Is The FCC Obsolete?

Declan McCullagh’s article advocating the abolition of the FCC is a must-read, even if you disagree with him (for the record, I don’t). In fact, he argues that the FCC may now be downright counterproductive:

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.

In fact, ask yourself this: what would happen if we had a Fred Kahn-style elimination of the FCC a la the abolition of the CAB?

2 thoughts on “Is The FCC Obsolete?

  1. If the FCC were eliminated a la the CAB then my guess is that some other federal gov’t agency would assume responsibility to interpret regulations and oversee the industries. Also, maybe the Justice dept. would take a more active role to “ensure” competition. That is what the Transportation Dept. does now with airlines. Generally, after Congress writes a law one or more gov’t bureaucracies interprets and completes the details. That’s just the way technocratic, bureaucratic, administration operates. Until that process is changed I don’t think the federal apparatus shrinks.

    Another possible result is that state-level agencies assume a larger role because they exist now for telecoms.

  2. I would argue that all regulation is obsolete. All regulation has become reactionary; it either reacts to developments in the market, or it reacts to new technology which could affect the market and its regulation. Frequently, the reaction is to prevent the implementation of new technology or to impede its capabilities.

    In the case of local exchange network service, the fundamental problem (which nobody wants to talk about) is the ownership and operation of the network infrastructure by the same company which offers services over the network. This arrangement causes the infrastructure owner to prefer its own service offerings to those of potential competitors; and, it effectively shields the service provider from competition.

    Separation of infrastructure ownership from the provision of service would drastically change the attitude of the infrastructure owner, which would be very interested in the provision of additional services by multiple service providers over the network. It would also force the service provider, even if it remained regulated, to learn how to compete in the market.

    Advances in cellular technology and VOIP have made the network’s role contestable. While the network owners / service providers are focused on protecting their regulated turf, the cable companies and cellular companies are changing the game. The regulators are already trying to figure out how to react and close the barn door. Should be fun to watch.

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