Which brings up a question that hardly anyone seems interested in: Whose airwaves are they? The standard answer is that they belong to the public. Throughout the debate over what can and cannot be broadcast, no one has questioned that premise. Even people who ordinarily extol private property as a pillar of Western civilization are strangely enthusiastic about collectivism when it comes to the broadcast spectrum. In a statement typical of those battling indecency, L. Brent Bozell III, president of the Parents Television Council, asks, “Why does the FCC ignore its Congressionally mandated role to enforce broadcast decency standards over the publicly owned airways?”

Isn’t something out of kilter when the world’s reputedly paradigmatic capitalist country has public ownership of this resource? There is nothing peculiar about the broadcast spectrum to justify collectivization. The spectrum was not a resource until particular individuals discovered its usefulness. That required scientific and entrepreneurial insights: namely, that sounds and later pictures could be delivered through the air, and that people would be willing to pay (even if indirectly) to receive them. The risk-taking involved is easy to overlook now.

What did the pioneers of broadcasting get for their trouble? Government appropriation and licensing of that revolutionary resource. (This is not to ignore that some of the early titans of broadcasting reaped benefits from the government’s takeover of the spectrum.)

It almost didn’t work out that way. When the first radio broadcasters commenced, they sometimes interfered with each other. Aggrieved parties did what Americans always do when they believe their property has been violated: They went to court. The courts, quite naturally, began to apply the common-law principles of trespass to resolve the disputes. Formal property rights were beginning to emerge.

But in the 1920s the federal government got into the act. Then-Commerce Secretary Herbert Hoover, who oddly has a reputation as an advocate of individualism and laissez faire, began by unilaterally regulating the airwaves. Next he engineered the Federal Radio Act of 1927, which authorized a new government agency to parcel out the spectrum to licensees. (Yes, it could have been worse: Hoover could have set up a state broadcasting monopoly.) With the authority to issue and revoke licenses came the power to impose obligations on broadcasters, such as the equal-time rule, the fairness doctrine, the restrictions on indecency, and the prohibition of obscenity. Theoretical ownership by the public always means actual control by government.

The last 20 years have seen some relaxing of the rules, but few people have seriously questioned the socialized status of the airwaves. With good reason people worry about what they and their children might be exposed to on radio and television, and I don’t mean to minimize that concern. But I do mean to say that collective—that is, government—ownership is an illegitimate solution in a free society.

* * *

Former President Ronald Reagan died in June. Richard Ebeling assesses the Reagan legacy.

Government enjoys meddling so much, it even interferes when people are doing what it wants them to do. James Payne has an example.

With freedom comes change. As John Hood says, it’s important to look for the upside as well as the downside.

The right to property is subtly eroded every day by the agency that’s supposed to protect it. Dale Haywood explains.

We hear much about borders these days, but few notice how they really protect liberty. Andrew Morriss explores this unappreciated feature.

We’re often urged to fear bigness when it comes to business. But as Wayne Dunn points out, we wouldn’t have to worry about that if the size of another entity were brought under control.

Has any political philosopher been more demonized than Herbert Spencer? Roderick Long demonstrates that the great classical liberal deserves better.

The International Labor Organization has a history of endorsing government intervention in all ways. So Jude Blanchette wasn’t surprised when the ILO called for beefing up government schooling in the developing world.

In this month’s FEE Timely Classic, the late Dean Russell revisits some of Frédéric Bastiat’s great writing on free trade and protectionism.

Our columnists spared no effort in finding compelling topics. Richard Ebeling reflects on a global tobacco treaty. Lawrence Reed reports on his trip to Vietnam. Thomas Szasz surveys the mental-health landscape after 300 years of “psychiatric reforms.” Burton Folsom tells the story of the National Road. Charles Baird weighs support for unions in the United States.

Books coming under scrutiny this month deal with the Gulag, diversity, lawyers, and the inoffensive language of textbooks.

—Sheldon Richman

Over a four-day period, from March 31 to April 3, Washington gave away the proverbial store to the nation’s over-the-air television broadcasters. A major step by the Federal Communications Commission (FCC)—taken per a Democratic White House and Republican Congress—and a decision by the U.S. Supreme Court will both prove quite costly for taxpayers, consumers, and the U.S. Constitution. It is corporate welfare run amok.

Broadcasters were handed tens of billions of dollars worth of broadcast spectrum, free of charge.

Earlier this century, the government asserted the right to manage the spectrum, the airwaves over which television, radio, and other forms of communication are transmitted. This year the federal government flexed its industrial-policy muscles, decreeing that American consumers should watch digital-quality television (with its purported better picture and sound) whether they want to or not. Broadcast television stations will use their new, free-of-charge channels to send out digital signals of their commercial TV service, currently delivered through less efficient analog signals; some frequencies will be left for subscriber-paid services. Broadcasters will simultaneously send out their analog and digital signals for about the next decade, after which the old signal will end, with that section of the spectrum supposedly returned to the government for auction.

In effect then, over the coming decade the broadcasters, backed by the federal government, will push consumers to buy new digital TV sets or set-top converters for their old TVs. This amounts to a TV tax on consumers, potentially running into hundreds of dollars for converters and thousands of dollars for digital televisions. At the same time, were the spectrum auctioned off, rather than given away, billions of dollars in revenues could be collected and used to retire a bit of the federal government’s outstanding debt. Indeed, at this point Washington’s lone goal should be to extract itself from any involvement in the broadcast spectrum—but for safeguarding property rights—and the best means to do so would be to auction off the entire spectrum, allowing the marketplace, not government, to decide the future of over-the-air telecommunications.

As for the promise by broadcasters to eventually return their old spectrum, don’t hold your breath. If consumers resist paying the TV tax and stay with their old televisions, the broadcasters could keep all of their spectrum for some time. Either way, it’s a lose-lose proposition for taxpayers.

The Must-Carry Rule

Meanwhile, also in March, the Supreme Court struck another blow for industrial policy and the TV broadcasters by upholding a 1992 federal law mandating that cable television systems carry local broadcast stations, i.e., the must-carry rule. In the continuing, perverse “tradition” of judicial activism, the Court utilized, as Justice Sandra Day O’Connor put it in her dissent, “a highly dubious economic theory” to uphold the law. The economic viability of local broadcast stations was considered as an issue by the Court, while the First Amendment (i.e., free speech) and the Fifth Amendment (i.e., takings) were discounted.

In the case of must-carry, the federal government has decided that a local broadcast station must be seen by cable TV subscribers over other stations such as C-Span and ESPN. Of course, this law violates private-property rights, interferes with the superior workings of the free market, and overrides what consumers may actually demand.

Government should neither be guiding the development of television technologies, nor ensuring the economic viability of local broadcasters. If only we could click off government officials, who insist upon ignoring the free market and the U.S. Constitution, as easily as we turn off the often moronic television shows the broadcasters offer over the airwaves.

The so-called “public interest standard” has governed communications policy decision-making at the Federal Communications Commission (FCC) for more than 70 years. It is time to question whether this “standard” does indeed serve the public, or if it has instead served only the interests of regulators and companies that stand to gain via the regulatory process.

Ever since the passage of the Radio Act of 1927, federal regulators have been given the power to regulate if they found it was in the “public interest, convenience, or necessity.” This meant that regulators were given broad authority and discretion to regulate in the name of communications consumers. Unfortunately, in practice, this has resulted in the public truly having no voice in this marketplace.

Why is this so? Precisely because Congress has never defined what exactly is “in the public interest.” As Nobel Laureate economist Ronald Coase noted over 35 years ago, “The phrase . . . lacks any definite meaning. Furthermore, the many inconsistencies in commission decisions have made it impossible for the phrase to acquire a definite meaning in the process of regulation.”^[1] More recently, critics have pointed out that regulation “in the public interest” has come to mean whatever is in the interest of regulators to do at a given time.^[2] Hence, the “public interest” or “public trustee” model of regulation that sprang up 70 years ago gave regulators the ability to exert unusual influence and require special demands be fulfilled, especially as a condition of broadcast spectrum license renewal.^[3] In effect, therefore, the standard is a non-standard: it has no fixed meaning.

Over time, FCC actions taken “in the public interest” have had less than desirable results. Consider:

•       To supposedly serve the “the public interest,” the FCC instituted in 1949 the inappropriately named “fairness doctrine.” The doctrine required radio and television broadcasters to “afford reasonable opportunity for the discussion of conflicting views of public importance.”^[4] Instead of promoting the discussion of conflicting views and free speech in general, the fairness doctrine stifled it. In fact, over the span of its 40-year existence the doctrine was used as a tool of blatant political intimidation and influence by threatening license revocation for failure to comply with the political whims of the day.^[5] The Reagan administration FCC wisely repealed the doctrine in 1987, citing First Amendment concerns and the fact that program diversity (informational, educational, religious, and entertainment fare) had increased steadily over time.

•       To promote “the public interest” in the early 1960s, the FCC restricted the development of cable television at the request of broadcasters who felt their turf was being threatened. As telecommunications scholars Michael K. Kellogg, John Thorne, and Peter W. Huber note, “For many years the FCC’s principal objective was to suppress the cable industry by preventing direct competition between cable, and over-the-air broadcasting. It did so quite successfully. . . .”^[6] Essentially, the commission did not allow the entrepreneurial cable industry to offer innovative service options to consumers since it posed a threat to the survival of some local broadcasters. This regulatory setback delayed the onset of video competition for over a decade.^[7] Despite no clear justification of how this served “the public interest,” the FCC carried these anti-competitive policies, even though no explicit grant of Congressional authority had been given to do so.^[8]

•       More recently, the FCC has attempted to serve “the public interest” by using the Children’s Television Act of 1990 as a tool of blatant regulatory extortion. The FCC went beyond the statutory language of the act and used the law to demand a specific, quantitative minimum number of hours of children’s programming^[9] in exchange for other business freedoms. For example, after CBS and Westinghouse announced their intention to merge, FCC regulators (who have the power to block such alliances) forced the companies to promise that certain quantitative programming requirements would be honored as a condition of merger approval. Several other firms have faced similar threats from the FCC as a condition of normal business operation.

Fewer Choices, Less Freedom of Speech

Two things should be obvious from these examples of the public interest standard in action. First, the public interest or public trustee model of regulation often does not serve the public in any constructive way. Industry competition and innovation is often discouraged because of the standard, meaning the public has fewer and poorer quality choices available to them.

Secondly, the public interest standard makes a mockery out of the First Amendment, especially in the realm of electronic wireless communication. Ever since the adoption of the Radio Act of 1927, Congress and the FCC have bought into the mistaken notion that the supposed scarcity of spectrum, or potential interference within the spectrum, justifies asymmetrical First Amendment treatment of electronic communications providers.

As Thomas G. Krattenmaker and Lucas A. Powe, authors of Regulating Broadcast Programming argue, “[B]y adopting public ownership of the spectrum and administrative control over its uses, Congress chose a legal regime for broadcasting that differs radically from the law that governs every other mass communications medium in the United States. Congress thus put its imprimatur on the twin myths that scarcity and interference are phenomenon unique to broadcasting and that scarcity and interference necessitate administrative control of the quality of broadcasts.”^[10]

Ironically, regulation itself created artificial scarcity and interference within the spectrum. Because the government enforced an extremely inefficient licensing policy in the early days of spectrum management and then rejected the imposition of a more orderly property-rights regime to govern the spectrum, scarcity and interference resulted. Instead of solving the problem by instituting property rights and private ownership, which solved the problems of land scarcity and trespass centuries ago, Congress and the FCC instead opted for an inefficient system of public management with “the public interest standard” as its guiding star.

The rest, as they say, is history. But it is a history we should not and cannot forget since we are still living with its adverse consequences. The FCC still uses the public interest standard to restrict beneficial industry advances that, in turn, deny new services to the public. It also inhibits the free flow of information and free speech in general.

How, then, can “the public interest” be truly served? By encouraging vigorous market competition—and by rejecting misguided social compacts and vague regulatory standards flowing from Washington.

1.   Ronald H. Coase, “The Federal Communications Commission,” The Journal of Law and Economics, Vol. 2 (October 1959), pp. 8-9.

2.   See, William T. Mayton, “The Illegitimacy of the Public Interest Standard at the FCC,” 38 Emory Law Journal 715 (1989), pp. 715-769; Mark S. Fowler and Daniel L. Brenner, “A Marketplace Approach to Broadcast Deregulation,” Texas Law Review, Vol. 60 (1 1982-1983), pp. 207-257; Thomas G. Krattenmaker and Lucas A. Powe, Regulating Broadcast Programming (London: The MIT Press, 1994), pp. 173-174; Adam D. Thierer, “A Report Card on the Pressler Telecommunications Plan (S.652),” Heritage Foundation Issue Bulletin No. 209, May 5, 1995, pp. 14-15.

3.   This does not mean, however, that broadcasters put up a serious fight to end the public trustee paradigm. On one hand they speak of its importance to ensure that viable competitors are kept out of their market, while on the other, they cite its intrusiveness as an excuse to produce mediocre programming. As Henry Geller, fellow at the Markle Foundation notes, “A broadcaster loves to be considered a public interest figure. Broadcasters generally want the economic benefits of being a public fiduciary without having to meet the burden of adhering to public interest content regulation.” See Henry Geller, “Broadcasting and the Public Trustee Notion: A Failed Promise,” Harvard Journal of Law and Public Policy, Vol. 10, No. 1 (Winter 1987), p. 90.

4.   FCC Report, Editorializing by Broadcast Licensees, 13 F.C.C. 1246, (1949).

5.   For more information see Adam D. Thierer, “Why the Fairness Doctrine is Anything But Fair,” Heritage Foundation Executive Memorandum No. 368, October 29, 1993; E. Brandt Gustavson, “The Fairness Doctrine: Once and Future Threat to Speech, Religion,” in Speaking Freely: The Public Interest in Unfettered Speech (Washington, D.C.: The Media Institute, 1995), pp. 87-106; “The Hush Rush Law,” the Wall Street Journal, September 1, 1993, p. A14; John Corry, “Fairness Most Foul,” The American Spectator, November 1993, pp. 50-51; Thomas W. Hazlett, “The Fairness Doctrine and the First Amendment,” The Public Interest, Summer 1989, pp. 103-116; Jonathan W. Emord, “Toward a Free Broadcast Press,” Freedom Technology, and the First Amendment (San Francisco: Pacific Research Institute, 1991), pp. 233-248; Krattenmaker and Powe, “The Fairness Doctrine,” in op.cit., pp. 237-275; Ford Rowan, Broadcast Fairness: Doctrine, Practice, Prospects (New York: Longman, 1984).

6.   Michael K. Kellogg, John Thorne, and Peter W. Huber, Federal Telecommunications Law (Boston: Little, Brown, 1992), p. 689.

7.   See Jonathan W. Emord, Freedom, Technology, and the First Amendment (San Francisco: Pacific Research Institute for Public Policy, 1991), pp. 252-254.

8.   See Thomas W. Hazlett, “Station Brakes: The Government’s Campaign Against Cable Television,” Reason, February 1995, pp. 41-47. Hazlett notes that when cable television (or “CATV” as it was known then) was developing between 1950 and 1972, “Cable television was then officially judged a menace to society, and the [FCC] had launched a regulatory jihad against it. Like all holy wars, this offensive was undertaken in the `public interest.”’ Hazlett dramatically illustrates the FCC’s protectionist policies in action by quoting from a 1966 Commission report on cable. The Commission stated: “We must thoroughly examine the question of CATV entry into the major markets, and authorize such entry only upon a hearing record giving reasonable assurance that the consequences of such entry will not thwart the achievement of Congressional goals. We cannot sit back and let CATV move signals about as it wishes.”

9.   For more information see Adam D. Thierer, “Who Will Mind the Children? The Regulation of Children’s Programming in the Information Age,” in Speaking Freely: The Public Interest in Unfettered Speech (Washington, D.C.: The Media Institute, 1995), pp. 47-66.

10.   Krattenmaker and Powe, op.cit., p. 18 [emphasis added].