End “Forever Government,” Starting with the Federal Communications Commission

“Government programs, once launched, never disappear,” Ronald Reagan famously noted in a 1964 speech. In fact, “a government bureau is the nearest thing to eternal life we’ll ever see on this earth,” he concluded.

Unfortunately, Reagan was right. Bureaucracy has expanded endlessly, especially over the past century. Almost every president enters office promising to reduce bureaucratic bloat, but government keeps growing. The Federal Register lists 445 federal agencies, and that number has grown steadily.

In the Declaration of Independence, America’s founders protested how the king had “erected a multitude of New Offices, and sent hither swarms of Officers to harass our people.” One wonders what they would have thought about the government they birthed now having so many offices and officers touching every facet of our lives.

If there is any hope of countering “forever government,” it begins by identifying agencies that undermine markets, waste money, and have outlived their usefulness. One of the best candidates for this chopping block is the Federal Communications Commission (FCC).

In testimony before the House Energy and Commerce Committee Subcommittee on Communications and Technology on March 26, I made the case for winding down the FCC after an orderly elimination of unneeded functions, or a transition of its powers to other agencies. It sounds radical but it isn’t, because the FCC is no longer needed, and sunsetting the agency will be easier than some might imagine.

100 Years of a “Zombie Agency”

“The story of the FCC is a classic tale of a zombie government agency,” the Washington Post editorial board noted recently. While the FCC is now “largely irrelevant,” the agency still, “gropes for new ways to justify its existence” even though it “should no longer exist,” the Post argues.

The FCC’s eternal life began almost 100 years ago with the Radio Act of 1927, which created the FCC’s predecessor, the Federal Radio Commission (FRC) to manage wireless spectrum. After Congress passed the Communications Act of 1934, the FRC became the FCC and its power expanded considerably. 

What followed was a long, lamentable history of FCC micromanagement of America’s communication and media marketplace, and of speech. There were also many layers of state and local regulation. The mandates included competition restrictions, price controls, equipment regulations, speech controls, inefficient subsides, and assorted other red tape. As a recent R Street series summarized, “bureaucrats possessed sweeping control over the information means of production for the nation,” and “[t]hese policies created direct barriers to new entry, innovation, consumer choice, and free speech.”

At the core of the problem was a simple phrase: “the public interest.” The phrase appears over 100 times in the Communications Act and is found in almost all other agency pronouncements.  Amazingly, however, Congress has never clearly defined the term. As a result, “the public interest” came to mean whatever unelected bureaucrats thought it should be and, unsurprisingly, the definition shifted over time and was abused. 

By the mid-1990s, Congress came to realize that this regulatory regime was failing and passed the Telecommunications Act of 1996. While the Telecom Act hoped to “promote competition and reduce regulation,” and was widely described as a deregulatory initiative, the measure was a mix of some liberalization alongside many new mandates. As I noted in my testimony, “the Telecom Act failed to impose serious constraints on the FCC and even empowered the agency to regulate in new ways using many open-ended powers on top of many older rules that remained untouched by the law.”

While the Act encouraged the FCC to forbear from over-regulating, it became clear that the agency would never relinquish control. Congress trusted the agency to steer a sensible course and lessen its power over markets and speech decisions over time. This proved wishful thinking for reasons Reagan taught us long ago: “No government ever voluntarily reduces itself in size” or power.

At Thursday’s hearing, former FCC Commissioner Michael O’Rielly testified alongside me and highlighted “numerous instances where the law’s provisions were either intentionally or unintentionally misapplied” by the FCC over the past 30 years. “Overall, the FCC—once entrusted to correctly handle the law’s technical aspects—became less than trustworthy and often misused its authority,” O’Rielly concluded.  Both his testimony and mine highlighted how it is a mistake to “rely on the good intentions of a federal agency to interpret Congress’s intent” by delegating broad authority and hoping for the best. The FCC has taken advantage of the fact that the Telecom Act was, in the words of the Supreme Court, “a model of ambiguity or indeed even self-contradiction,” and the agency used the law’s many vague provisions—and many older rules—to continue micromanaging markets.

Worse yet is the speech meddling. The current FCC chair has been at war with late night talk show hosts and broadcasters over “news distortions,” whatever that means. While the First Amendment protects the editorial rights of speakers in America, the FCC has spent a century trying to dictate media “fairness” by referencing their vague public interest powers and threatening license revocations for operators that contradict current agency preferences. 

Sunsetting and Transferring Powers

The only way out of this predicament is for Congress to comprehensively liberalize markets and downsize the FCC or, better yet, eliminate it.

Over the past 30 years, I have been part of multiple blue-ribbon working groups that brought together bipartisan experts who devised blueprints for comprehensive FCC reform.  Based on those experiences, my testimony sketched out a five-part plan to sunset or transfer FCC powers after a two to three year wind-down as part of a new “Communications Freedom Act of 2027” to end the agency 100 years after its creation. Here is the rough sketch of how that would work:

1. Scrap wireline common carrier regulations and media industry mandates and let the Federal Trade Commission and Department of Justice handle competition policy and consumer harm matters.
2. De-politicize the spectrum and treat it as a fully flexible and tradable property right. Then transfer remaining technical spectrum allocation and management tasks to the National Telecommunications and Information Administration or a technical coordination body.
3. Convert inefficient universal service programs into a means-tested welfare program administered by other agencies or state governments.
4. Sunset arbitrary “public interest” FCC speech controls to protect the First Amendment rights of all speakers and listeners.
5. Preempt or simplify remaining state barriers to competition that undermine interstate markets.

As this list makes clear, some FCC regulatory powers would not disappear, but instead be transferred to another agency or body. The adjoining chart identifies various FCC functions and identifies the agencies that could take over those tasks as the FCC is downsized.

Defenders of the status quo might protest that the FCC is still needed to ensure the smooth functioning of complex technology markets and protect consumers. That argument is contradicted by real-world experience. The FCC has traditionally micromanaged markets and restricted innovations in ways that usually favor incumbents and undermine innovation and choice.

Meanwhile, America’s post-Telecom Act experience illustrates that the most rapid-fire innovations over the past 30 years came from those information sectors and technologies least touched by FCC controls. Online services, personal computing, electronic commerce, and smartphone hardware and applications benefited from a presumptive freedom to innovate, or “permissionless innovation.” They thrived and made the United States the globe’s digital technology powerhouse, offering the public a massive array of new communications and entertainment options along the way. This happened even though innovators in each of those fields faced countless technical coordination challenges that had to be hammered out using other means. Contracts and the common law took care of much of the work, but private sector standards and negotiations helped bring order to markets without FCC top-down controls.

Conclusion

Whether the political will exists to eliminate the FCC is unclear. One thing I learned at the hearing is that communications and media policy is more intensely political than ever, and the possibility of bipartisan reform seems remote. Rep. August Pfluger (R-Texas.) stressed how “even in an environment that is politically tough,” some sort of bipartisan deals will need to happen because “the stakes are really high” as America races against China in the AI age.

Perhaps the past can provide some inspiration for trying again, however. Almost fifty years ago, it was Democratic lawmakers and the Carter administration who took the lead in dismantling anti-consumer aviation cartels that had been propped up by government licensing, price controls, and entry restrictions. While they were at it, those lawmakers abolished the Civil Aeronautics Board, which had been responsible for creating much of the mess. Two decades later, the Clinton administration developed light-touch policies for the internet and e-commerce, including the Framework for Global Electronic Commerce, that helped unleash the digital revolution.

Is it so outrageous to think this could happen again? As Rep. Jennifer McClellan (D-Va.) wisely summarized near the end of the hearing, everyone agrees telecom modernization is needed, “but it can’t wait, and this Congress has moved very slowly.” She concluded by noting that, “technology is changing much more rapidly today, and it we’re not careful the next Telecom Act could be obsolete in 4 or 5 years.” She’s right, and one thing is even more certain: the old Telecom Act was obsolete many years ago, yet nothing much has changed legislatively. “Forever government” need not be the new normal. Congress should promptly reform the FCC and put it on a path for closure by 2034. 100 years is long enough.