While the latest deregulation initiative is a step in the right direction, the best policy would be to close the agency.
By Thomas Lenard ET
The Federal Communications Commission recently requested public comment on all of its rules and guidelines in an effort to identify unnecessary regulatory burdens—an undertaking comically called the “Delete, Delete, Delete” docket. FCC Chairman Brendan Carr says he aims to “clear out the regulatory underbrush.”
While this deregulation initiative is a step in the right direction, Mr. Carr could be more ambitious. The White House is closing and shrinking other agencies, and it should consider doing the same to the FCC—as the administration has a responsibility to evaluate whether the agency has outlived its raison d’être.
Congress established the FCC to regulate monopoly telecommunications services and later directed it to promote competition in those services. Today, with voice and data communications provided by many competing technologies, the industry is one of the economy’s most competitive and dynamic.
For much of its history, the FCC presided over the Bell System monopoly, which kept out new entrants and lasted until the courts broke it up in the early 1980s. The FCC’s subsequent efforts to promote competition, following passage of the Telecommunications Act of 1996, resulted in dozens of bankruptcies, billions of dollars in shareholder losses, and distorted investment incentives for new entrants and incumbents.
As the internet took off in the 1990s and early 2000s, the Clinton and Bush FCCs recognized the importance of leaving it largely unregulated. The Obama and Biden FCCs, however, saw the internet’s success as a reason to regulate.
Without evidence of market failure, Messrs. Obama and Biden tried for years to make internet-service providers common carriers and subject them to public-utility-style regulation. This type of regulation is rarely beneficial, and virtually never for industries characterized by rapid technical change.
The FCC has achieved some success with its policies on electromagnetic spectrum, the invisible airwaves that helped usher in a dynamic wireless environment. Even in this case, however, much of the progress involved undoing regulatory mistakes of the past.
The FCC’s older system allocated blocks of spectrum to specific uses—for instance, for broadcast television—and assigned licenses to specific users. That system required the FCC to approve new spectrum uses, delaying the introduction of new wireless services for years. Studies suggest the costs of innovations forgone or delayed were at least in the tens of billions of dollars. Since the 1990s, the FCC has adopted more-flexible market-based approaches, but reforms have been slow, and too much of the legacy system remains.
The commission has used the amorphous and malleable “public interest standard,” which applies to public airwaves, to assert broad authority over media content and corporate behavior. The agency is currently investigating CBS over the way “60 Minutes” edited its Kamala Harris interview during the campaign. It may hold up CBS parent Paramount’s merger with Skydance Media.
Mr. Carr joins a long line of predecessors who have justified inserting the FCC into new areas. During the Biden administration, Chairwoman Jessica Rosenworcel opposed Standard General’s acquisition of Tegna. She cited concerns about, among other things, newsroom layoffs, which isn’t traditionally within the FCC’s scope.
A license to use the electromagnetic spectrum shouldn’t be an invitation for the FCC to expand the agency’s regulatory authority or to put a particular view of the public’s interests above First Amendment rights.
As long as the FCC exists, it will continue to find new reasons to exist. The best solution is to close the agency. While agencies rarely close themselves, it has happened. During the 1970s and 1980s, the heads of comparable agencies that regulated air and surface transportation—Alfred Kahn of the Civil Aeronautics Board and Darius Gaskins of the Interstate Commerce Commission—took steps to put their agencies out of business through rulemakings and with legislative help from Congress. Those agencies’ remaining functions were transferred elsewhere, mainly to the Transportation Department.
Similarly, some of the FCC’s functions would need a home elsewhere. The Commerce Department already has spectrum-related functions, and the Biden administration housed its major broadband subsidy program there.
Deregulation reduces the role of government in the private sector. Regulation increases it by requiring companies to change their behavior. The FCC would do well to recognize the difference, and Mr. Carr could leave a real legacy by putting himself out of a job.
Mr. Lenard is president emeritus and a senior fellow of the Technology Policy Institute.