Jamison Supports Scaling Back FCC, But Also Sees Need for Strong Leadership

Trump transition team member Mark Jamison said the FCC is no longer needed, at least as presently constituted, and suggested the commission should be downsized and refocused on a core spectrum management mission, with many of its current functions turned over to other federal and state agencies. "Most of the original motivations for having an FCC have gone away," he wrote in an Oct. 21 commentary. But Jamison, director of the University of Florida's Public Utility Research Center, more recently lauded FCC chairmen of both political parties for providing strong and effective leadership that resists political pressures and preserves the agency's independence.

Jamison, who's also a scholar at the American Enterprise Institute, was recently named to the FCC landing team of President-elect Donald Trump's transition team (see 1611210045). Fellow landing team member and AEI scholar Jeff Eisenach (see 1611230014) has endorsed restructuring the FCC and combining its key competition and consumer-protection activities with the FTC, though he and others recognized such action would require congressional action, which is a heavy lift.

In his Oct. 21 piece, Jamison asked whether the country still needs the FCC. "The answer is 'no, but yes,'" he wrote. He said the FCC was created largely to oversee the interstate services of telephone monopolies and to regulate broadcasting, including its airwaves. Congress made the commission independent to foster "a regulatory environment in which businesses could make good investment decisions," free from political winds that change with elections. Jamison cited research he co-authored saying "politically-driven infrastructure regulation suppresses investment," and he said the FCC's 2015 "economics-free decision on net neutrality" appears to provide anecdotal evidence about capital expenditure of broadband ISPs (see 1509090056).

But Jamison said competition eliminates most of the reasons for having the FCC. Telecom providers and ISPs "are rarely, if ever, monopolies," and if monopolies do exist, "it would seem overkill to have an entire federal agency dedicated to ex ante regulation of their services," he wrote, saying the FTC and state authorities "can handle consumer protection and anticompetitive conduct" issues. He said Internet content "competes well" with broadcast content, "seeming to eliminate any need for FCC oversight" of broadcasters. Licensing of spectrum seems to be "the only activity that would seem to warrant having an independent agency," given the potential for political cronyism and even corruption that could hurt investment, he wrote.

He said the FCC still exists for varying reasons, starting with inertia: "Dissolving a federal agency is a large task and Congress often has higher priorities." The commission also "is valuable to business and interest groups" that benefit from its activity -- such as on net neutrality and set-top boxes -- at the expense of other interests and consumers, "who ultimately bear the brunt of regulatory rent-seeking," he said; plus, "cottage industries" employ many people who rely on policies such as universal service subsidies. And he recognized it's "important to keep radio spectrum allocation independent of day-to-day political pressures."

Absent the FCC, Jamison said "any legitimate universal service concerns could be handled by others," such as the states and the federal Department of Health and Human Services, with the FTC and states in charge of consumer protection. "A much smaller independent agency could be created to license radio spectrum, where a spectrum license would be a property right for use and not about content," he wrote. "Thus, at the end of the day, we don’t need the FCC, but we still need an independent agency."

Other Comments

Jamison earlier gave additional thoughts on revamping the FCC. "Taking lessons from the Brits (and others), a new governance model would have a small executive team that is responsible for carrying out the work of the agency, subject to a board made up of economists, accountants, engineers, social scientists, and business persons whose professional loyalties are to their professions, not politics," he wrote in an Oct. 3 column. "It appears that regulation by president-appointed commissions is an idea whose time has passed in the US. If we make effective reforms, maybe the US can once again become a world leader in effective regulation."

Jamison recently picked up on that theme, calling for restoring "effective" FCC leadership after the chairmanship of Tom Wheeler, who he said had been criticized for politicizing the agency. "Perhaps the most challenging job for the new chairman will be rebuilding the agency’s credibility, pushing back the political opportunists, and mending the commission’s internal divisions," he wrote in a Nov. 15 commentary. But he cited previous Democratic and Republican chairmen as good examples: "It takes a strong organization to withstand political pressures. Chairmen Reed Hundt, William Kennard, and Michael Powell provide lessons in building the FCC by building its staff."

Jamison credited Hundt with pushing FCC staff to develop "analytically correct solutions" after studying the economics of policy problems. He lauded Kennard for ensuring decisions were "well formulated' and released quickly after being voted, "which improved the credibility of the commission." Powell focused on giving staff further training and opportunities, including through "FCC University," and on "strengthening internal relationships and improving dialogue through 'town hall meetings,'" wrote Jamison, who also cited the work of Mark Fowler and Dennis Patrick, two earlier Republican chairmen.

"Strong leadership at the FCC is needed regardless of the new administration’s regulatory agenda," Jamison wrote. "If the FCC’s work remains largely unchanged, the rebuilding is needed to ensure that the agency is strong enough to provide substantive decision-making and to withstand future politically-oriented chairmen. If the administration follows the other extreme and moves to largely disband the agency, effecting the change will require strong leadership." Jamison and an FCC spokeswoman didn't comment for this story.

Hundt, CEO of the Coalition for Green Capital, played down any talk of gutting the FCC. "I suspect that Commissioners [Ajit] Pai, [Michael] O'Rielly and a third to be named by President Trump will look forward to composing the majority of an actual, existing agency. The two incumbents' votes and speeches outline articulately a fairly robust agenda," he emailed Friday.

Echoes of 1990s?

When he was chairman, Hundt faced some calls for eliminating the FCC after Republicans took control of Congress in a sweeping 1994 mid-term election victory spearheaded by Rep. Newt Gingrich, R-Ga., whom Eisenach had worked for as an adviser from 1989 to 1993. Of course, Congress then passed the 1996 Telecom Act mandating dozens of FCC rulemakings that arguably expanded its authority, albeit along with cable rate deregulation, some broadcast ownership liberalization and regulatory forbearance authorization.

There are two big differences this time, said TechFreedom President Berin Szoka. "Now the Republicans control the White House," he said. "Moreover, we’re now 20 years later, and it’s clear to everybody except [Sen.] Ed Markey [D-Mass.], basically, that the Telecom Act is outdated, and that putting everything into economic silos was a mistake."

But Szoka said FCC restructuring requires lawmaker action, and Democrats can block substantive legislation, given their current power to mount filibusters in the Senate that require 60 votes to end. "You still need eight Democratic votes in the Senate," he said, referring to the Republicans' expected 52-48 majority (a Louisiana seat appears likely to go Republican in a runoff election). He's skeptical Republicans will do away with the 60-vote requirement completely. "Basically, the only thing that’s changed is the Republicans can use the FCC to piss off Democrats, to try to force Democrats to come to the negotiating table," he said. "Anything you do on the FCC’s own initiative can be undone by the next FCC. The end game has to be legislation."

NetCompetition Chairman Scott Cleland said FCC policy is going in the wrong direction, particularly by relying on common carrier regulation of broadband providers. The commission "has to be modernized for that reason, by Congress, and it eventually will be," he said. "The mistake people make is thinking it won’t happen. There are all sorts of things that can be done, between doing nothing and a comprehensive overhaul, that can be very significant."

Szoka said recent comments by Public Knowledge Senior Vice President Harold Feld, on a congressional backlash against a Powell-driven move to change broadcast rules (see 1611230014), were on target and should be taken to heart by FCC Republicans in the current environment. After the Powell FCC raised a broadcast ownership cap from 35 percent to 45 percent of national audience reach, the GOP-run Congress pared it back to 39 percent. "It's a good object lesson in how important political savvy and realpolitik are to getting things done," Szoka said. Noting the outcry, Powell later joked at the FCC chairman's dinner that the country had learned the difference between democracy and fascism was "6 percent."