In the early 1900s, when Congress was figuring out how to regulate broadcasting over a newfangled invention known as radio, it faced a crossroads. It could extend existing ideas about private property to a new domain. Or it could reject that in favor of a quasi-socialist system prone to government efforts to restrict speech and freedom.
ABC can tell you which one it chose.
Under the system set up a century ago, a government agency, initially the Federal Radio Commission and since 1934 the Federal Communications Commission, issues licenses for broadcast frequencies. Who gets these is not based on market forces but rather on what the FCC deems the public interest. Broadcasters don’t actually own their frequencies — licenses must be renewed after a set term — and they can’t transfer them without FCC approval. This system has long since been expanded beyond radio to broadcast TV.
When it created this regulatory regime, Congress was guided by the premise that broadcast frequencies are scarce and many people want to use them. There was a need, the thinking went, for an orderly way to assign frequencies so that multiple users wouldn’t overlap on the same one.
But allocating scarce resources is what markets do. When radio pioneers broadcast programming on a certain frequency, they were transforming a sliver of the electromagnetic spectrum — something owned by no one — into a valuable resource. Remove the hand of intrusive government, and this first-mover claim ought to have conveyed ownership. Left alone, a market for frequencies would have developed naturally, with prices determined by supply and demand.
In this alternate reality there would still be a role for government, which would use its enforcement power to punish interlopers and facilitate the functioning of the market. Broadcast on a frequency owned by someone else? You’re trespassing. Attempt to gobble up a critical mass of frequencies? Welcome to an antitrust lawsuit. But Congress was spooked by the powerful new technology of radio, and the heavy-handed, speech-policing system America has today was born.
A 1959 paper by renowned economist Ronald Coase isolated the fallacy at the heart of the FCC regime. Every valuable resource is scarce, Coase noted, but scarcity doesn’t give government a right to control them — at least not in the United States. Coase traced the history of FCC licensing and found that skeptics of government control were ignored as the FCC got rolling; after that regulators couldn’t imagine doing things any other way. Bad economic reasoning got government off on the wrong foot, and then it stepped into cement that hardened around the mistake.
The Trump administration’s apparent attempt to use the lever of FCC licensing to move the broadcaster’s coverage in the direction it wants, now the subject of a federal lawsuit, lies directly downstream from that.
In the process of issuing and renewing licenses, the FCC has power to review broadcasters’ content to ensure it is serving “the public interest.” It’s this eye-of-the-beholder requirement that the agency uses to take steps that would be obvious violations of the First Amendment in any other context.
The government can’t shut down a podcast for harshly criticizing public officials or spreading what it thinks are undesirable religious views. But that’s essentially what the Federal Radio Commission did in 1931 when it took away a Los Angeles pastor’s broadcast license.
The government can’t tell a newspaper it’s not allowed to run editorials it thinks are contrary to the public interest. But the FCC in 1941 renewed a Boston radio station’s license on the condition that it wouldn’t broadcast editorials.
The government can’t take a cable TV station off the air because it believes its programming is too politically one-sided. But in 1970 the FCC denied license renewal to a Philadelphia-area broadcaster over violations of the Fairness Doctrine, which said broadcasters had to air opposing viewpoints.
The Kennedy and Johnson administrations also used the Fairness Doctrine to bully conservative broadcasters. Democratic Party operatives used front organizations to file Fairness Doctrine complaints with the Democratic-majority FCC, which then ordered stations to broadcast pro-administration views. In the 1970s, allies of Richard Nixon challenged the licenses of TV stations owned by The Washington Post Co., which also happened to publish the president’s most hated newspaper.
While courts are supposed to help protect Americans’ First Amendment freedoms, they have often failed when it comes to broadcast media. Courts have largely allowed the FCC to freelance on the First Amendment because they, too, have bought into the economic fallacy that Congress did. Since broadcasters are only using spectrum by the grace of government, the theory goes, government can set conditions for using it.
Anyway, even holdouts for the scarce-spectrum theory ought to concede that the world has changed. In 2005, a research paper by an FCC staffer concluded that “the Scarcity Rationale for regulating traditional broadcasting is no longer valid,” and we all know technological progress did not halt in 2005. Electromagnetic spectrum continues to be used more efficiently. Cable TV, satellite radio and the internet have opened far more media for broadcasting outside the FCC’s remit. In the cacophony of modern communications, tightly controlling supposedly precious broadcast bandwidth is a farce.
The FCC has loosened some restrictions as time has passed; most prominently, the Fairness Doctrine ended in 1987. But the agency’s core power over broadcasters remains — to the evident glee of the Trump administration.
It’s a power the government never should have had. As the advance of artificial intelligence spurs calls for government ownership, universal basic income and new types of taxes, let’s not make the same mistake again.
The post The FCC’s power over broadcasters was a mistake from the start appeared first on Washington Post.
