Time to Reform the FCC

Minor abuses at the FCC, such as the one mentioned in my last post, warrant at least investigating how the FCC assesses fines, if not looking for ways to reform the FCC’s governance of broadcasting. But when we look at the incredible distortion created by the central planning of broadcast spectrum the case of dramatic and rapid reform becomes very clear.

More specifically, the FCC is now placing caveats on the 700Mhz auction–perverting the one reform, auctions, that have worked to replace bureaucratic preference with market forces. The XM/Sirius Satellite radio merger is also a symptom of the disease of FCC regulation. Satellite spacing requirements, spectrum allocation, and the inability for terrestrial firms to sell their spectrum assets and move skyward are all standing in the way of more competition in satellite markets.

This squandering of a natural resource has inspired many FCC reform projects–the predecessor of all this work is Coase’s “The Federal Communications Commission” from the Journal of Law and Economics (one of the most cited papers of all time), but more recently the FCC itself has released working papers mapping out the road to markets. There have also been broader plans like CEI’s Communications Without Commissions as well as highly informative work coming out of Cato on the stumbling blocks that might be encountered in the process of privatization.

The intellectual work has been done on this issue, but for reform to actually occur, the issue of the FCC and its inefficiency and threat to American competitiveness needs to be pushed to the forefront of the public debate. CEI is working on a paper outlining the litany of abuses that have come out of the FCC and just how much of the communications potential of the United States goes unused because of the lack of markets in spectrum. Others need to join the fight as the XM/Sirius and 700Mhz issues move forward. If the road to reform is obvious and the benefits made known, Congress might act, but not until we force the issue.