The FCC Has Untapped Powers. The Next Administration Needs to Use Them

It won’t take a new communications act to give any Biden nominees the power to go after telecom and media monopolies.

The nation’s concentration crisis is at a zenith in the modern era. State Attorneys General, Congress, the Federal Trade Commission, the Department of Justice, and private parties are investigating and prosecuting corporate power. The next administration should take it a step further by revitalizing the Federal Communications Commission (FCC) and use its dormant regulations to break up monopolies in the telecommunications industry.

Since the FCC was established in 1934, it’s been charged with structuring communications in the United States and ensuring that wireless and wired technologies are managed in the public interest. The FCC’s breadth of territory is astounding – radio, television, wire, satellite, and cable are all within the agency’s purview. As detailed in a report by the Center for Journalism and Liberty, the FCC once used its mandate to regulate abusive and exclusionary behavior by fostering a fair and competitive marketplace that serves the public interest. The commission’s enabling statute gave the agency strong substantive rulemaking authority to structure and regulate communications markets. Congress even gave the FCC the ability to allow mergers involving telecommunications companies that only “enhance[d] and promote[d], rather than eliminate or retard, competition” – a lower standard than the “substantially lessens competition” standard in the primary anti-merger statute, the Clayton Act.

As the report details, between 1934 to 1975, the FCC implemented some of the most progressive anti-monopoly policies in our nation’s history. The FCC required NBC, the then-dominant provider of radio communications, to divest significant parts of its operations to what is now ABC. The FCC prohibited broadcasters from owning more than one station in a geographic region and limited broadcasters to owning at most five stations nationally, a rule that partially continues today with the agency’s broadcast network rules.

The FCC prevented excessive market consolidation by imposing rules that promoted fair competition and inhibited a telecommunications provider from leveraging their dominance in one industry to gain a foothold in another. For example, the FCC prevented the cross-ownership of newspapers and broadcast stations. It also separated television networks from studios and production houses that produced their content. The agency prohibited networks from rebroadcasting the same program on multiple stations if the network retained a financial interest in the program. The FCC even sought to inhibit telecommunications companies from leveraging their access to private information about their customers for marketing purposes—something that seems more than a little relevant today in the age of social media giants that exist to collect every ounce of data on their users. Most famously, the FCC implemented the Fairness Doctrine, which mandated that broadcasters exposed the American public to contrasting viewpoints.

These policies have several goals. The first was to ensure a deconcentrated and competitive media sector. Second, by structurally limiting their size, the commission inhibited a handful of corporations’ ability to control the medium in any geographic location. Lastly, the commission sought to create an environment where the public was exposed to diverse content to meet the broad information needs of communities. The FCC believed its policies not only facilitated its legislative mandate but also implemented these policies to facilitate the spirit of the Sherman Act, the 1890 federal antitrust law designed to be a “comprehensive charter of economic freedom.” In its landmark 1941 Report on Chain Broadcasting, the FCC dedicated itself to “the purposes which the Sherman Act was designed to achieve.”

The 1980s were a turning point for the FCC. Slowly America’s anti-monopoly enforcement began to retreat as then-Yale Law Professor Robert Bork’s idea of promoting economic efficiency convinced scholars and the federal courts to reinterpret the antitrust laws. Bork’s ideas convinced courts to restrict the application of antitrust laws, overturn critical precedents, and incorporate economics into their analysis, increasing the legal hurdles to successful litigation.

Since adopting Bork’s philosophy, the FCC has retreated from its core mission. In 1996 Congress passed, and Bill Clinton signed a telecom law that codified many pro-monopoly philosophies. The 1996 statute substantially changed the 1934 Communications Act and imposed significant burdens on the regulation of American telecommunications. In line with the Borkian viewpoint, the FCC has repealed almost all of its structural regulations enacted during its first four decades. As a result, only a handful of corporations own and control significant aspects of America’s telecommunications markets. Research from IBIS World shows that the top three broadcast television stations have a total national market share of 40%. The top three companies have a combined market share of almost 70% in the cellular industry. The top five internet service providers have a market share of over 60%, and 80 million Americans have access to only one monopoly internet provider. As detailed in the chart below, the number of industries in telecommunications that competitive is almost non-existent.

Even worse, the FCC has taken affirmative steps to codify monopoly in the telecommunication sector. The FCC approved the merger between T-Mobile and Sprint, reducing national mobile carriers from four to three. It repealed net neutrality, which prevents internet service providers from discriminating against a user’s internet connection by either throttling data speeds or charging users extra to access all aspects of the internet. Worse still, the Trump-appointed FCC chairman, Ajit Pai, added jet fuel to the Borkian pro-monopoly agenda by forming the Office of Economics and Analytics in 2018, which adds further regulatory hurdles for the FCC’s to implement its statutory mandate.

Although monopolies blight the communications landscape, the wave of litigation against them is an encouraging sign. The antitrust report released on Tuesday by the House Subcommittee on Antitrust, Commercial and Administrative Law also signals a new anti-monopoly commitment by lawmakers…The FCC has the ability to restructure consolidated telecommunications markets, without Congressional intervention. The agency has routinely been granted by courts a powerful affirmation to reinterpret their controlling statute, as was shown in the numerous concerning net neutrality. A new administration ca nominate commissioners to enact new structural regulations to rein in and break up concentrated corporate. Fundamental change is possible.

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Daniel A. Hanley

Daniel A. Hanley is a Policy Analyst at the Open Markets Institute.