDTV and another with lots of people having HDTV (and the susiquent economic activity).

Government intervention can bump the market from the "no HDTV" state to the "lots of HDTV" state easier than private companies can.

Private companies are good for local optimization, far better than governments.

I would admit, this system would allow broadcasters to handily maximize their profits.

I don't know which side of this arguement I'd be on, I just thought I'd point out some examples of the problems with it...

The switch from normal TV to HDTV is much like the switch from black and white to color.

Advertisers and networks see the potential in the new techology, and switch over accordingly. Not everyone wants to, or needs to right away. But someone like ESPN jumps on it right away because it realizes that broadcasting the NBA, NHL, MLB, and most importantly the NFL in HD is something no one else can afford, and will put ESPN another leg up.

Sports fans, see this, and when the prices on HD TV's come down to a price they are willing to pay, they switch.

Eventually, a majority of networks are in HD, and the rest fall in place accordingly.

Yakk - Tell you what. . . we will keep the part of the FCC that doles out bandwidth so that states don't pass conflicting standards and people don't just throw signals all over the place (like your FM Radio example).

Instead of $300 million, give me like 10 well paid / smart people and maybe 5 - 10 admins and we are all set. In addition, there are not questions about our mission. Simply to keep order with the available spectrum.

Also - something like HDTV I am not sure is a public good. Why do tax payers have to pay to "bump" the HDTV industry. If the free market does not demand it, then in this case it must not be that important. If it is not that important, I don't want my taxes paying for it.

I agree wholeheartedly that the FCC should be abolished. The market will provide alternatives (think XM satellite radio) if there is a consumer desire for them.

Quote:

Originally posted by Mondak
Yakk - Tell you what. . . we will keep the part of the FCC that doles out bandwidth so that states don't pass conflicting standards and people don't just throw signals all over the place (like your FM Radio example).

This goes directly in the face of the suggestion: they wanted to auction off all of the spectrum for whatever use the buyer wants. Once you have to make decisions like "which use is best" or other policy ones, you end up with beaurocracy and the like.

The effort and time to allocate a chunk of spectrum for new uses, like cell phones, is one of the things the policy put forward is trying to combat.

Then, you have regional vs national spectrum. Cell phone technology works much better with every cell phone using the same slice of spectrum accross the country. But, if the spectrum had already been sold off back in the 50s, no company could really afford to buy up an entire spectrum over the entire nation without something like eminant domain backing them. (hold-outs etc).

Do you want to get rid of just the decency police?

Quote:

Also - something like HDTV I am not sure is a public good. Why do tax payers have to pay to "bump" the HDTV industry. If the free market does not demand it, then in this case it must not be that important. If it is not that important, I don't want my taxes paying for it.

The free market has certain properties and problems that it solves. It isn't good at some things. The free market is not god.

The free market makes local optimizations, and can some large-scale pruning. But it fails in numerous well-documented cases. One solution is to live with the failures. Another is to adapt to the failures and use the free market when it works.

The free market didn't provide the world with the Internet.

Now, I don't know if HDTV is a good idea: but, the fact that the free market wouldn't push us over the tipping point without aid is not a proof that it is a bad idea. If you care about government money, possibly a relatively small amount of government money could push it over the tipping point and generate more tax revenue than it cost in the first place due to increased economic activity.

Quote:

Originally posted by Jimmy4
The switch from normal TV to HDTV is much like the switch from black and white to color.

Strangely enough, it isn't.

They did some amazing hacks that allowed color signals to be broadcast and picked up by B&W TVs. I believe for the most part the color signal fit in the B&W signal spectrum, so no spectrum purchases or juggling had to occur.

HDTV, on the other hand, requires new spectrum room.

It is somewhat similar, on the other hand.

Quote:

Eventually, a majority of networks are in HD, and the rest fall in place accordingly.

The key word is "eventually". Eventually we will all die of old age. Eventually an economy in depression will work it way out of depression. There is a very strong case to make for pushing economies out of depression without relying on the free market: weaker versions of the same arguement apply to other forms of market intervention.

The strongest arguement behind chopping up the FCC is the existance of satalite, internet and other forms of non (or not as)-natural-monopoly flavours of information delivery.

At the same time, those methods will eventually make the traditional means of recieving entertainment obsolete. People will eventually not listen to FM radio, because they can get a better quality radio off the internet feed in their car. On-air broadcasts won't be worth doing, the'll feed them over the internet to people who want to watch.

This will happen, eventually. Should one make decisions that will make it happen faster?

I'd love the FCC if they would break up the current media congolmerates into smaller groups.

What is it, something like 6-7 corporations control most, if not all, of the mass media outlets? Come on.

The FCC is needed...

FOR ME TO POOP ON!

Seriously though, this current administration LOVES the FCC because it helps them extend their conservative religious agenda. No other way about it.