Tag Archives: FCC

FCC: The Worst Agency Nobody Cares About

The Obama Administration is unusually adept at regulating its political agenda. When Congress declined to pass cap and trade laws, Pres. Obama’s EPA issued two new rules outlawing coal electricity – really. When Congress declined to pass card check legislation to ease union drives, the NLRB responded by cutting the debate that should precede a union vote. Most recently, the Supreme Court decided that corporations had a right to political speech. Pres. Obama responded by calling out Romney donors to silence them. Further, the FCC has issued a new rule requiring the disclosure of any organization that engages in political speech on its airwaves – another Obama effort to silence his opponents.

Most people do not care one whit about the FCC; after all, the FCC are those guys who divvy up cell phone spectrum and make people buy digital TVs. What interest does the FCC have in politics? Sadly, the FCC has always been a political tool because it regulates and controls the media of political dialogue. This is why the FCC, bypassing a federal judicial order, regulated ‘net neutrality.’ The FCC cannot stand to be outside of the loop on communications, especially political. This is why Rep. Nancy Pelosi seeks to restore the ‘fairness doctrine,’ which would allow the FCC to stamp out talk radio personalities that oppose her.

As with most regulation, the raw political power grab of the FCC’s latest disclosure rule is concealed by a veneer of ostensible reason. The new rule requires any broadcaster, no matter how small, to report any political airtime buys to the government. The veneer of reasonability is disclosure and sunlight, however, the rule requires immediate and real-time reporting of political buys. No other regulatory body’s political regulations are so onerous, and the only purpose can be to enable immediate tactical responses to those who buy ad time. The new rule’s timing is also convenient, as Obama’s reelection is just getting into gear.

Further, the rule’s primary proponent, Meredith McGehee, is a Naderite political operative. The former Common Cause lobbyist and aide to Socialist IL Rep. Lane Evans (D) somehow decided to focus on FCC reporting to advance her political agenda. Team Obama is amazingly talented at coordinating all of the Left’s assets to advance its overall political agenda.

If regular people start to feel the government’s collar around their necks, it has been a long time coming. While Obama’s assaults on traditional American freedoms have been most visible from the front (e.g. Obamacare, union bailouts, punish ‘the rich’), his shadowy tactics have been just as effective. If the nerdy FCC can become a political tool for Obama, his tactics combined with the embedded left sentiment of the bureaucracy appear to have no limits.

The FCC Serves Another Blow To Consumers

While many consumers reasonably assume that government regulators protect and work for their interests, the reality of today’s regulatory regime is far more complicated and sometimes corrupt. All too often, the relationship between regulators and industry is too cozy, and government regulation becomes a crutch for political insiders and a barrier to competition. Sadly, the one party not at the regulatory banquet is the consumer. No better example is that of the recent FCC decision to repurpose its Universal Service Fund as an internet build out fund, the Connect America Fund.

The FCC has a long history of driving up consumer prices to benefit rich and connected companies. Older consumers may remember the days when long distance rates varied by time of day, with prices jumping fivefold Sunday evenings. AT&T would admonish its customers to call grandma early on Sunday before prices spiked. The fact is that long distance costs basically the same as local call to provide, as evidenced by every major mobile provider including long distance for free. The price difference was a construct created solely by the FCC. When Judge Greene broke up AT&T, its executives foolishly fought to keep the long distance business because the FCC had artificially made it the profit center. The slow decline of AT&T, ending with its acquisition by one of the companies it once considered ancillary trash, demonstrates that the market eventually bypasses regulatory interference. Market competition from cell phones and internet telephony eventually reduced AT&T’s value to nothing more than its brand name.

In 1996, Congress tasked the FCC with revamping a fund that mostly provided Puerto Rico with cheap phone service into a nationwide subsidy to equalize the cost of urban and rural phone service (phone service costs much more to provide in the country). The fund did not alter the exceptionally generous, even corrupt, subsidies to small rural companies; this new fund was for large companies that mostly served big cities. The supported areas were not really impoverished farm land, but most often rich suburban estates and tony vacation hamlets. The various Baby Bell companies like Bell South or SBC fought vigorously for what they thought would be billions in free money. The handful of people who still receive a bill from these companies can still see a charge for Universal Service Fund. While consumers certainly paid into the fund, nobody was particularly happy with its results. As cell phones and internet telephony began to dominate local phone service, it became clear that few wanted a land line, especially in the suburban and vacation cities this fund was designed to subsidize.

So an expensive government program that ultimately benefited rich suburban customers at the expense of relatively poor urban customers had run its course. The FCC had the broad authority to declare that basic service was universally available at reasonable rates without the fund and end the tax on the urban poor. Of course, the government never gives money back, so the FCC repurposed the fund to now provide high speed internet to the same wealthy suburban and vacation home customers. Again, remember that country farmers are covered by a separate fund that more than adequately provides them high speed internet.

High speed internet is a growth and profit center; it does not need a subsidy. Suburbanites already have basic DSL speed internet, just not quite fast enough to satisfy the FCC’s delicate sense of fairness. Of course you don’t hear the multi-billion dollar Baby Bells fussing over another subsidy, even if nobody needs it. Again, the relatively poor urban customers are subsidizing HD video quality internet for the relatively rich suburban dwellers and their vacation second homes. The only real beneficiaries are the internet providers who will get free money to build networks that consumers probably could afford anyway. Of course the FCC’s intervention in the free market will drive up overall costs, but the consumer was never at the table to begin with. Naturally, those that might want to later compete using technologies such as LTE wireless will have a hard time overcoming the politically connected companies that got free money to build out their networks. The FCC’s M.O. is to lock in technologies and entrench favored companies at the expense of the consumer.

Good for the poor? No. Good for the truly rural farmers? No. Good for Ted Turner’s Montana ranch and Aspen second homes? Yes. Good for Fortune 500 companies that are already profitable? Yes, very. The FCC is yet another example of a rogue regulatory agency that the US does not need. Consumers can do very well without this type of protection.

Please Don’t Wake the Sleeping Bureaucrat

Proving that the elves of Washington never sleep, the FCC moved to defy the DC Court of Appeals, which last month ruled that the FCC lacks the authority to impose ‘net neutrality’ on internet providers like Comcast. Whoever thinks Washington bureaucrats are lazy does not know how to motivate them: simply try to impose legal and constitutional boundaries to their authority. The FCC took less than a month from the time the DC Circuit struck down its authority over the internet to formulate a sleazy workaround, publish the sleazy workaround, and trumpet the sleazy workaround in the press. This from an organization that took years to shut off old fashioned TV and then delayed it several more months out of an abundance of caution. The important lesson is that Washington’s sleeping bureaucrats are best not disturbed.

As Shout Bits discussed regarding the EPA, the FCC is an expert agency. Expert agencies are created by Congress and then take on lives of their own. The FCC is generally empowered to interfere with all aspects of the telephone business. The FCC’s stranglehold on innovation is such that a 90 year old telephone must still work when connected to today’s network. Ever wonder why long distance calls are free on a cell phone, but not a home phone? The FCC’s rules effectively outlaw the kind of innovation found in wireless and VOIP services. Of course, the FCC wants to do for the internet what it has done to the plain old telephone.

For those who think the internet works OK as is, a little background on Washington regulation. As Shout Bits reported, in 2007, Comcast was caught secretly slowing down the traffic of its customers who were sharing very large files – bit torrent traffic. Internet content companies like Google manufactured outrage; while Comcast claimed that it was trying to prevent a small number of its customers from slowing down access for everyone else. Over a nearly two year (not 30 day) period, the FCC issued regulations to control the likes of Comcast, and along the way regulate internet content.

Fortunately Comcast sued the FCC and won. It is quite a mystery why companies sue regulatory agencies, for the outcome is invariably enough to make Pyrrhus shrug and go home. Washington bureaucrats never lose. Every time, when faced with court defeats they rewrite the rules to have the same impact without running afoul of the courts. The FCC has played this game over and over, rewriting the same rules, having them struck down, and rewriting them again. When ordered to rewrite an illegal rule, the FCC can delay compliance for years, tempting sanctions normally reserved for organized criminals. While Washington bureaucrats are indeed corrupt, Comcast seems foolish to challenge them.

Still Comcast did challenge the FCC, and won. The court found that the FCC could not regulate net-neutrality because Congress forbade them from doing so. The FCC’s response? The internet is no longer the internet. The FCC, rather than simply move on to other power grabs, simply reclassified the internet into a brand new category of regulation beyond the law’s reach. Even though nobody noticed, the internet was reborn this week into a third variety of service that the FCC hopes it can control.

What gives the FCC the right, on 30 days’ notice, to declare a whole new field of regulation? The true culprit is Congress that routinely abdicates is responsibilities and punts them over to the hidden gnomes of Washington. The result is a rule of man, not law. The FCC does not answer to the courts. The EPA can regulate carbon against the will of the People or Congress. This week’s FCC ruling on net-neutrality reveals more than the government’s desire to regulate internet content. The FCC bared its fangs and showed how much Washington bureaucrats covet their shadowy powers. If the FCC would make such a bald faced power grab over internet traffic, what might the new legions of Obama Care regulators do to control medicines? Congress must restrain these rogue regulators that limit prosperity and insult liberty with their arrogance.