Most histories of radio in the United States will tell you that the Federal Radio Commission (FRC)—the predecessor of the Federal Communications Commission (FCC)—came into being as a necessary response to the chaos that prevailed when signals from multiple radio stations interfered with each other. But according to Clemson University economist Thomas Winslow Hazlett, in his recent book The Political Spectrum: The Tumultuous Liberation of Wireless Technology, from Herbert Hoover to the Smartphone, that story is wrong. In fact, in the first years of radio, the early 1920s, the U.S. government's Commerce Department had figured out how to recognize radio stations' property rights in various parts of the electromagnetic spectrum. With such well-defined property rights, the problems of interference were minimal to non-existent. What led to interference was U.S. Secretary of Commerce Herbert Hoover's decision in 1926, in response to a federal court decision, to no longer enforce property rights to the airwaves. That's when chaos ensued.
Why Hoover did this is an interesting story, which I'll get to later. Indeed, The Political Spectrum is chock full of interesting (and true) stories told by a master storyteller with a great sense of humor. We learn how Hoover's decision started a path leading to government control that is still with us today. Hazlett shows that the FCC has, for over 80 years, set itself up as a central planner, creating the usual problems that central planning creates. The planners are in the dark about the best uses of the electromagnetic spectrum, but that hasn't stopped them from planning. Hazlett shows how FCC regulation slowed FM radio, cable television, and cellular phones by decades, destroying many hundreds of billions of dollars of value. And, as a bonus, FCC regulation reduced free speech on radio and TV, something that still exists today.
This is from David R. Henderson, "How the Electromagnetic Spectrum Became Politicized," Defining Ideas, January 2, 2019. It's my review of Tom Hazlett's excellent book The Political Spectrum. In case it's not obvious, I highly recommend the book.
I also recommend reading my whole review.
Sounds interesting. I'll check it out. Incidentally, you put the year of your review as 2018 but I think you meant 2019.
FCC story makes a lot of sense. In Australia we not only have to contend with unnecessary controls on the spectrum that can be used but also with publicly- funded broadcasters such as the ABC and SBS, in receipt of over a billion dollars annually, advocating more public spending and generally an anti-market agenda.
Thomas Hazlett of George Mason University talks with EconTalk host Russ Roberts about a number of key issues in telecommunications and telecommunication policy including net neutrality, FCC policy, and the state of antitrust. Hazlett argues for an emergent, Hayekian approach to policy toward the internet rather than trying to design it from the top down and for an increased use of exchangeable property rights in allocating spectrum.