June 05, 2003

The FCC - A Modest Proposal

The airwaves belong to the people. It is unfortunate, to say the least, that the only way to obtain a license to use those airwaves, in a major market, is to buy a license for millions, sometimes hundreds of millions of dollars. Broadcasting becomes the exclusive prerogative of the rich.

The law provides for broadcast licenses to be issued for a limited period of time. Currently, the term is 8 years, at the end of which time it is always renewed. In theory there is a possibility that in extreme cases of misuse of this public resource, the license could be taken away. Public comments can be taken, a process is followed, but the assumption is that the license will be renewed.

The result is that it is practically impossible for someone new to start a station. All the frequencies are already taken. (Qualification - there are some parts of the country with a few available frequencies, just not where most people live.)* If you had the foresight to grab a license back at the beginning of time, then you are in clover. If not, then you have to buy an existing license. Prices get into the hundreds of millions of dollars, if you can find somebody who is willing to sell. Many licensees are in it primarily to speculate in the price of the license. Any interest to actually run a station is secondary. (I can't substantiate that statement. It goes to the state of mind of a corporation. However, with rising purchase prices for licenses, appreciation of license value represents an opportunity that corporations simply cannot ignore. If speculation in licenses makes them more money than actually running the stations then it is only natural that that will be their major interest.)

So, given this situation, monopolization of the market by a few mega-corporations is practically inevitable. Nobody else can afford to break in. It is profoundly undemocratic and all the worse since it is the public's resource. Congress and the FCC are supposed to protect the public interest but they have been reducing their restrictions and oversight. They are actually protecting the interests of the monopolists.

Now for my proposal. We can change this situation and restore the airwaves to the public, increasing diversity and promoting the free flow of ideas essential to a democracy. All it takes is a small change of emphasis and a huge change of attitude.

What would happen if the license were to actually expire at the end of its term? It would not be automatically renewed, in fact it wouldn't be renewed at all. Somebody else would get a chance to broadcast. Speculation in licenses would end. Since it would expire in a few years, its value would be greatly reduced. In fact, we might want to forbid the sale of a license. If a licensee didn't want it, they could turn it back to the FCC to be reassigned. There are lots of people who would want the chance to broadcast, if only they could get a license. The FCC says as much on their website. In fact, that is what drives the speculation in licenses.

When a license expires it will need to be reassigned. The fairest way to do that would be a lottery. The current FCC assumption that the applicant with the most money is to be favored** has no basis and is profoundly anti-democratic. Many small stations do just fine with quite modest budgets. Actually, with less money tied up in the license, there should be more money available for equipment and programming.

When a broadcaster gives up their license, they would still be eligible to try to get a new one for the same frequency, or a different one, on an equal basis with everybody else. They could sell their equipment to the next licensee, or equipment could be leased for the term of the license.

The public would have to get used to a constantly changing array of broadcast stations. Some might not like losing their favorite station, but certainly many people lose their favorite stations today. Stations are bought or just change their format and programs all the time. You can take it for granted that nothing lasts. At least with new stations coming on the air all the time with a variety of programming choices, we should have a good chance of finding something else to our liking. We will be forced to seek out new sources for news and entertainment, which will help nurture the free and diverse flow of information our democracy needs.

The transition will be difficult. Current owners will not be happy to give up their monopolies. A broadcaster who has huge amounts of money tied up in their license will not like to hear that it has no resale value. Perhaps there could be some ameliorative measures but it is not always in the public interest to protect speculators when their investments go bad. It is, after all, necessary to reform the system precisely because the public interest has been abused.

I have no illusion that this is a perfect system. Perhaps there are negative aspects I haven't thought of, or further refinements that will be needed to prevent abuse. Certainly it can use more study and contributions from many people. I do think that we need to think about how to restore democracy to our public airwaves and not just react to each new outrage as it occurs.

*see the FCC website: http://www.fcc.gov/mb/audio/getstat.html. "Potential applicants for radio and television services should be aware that frequencies for these services are always in heavy demand. For example, the Commission received approximately 30,000 inquiries from persons seeking to start radio broadcast stations last year. Where broadcast frequencies remain available, competing applications are routinely received. Thus, you are cautioned at the outset that the filing of an application does not guarantee that you will receive a broadcast station construction permit. You should also be aware that in many areas of the country, no frequencies may be available on which a new station could commence operating without causing interference to existing stations, which would violate FCC rules. For that reason, we do not recommend that you purchase any equipment before receiving a construction permit from the FCC."

**see the FCC website: http://wireless.fcc.gov/auctions/about/index.html where they assert that the willingness to pay more means that the license will be used more effectively - "The auction approach is intended to award the licenses to those who will use them most effectively." and on http://wireless.fcc.gov/auctions/about/auctiondesigns.html, "This provides information about the value of the licenses to all bidders and increases the likelihood that the licenses will be assigned to the bidders who value them the most."