After 74 Years, FCC Starting To Flex Its Muscles

Tomorrow marks the 74th anniversary of the Communications Act of 1934, the legal framework for federal regulation of all manner of communications through the Federal Communications Commission.After 74 years, most Americans have more yesterdays than tomorrows. Does the same hold for the FCC?By many accounts, the FCC is just beginning to flex its muscles. During its first 60 years, the FCC was one of the more obscure federal agencies. In recent years, however, editorial pages — some with praise, some with a tut-tut, and some with uncontrolled hysterics — have commented frequently on FCC decisions, or lack thereof.Politicians are also taking notice, with Congress regularly holding hearings on the FCC in front of large audiences. Just listen to presidential candidates rattle off some of their favorite policies to cure all that ails America: a new press and broadcast ownership policy, a new broadband deployment policy, a new Internet privacy policy, a new Internet content policy, and so on. Our leaders may have differing views of government regulation, but having the FCC fade into the sunset is rarely one of them.An activist central governmental policy toward communications is not an ancient tradition. In its formative decades, the telegraph industry and subsequently the telephone industry suffered little if any federal regulation, other than perhaps obtaining rights of way along rail tracks. Federal regulation in earnest began with the Mann-Elkins Act of 1910, which assigned regulatory responsibility to the Interstate Commerce Commission. That regulatory responsibility was transferred to the newly created FCC in 1934, not because the ICC had been overly zealous in its regulation, but perhaps because the New Dealers thought it had not. No one in 1910, or even 1934, could have foreseen that the ICC would be dissolved in 1995, 108 years after its creation.Even the radio industry rumbled along without federal regulation for several years before the then secretary of commerce, Herbert Hoover, a staunch market interventionist, nationalized the airwaves in 1927. President Roosevelt was eager to transfer the responsibilities for regulating radio to the new FCC from the infant Federal Radio Commission, formed in 1927. The FRC ceased operations after just seven years, hardly the vision of Hoover or the Republican Congress of the late 1920s.Precisely where government regulation of communications is housed is less important than ensuring that such regulation is lawful and efficient. The FCC can and does perform important roles, from allocating spectrum to assigning property rights to spectrum through the assignment of its licenses. It enforces the rule of federal law with respect to communications.But over the decades, the FCC has exercised a regulatory reach that sometimes exceeds the grasp of law, to the detriment of both consumers and investors. Regulations that interpose the government between businesses and consumers deny each unfettered access to the other, to the detriment of both. In a free market, demand creates its own supply, and consumers rarely can be made better off. Where the government intervenes and attempts to dictate any combination of demand, supply, and prices, everyone — and most particularly consumers — suffers.The FCC is in no imminent threat of disappearing or having its responsibilities shifted elsewhere, like the Federal Radio Commission and the Interstate Commerce Commission. From the 1970s through the 1990s, Congress considered bills to revise and restructure the FCC, and even to abolish it. The only major reform bill to become law, the Telecommunications Act of 1996, left the FCC with more authority and a larger budget than ever. Today there is no politically viable discussion to scale down the agency.Political sentiments are no more permanent today than they were in the late 1920s and 1930s. But federal laws and federal agencies are much harder to create today. Roosevelt proposed the Federal Communications Commission in draft legislation in January 1934. Congress concurred and delivered a bill to the president a mere five months later. No president in recent memory would think such a time schedule possible, either to create or dissolve a federal agency.The structure of government agencies in Washington has changed remarkably little in recent decades. Progress in government likely will not occur through new agencies but more probably by ensuring that existing ones operate predictably and efficiently inside the law. Happy Birthday, FCC!A former FCC commissioner, Mr. Furchtgott-Roth is president of Furchtgott-Roth Economic Enterprises. He can be reached at hfr@furchtgott-roth.com.

After 74 Years, FCC Starting To Flex Its Muscles

After 74 Years, FCC Starting To Flex Its Muscles

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