"Open Access" and the Tyranny of the FCC
By Alex Epstein (Springfield News-Leader, Oct. 29, 2007)
In January the FCC will auction off the prized 700 MHz spectrum of wireless bandwidth. But instead of offering the spectrum to the highest bidder to employ it however he judges best (for example, a mobile video-on-demand service), the FCC will force the winner to employ a specific business model--an "open access" Internet network that forbids the spectrum-holder from controlling which devices and applications use its network, regardless of how much bandwidth they eat up. Why? Because the FCC and sundry lobbyists claim, "open access" is necessary for the "public interest."
Wireless companies have rightly criticized "open access" rules as restrictions on free competition that unfairly favor certain business models--namely that of leading lobbyist Google. But the injustice of "open access" is just a symptom of the deeper injustice used to justify it: FCC's control of the "public airwaves" in the "public interest."
In today's discussions of FCC policy, it is taken for granted that airwaves are "public." But it shouldn't be. As philosopher Ayn Rand argued in a landmark 1964 essay, "The Property Status of Airwaves," airwaves should be private property.
Observe that the broadcast technology that makes the so-called public airwaves a value does not exist in nature. It is the creation of individuals--and, like all human-created values, its creators earn by their effort a right to their creation. When inventors and engineers first unlocked nature's potential to carry radio waves, and entrepreneurs began developing the commercial value of radio, the government had a responsibility to define property rights in this sphere--so that these innovators could own and utilize portions of the spectrum without interference by others.
There is an exact parallel here to property rights over newly available land. When the western frontier was opened in the 19th century, the government did not declare it public property. Rather, it parceled out the unowned land on a first-come, first-served basis, and then recognized a property right for those who made use of the land for five years. The same type of procedure—enabling pioneers to earn a property right to that which they render valuable--applies to any newly usable portion of spectrum. And, like land rights, once a property right to the use of a given frequency band in a given region is earned, it belongs to the owner unconditionally; he may use it to offer whatever content or services he judges best, or sell it to someone else to do the same.
If the government recognized airwaves as private property, the wireless industry and broadcast media would be transformed. Entrepreneurs would compete freely for ownership of spectrum, and over time, those who sold the most valued product would win out. We would see innovations at a pace undreamed of today--the pace of entrepreneurs and inventors, not the pace of central-planning bureaucrats.
Unfortunately, our government does not recognize airwaves as private property, and never has. In the 1920s, its response to the development of radio was not to define and protect property rights for the field's creators, but to nationalize them as "public property." Consider the injustice of this: the pioneers who envisioned the potential of radio technology, and took the risk of bringing it about, had no more right to their creation than we do, who created nothing.
Under the "public" airwaves regime, businesses do not own but merely "license" portions of spectrum--which the government has total authority to control in the "public interest." The use of spectrum is determined, not by the business that has purchased and earned it, but by the FCC--by whatever it feels is in the indefinable "public interest." In the realm of media, FCC bureaucrats can effectively censor viewpoints they dislike by revoking broadcast licenses or imposing huge fines. In the realm of wireless data, FCC bureaucrats and Congress can impose more onerous terms on a paying licensee anytime they wish--such as Google's proposal that licensees be forced to sell large portions of their bandwidth to competitors at FCC-dictated "reasonable" rates, no matter what it does to their business.
In all such cases, the creators with the best ideas and the willingness to prove them in a free market are throttled by lobbyists and government officials who can wheel and deal in Washington--and innovation suffers accordingly.
Americans need to start recognizing airwaves as the private property they really are, and demand the abolition of the FCC. Then the government can hold a fair and just auction for the 700 MHz spectrum, and the others, in which each spectrum is not licensed but sold--no strings attached.
Alex Epstein was a writer and a fellow on staff
at ARI between 2004 and 2011.