The FCC and Quasi-Common Carriage: A case study of agency survival

The attached article, co-authored by Brent Skorup of George Mason University, originally was published in Vol. 18, Issue 2 of the Minnesota Journal of Law, Science & Technology. 

The Federal Communications Commission (FCC) has been called “the paradigmatic New Deal agency,” created in 1934 with broad authority to regulate a general area of the economy and “largely staffed with reformers eager to expose and correct the misdeeds of corporate institutions and executives.” Its charge was to regulate the common-carrier telegraph, telephone operators and the nascent broadcast radio industry as public utilities. To that end, Congress created the FCC to “make available, so far as possible, to all the people of the United States … a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges.”

This broad grant of jurisdiction allowed agency goals to shift markedly and expansively into adjacent markets. Major regulatory interventions into mass media, such as broadcast media ownership rules, investigation into newspaper-broadcast cross-ownership, the Fairness Doctrine and cable TV regulation were not expressly authorized in the 1934 Act. These self-initiated expansions in authority were sometimes ratified by courts or Congress later, but Congress’ major amendments to the Communications Act since the 1970s have deregulated cable TV and telecommunications. However, unlike two other industry-specific common-carrier regulators, the Civil Aeronautics Board and the Interstate Commerce Commission, the FCC survived the national mood for laissez-faire regulation. Even modest grants of regulatory authority resulted in substantial increases in new staff and appropriations, and today the FCC still exercises considerable authority over mass-media and telecommunications firms including Comcast-NBCU, Google, AT&T-DirecTV, Disney-ABC, Sirius-XM and T-Mobile.

The FCC’s recent assertions of authority to oversee internet services, apps and online-user privacy mark a long-anticipated reality: the great projects of the 20th-century FCC are over. We document the breakdown of the public utility model for mass media and telecommunications. The telegraph has disappeared, as has the AT&T long-distance monopoly. Facilities-based, local phone competition, thought impossible even as recently as the 1990s, is present. Gone are the days of three broadcast TV networks and a few local stations, and mass media consumer choice has never been more abundant. Today hundreds of TV channels and ubiquitous internet access provide access to every viewing niche imaginable.

In theory, these accomplishments might warrant the elimination or reduction of a New Deal agency’s regulatory authority. An agency should shrink once its goals have been achieved, whether by market forces or by regulatory intervention, and members of Congress have proposed dismantling the FCC since the late 1970s. What accounts for the FCC’s persistence, even as its original purposes—overseeing a national telephone monopoly and promoting a nascent broadcast radio industry—are obsolete?

We posit, after reviewing trends in communications law, that the FCC is not going anywhere soon. In this article we identify why, despite competition, falling prices and expanding output in telecommunications and media, the agency will survive indefinitely and may expand its jurisdiction. We address a prominent theory after the passage of the deregulatory 1996 Telecommunications Act that the FCC would survive simply as a modest economic regulator of “bottlenecks.” While it is still too early to dismiss this theory completely, it failed to foresee some important changes in the FCC’s regulatory philosophy and strategy. Namely, the FCC and its defenders in recent years have largely shifted the FCC from an economic regulator to a social regulator—a shift consistent with public choice theory. We also highlight a resilient (and incoherent) theory of law—quasi-common carriage—that coincided with this shift and will keep the agency and its constituencies quite active going forward. This change in regulatory philosophy, which evolved over decades but became prominent in recent years as common carriage withered in the face of deregulatory pressures, will likely ensure agency survival for the foreseeable future.

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