Saturday, January 20, 2007

The case for abolishing the FCC

It's time to abolish the Federal Communications Commission.

The reason is simple. The venerable FCC, created in 1934, is no longer necessary. In fact, it wasn't even necessary when it was started.

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 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 becoming a campaign issue.

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. The FCC's answer is more control over the airwaves. Commissioners are planning how to order voice-over-Internet Protocol (VolP) companies to comply with arguably unlawful wiretapping request 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. After those rules take effect in mid-2005, they put some PC tuner card makers out of business.

These signs warn of an agency 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 itself 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 license.

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 Bell's monopolistic practices, because they effectively aren't monopolies any more. Cable customers don't need to worry much about monopolistic practices because of satellite TV. Eventually, fiber connections will transport every kind of data.

With all that said, it's time for the FCC to go.


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