Abolish the FCC!

What's up with the Federal Communications Commission (FCC) ? Why does it exist? Do people actually enjoy watching the insipid battle of egos between these largely irrelevant policy wonks and their equally pig-headed lobbyist counterparts? Is it the bureaucratic equivalent of the WWE?

The recent controversy over the FCC's efforts to step up regulation of the cable industry is a great demonstration of its irrelevance. The good news is, it's largely failed.

For those of you who haven't followed the game, FCC Chairman Kevin Martin -- a Republican and thus thought to be naturally pro-marketplace -- has recently been flexing his regulatory muscles and trying to step up regulation of cable, including price controls and the patrolling of content. It's been covered nicely by our friends over on Cable Digital News.

FCC Commissioner Robert McDowell decided to butt heads with Martin, saying Martin's efforts to increase regulation were not in the public interest, and, in fact, he even accused Martin of trying to railroad through more regulation using faulty data and without the appropriate review process.

As CDN editor Jeff Baumgartner has pointed out, much of the debate revolves around the mechanics of the "70/70" rule, which gives the agency the power to re-regulate the cable industry if it can show that MSOs (multiple system operators) pass at least 70 percent of U.S. homes and at least 70 percent of those homes actually take cable service. "Despite most research showing the contrary, Martin has held that the stats he has -- from the Warren Communications cable fact book -- show penetration rates that could invoke the rule," writes the Bauminator.

Let's shelve the archaic rules here and use common sense. Are communications networks more monopolistic than they were 10 years ago? 20 years ago? It seems to me that the big trends for communications networks for the past 10 years are more services, more choice, and more competition.

As as far as I can tell, the cable industry is proving that itself, with its struggle to move into Internet services and VOIP. Cablevision Systems Corp. (NYSE: CVC) shareholders will tell you it hasn't exactly been a walk through monopoly park. In fact, pricing pressure and competition is eating up margins.

The fact of the matter is that Verizon Communications Inc. (NYSE: VZ)'s moves into cable turf with fiber optics are forcing others to compete. AT&T Inc. (NYSE: T) is rethinking its half-hearted attempt at Fiber to the Whatever (FTTW). Wireless networks are bringing broadband to even more coverage areas, and 3G networks and 4G networks are going to increase over time.

The average consumer has more communications options than ever. Recently, I estimate, I've halved my communications bill and doubled the quality of my services (through more HD cable channels and blazing fast broadband service) by going to a new triple-play fiber service. The TV service is now essentially free.

Is the consumer really losing here?  There is more competition in the communications industry than ever before.

The FCC's recent debate boils down to no more than a rationalization for its own existence. The fact is, the Internet and mobile communications are rapidly removing its relevance. At the very least, the agency's powers and budget should be rapidly scaled back.

The FCC's budget has more than doubled from $150 million to $300 million since 1993! Are American citizens seeing proportional benefit? As far as I can tell, the FCC has been a disaster ever since Reed Hundt convinced us that loading up telecom companies with debt through wireless spectrum auctions was a good idea. It was a good growth strategy for the FCC -- but I'm not really sure how it helped the industry delivery better services to consumers.

I'd argue that it's time to abolish the agency, and start over. It should be a small board, with a $50 million budget. Don't you think that would get it done? The agency could deal with only the basic public communications issues: public safety, spectrum regulation, and ensuring communications services for low-income and rural citizens. 

The rest of it you can leave to local public utility boards.  

Who would really object, other than the FCC itself and the army of parasitic lobbyists who feed off its existence?

— R. Scott Raynovich, Editor in Chief, Light Reading