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New WaveThe case for killing the FCC and selling off spectrum.

By Jack ShaferPosted Wednesday, Jan. 17, 2007, at 6:42 PM ET

Suppose Congress had established in the early 19^th century a Federal Publications Commission to regulate the newspaper, magazine, and newsletter businesses. The supporters of the FPC would have argued that such regulation was necessary because paper-pulp-grade timber is a scarce resource, and this scarcity made it incumbent upon the government to determine not only who could enter the publications business but where. Hence, the FPC would issue publication licenses to the "best" applicants and deny the rest.

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Whenever an aspiring publisher pointed out that timber wasn't scarce, that huge groves of trees in Canada and the western territories made it plentiful, and that he wanted to start a new publication based on this abundance, an FPC commissioner would talk him down. He'd explain that just because somebody had discovered additional timber didn't mean that the scarcity problem was over, it only meant that timber was relatively less scarce than before. He'd go on to say that the FPC needed to study how best to exploit this new timber before issuing new licenses.

Related in Slate

Earlier, Jack Shafer essayed on low-power FM to explain how the "media reform" movement gets it half right, and defended the Clear Channel radio chain against charges of negligence in Minot, N.D., the media reformers' central organizing myth. Last year, he was blinded by all the blond broadcasters on TV news.

Based on the notion of scarcity, the FPC would have evolved a power to prohibit licensees from using their paper for anything but publishing the kind of print product the FPC had authorized—no using that licensed paper to print party invitations or menus or handbills or facial tissue, the FPC would mandate.

And so on.

The absurd regulatory agency that I imagine here is only slightly more absurd than the Federal Communications Commission, which has exercised even greater control over the radio spectrum. Until the mid-1980s, broadcasters had to obey the "fairness doctrine," which required them to air opposing views whenever they aired a viewpoint on a controversial issue. Rather than tempt an FCC inquiry, most broadcasters simply avoided airing any controversial views.

Aside from bottling up debate, what the FCC really excelled at was postponing the creation of new technologies. It stalled the emergence of such feasible technologies as FM radio, pay TV, cell phones, satellite radio, and satellite TV, just to name a few. As Declan McCullagh wrote in 2004, if the FCC had been in charge of the Web, we'd still be waiting for its standards engineers to approve of the first Web browser.

Although today's FCC is nowhere near as controlling as earlier FCCs, it still treats the radio spectrum like a scarce resource that its bureaucrats must manage for the "public good," even though the government's scarcity argument has been a joke for half a century or longer. The almost uniformly accepted modern view is that information-carrying capacity of the airwaves isn't static, that capacity is a function of technology and design architecture that inventors and entrepreneurs throw at spectrum. To paraphrase this forward-thinking 1994 paper (PDF), the old ideas about spectrum capacity are out, and new ones about spectrum efficiency are in.

Almost everywhere you look, spectrum does more work (or is capable of doing more work) than ever before. For instance, digital TV compresses more programming in less spectrum than its analog cousin. As the processing chips behind digital broadcasting grow more powerful, spectrum efficiency will rise. Ever-more efficient fiber-optic cables have poached long-distance telephone traffic from microwave towers, and this has freed up spectrum in the microwave spectrum for new use by cell phone companies.

Other examples of spectrum efficiency: Low-power broadcasts of all sorts allow the reuse of spectrum, as everyone who uses a Wi-Fi router at work or home or listens to a low-power FM radio station knows. New technologies that share spectrum without interfering with existing licensed users exist (see this short piece about Northpoint Technology). In this bit of advocacy, an industry group gee-whizzes about the spectrum efficiencies promised by cognitive radios, smart antennas, ultrawide-band devices, mesh networks, WiMax, software-defined radios, and other real-world technology. The spectrum-bounty possibilities are so colossal that some members of the "media reform" movement even subscribe to them. The Prometheus Radio Project, best known for promoting low-power FM radio, accepts one estimate that spectrum capacity may increase 100,000-fold in coming years.

If the spectrum cow can give that much milk, why do we need regulators to ration the airwaves as parsimoniously as they do? Former FCC Chief Economist Thomas W. Hazlett accuses (PDF) the FCC of overprotecting existing spectrum users at the expense of aspiring new users. The commission generally delays making decisions about new spectrum allocations, and these delays cost the new entrants money. Hazlett eloquently catalogs the rope-a-doping offenses committed against spectrum aspirants by the FCC and the existing airwave industries in this paper (PDF).

A classic example of FCC overprotection was the subject of my column yesterday: The FCC issued rules in 2000 that limited the number of potential lower-power FM stations to 2,300 when, according to Hazlett's calculations (PDF), the dial could accommodate 98,000 under the existing interference rules. (Congress overruled the FCC and passed a law that essentially limited the number of LPFM stations to about 1,300 and locked them out of the top 50 urban markets.)

Technology alone can't bring the spectrum feast to entrepreneurs and consumers. More capitalism—not less—charts the path to abundance. Hazlett and others, going back to economist Ronald H. Coase in 1959, have advocated the establishment of spectrum property rights and would leave it to the market to reallocate the airwaves to the highest bidders. Such a price system would tend to encourage the further expansion of spectrum capacity.

Owners would be allowed to repurpose the spectrum they owned—using, say, AM radio frequencies to carry pictures—as long as they didn't interfere with the spectrum of others. Companies in control of spectrum would even be free to subdivide their frequencies and rent it out to customers by the minute for the broadcast and reception of data.

If that last example sounds too weird for words, think of it this way: You rent a chunk of subdivided spectrum every time you make or take a cell phone call.

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The best sustained argument for the abolishment of the FCC can be found in Peter Huber's Law and Disorder in Cyberspace, which can be picked up for a song on Amazon. The piece you just read draws heavily from Huber, so I'm a little embarrassed I don't actually quote him anywhere. For the abolishment of Jack Shafer, send e-mail detailing your request to the Shafer regulators at . They'll get back to you in a couple of years. (E-mail may be quoted by name unless the writer stipulates otherwise. Permanent disclosure: Slate is owned by the Washington Post Co.)

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Jack Shafer is Slate's editor at large. Follow him on Twitter.

COMMENTS

Remarks from the Fray:

If limiting the spectrum was an act of Congress, it's hard to see how eliminating the FCC would help. There are real public interests involved in the air waves, including emergency broadcasts, controlling noise, and preventing monopolies. In an age of media consolidation, I really don't want Murdoch to handle both content and ether.

Most importantly, it's not clear to me that the spectrum belongs to the government. The government regulates it rather than owning it. Making it property gives the state rather peculiar powers of ownership that I would not want extended to, for example, airspace. It also means a further denial of the concept of "public." There are resources in the world that are truly shared, and obligations that people have to interests other than profit motive. Denying such interests means that there is no collective "we," only a kind of capitalist feudalism.

Perhaps it is possible to privatize the airwaves, but the long term expense is much, much higher than the immediate gain.

--august

(To reply, click here.)

The current regime exists because there was genuine chaos before the federal government started giving out licenses. Sure, the potentially usable spectrum was much narrower, but there are a lot more potential uses now. There's no reason to think that chaos would not re-establish itself in the absence of a regulatory regime.

In fact, there's evidence that chaos would come back. There's a band that's been set aside for unlicensed use for a long time - the 902-928 MHz band. Despite the FCC setting moderately rigorous standards for using that band, it got so busy that people really couldn't use it any more. It was a classic tragedy of the commons - no one user destroyed it, but collectively the usage level got so high that it became unsuitable for many purposes.

Meanwhile, the notion of abolishing the FCC and granting property rights in spectrum would essentially guarantee full employment for communications lawyers. Regular property law is complicated enough - consider the question of what constitutes interference with your neighbor's use of her land, which has changed significantly over the years. Now, imagine how you'd apply that same thinking to interference between two users, when one uses, say digital technologies that cut out whenever there's interference and the other uses older, analog technologies that degrade more gracefully.

Imagine that somebody says he has a new technology that reduces interference in general, while the adjacent user says that this technology actually increases interference to her spectrum. These are, as the Attorney General might say, the kinds of problems that courts are ill-suited to decide. I sure wouldn't want them to be the subject of battles of experts, with generalist judges (or juries!) trying to parse out what's right and wrong.

Today, though, we have an agency that actually has the concentration of expertise necessary to evaluate what the hired guns have to say. It's beyond me why you'd want to dump that expertise in favor of a brand new system that would create more new litigation than you could shake a stick at. In fact, I've talked about this with people in the communications bar, and they regard the idea of making spectrum into regular property as a license for them to print money.

A property rights system would eliminate pretty much all the kinds of innovation that Shafer thinks would be so swell. If, for instance, I owned 901-902 MHz in New York City, the likelihood that I would let anyone else provide a low power service in my spectrum is not much more than the probability that I'd let someone I didn't know sleep in my bedroom while I wasn't using it.

The FCC, on the other hand, has - and uses - the power to push people off spectrum. It has, for instance, forced rebanding of spectrum to increase efficiency, created low power TV and FM radio and authorized ultrawideband services that span spectrum used by a wide range of existing licensed services. One of its other recent activities has been to reallocate spectrum to public safety - you know, police and fire departments - something that also couldn't happen under a property rights regime, unless the government wanted to pony up billions (maybe tens or hundreds of billions) of dollars. It can do these things because the government licenses explicitly give the FCC the power to change the rules when it sees fit. That wouldn't be the case under a property rights regime.

--randy_khan

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