Abolish the FCC

On February 23, 1927, President Calvin Coolidge—on the advice of Commerce Secretary Herbert Hoover, America's first regulator of radio—signed the Radio Act. In policy folklore, this law salvaged the rational use of frequencies according to "public interest, convenience or necessity." As the U.S. Supreme Court later summarized it: "Before 1927, the allocation of frequencies was left entirely to the private sector, and the result was chaos. It quickly became apparent that…without government control, the medium would be of little use because of the cacaphony [sic] of competing voices."

Misspelling cacophony was not the only grievous error in Red Lion Broadcasting Co. v. FCC (1969). In 1927, mass-market electronic communications had already arisen under the common law rule of "first come, first served" and did not need federal micromanagement. What the new Federal Radio Commission later deemed "five years of orderly development" (1921–26) was disrupted by strategic regulatory dancing that preempted enforcement of such property rights. Sen. Clarence Dill (D–Wash.), author of the 1927 Radio Act, explained that the purpose "from the beginning…was to prevent private ownership of wave lengths or vested rights of any kind in the use of radio transmitting apparatus."

Not due to "chaos," but due to "orderly development." The aim was to keep authority centralized and political, sidestepping the free speech protections of the First Amendment.

After nearly a century, that ruse deserves to be ended. The National Association of Broadcasters led the lobbying for a commission of the airwaves, which predictably proved itself a cartelization device. Command-and-control regulation laid barriers blocking new technologies and business models, juicing incumbents' profits, and favoring the inside game in awarding licenses. FM radio, invented in the 1930s, was stymied for decades; cellular telephone networks, designed during World War II, were sandbagged by the spectrum allocation process until the 1980s. Countless other wireless innovations died stillborn.

But gradually, with observed social losses, the wise critiques of Ronald Coase, and entrants clamoring to compete, liberalization began to take hold. Property rights reemerged in the 1970s, 1980s, and 1990s. Access rights to use spectrum expanded in scope, permitting "flexible use." The explosion in rivalry is awesome to behold, because the idea that interference required strict government control was backward: Only with open markets could creativity gain flight and complicated conflicts be managed.

Today, rival mobile carriers determine how spectrum is best utilized; there is no cacophony. Literally millions of applications—never explicitly authorized but launched as competitive services over wireless platforms—now happily reside in your hand-held devices. Each service interferes with every other: Angry Birds bump your neighbor's Facebook posts that hip-check those Waze directions that might encroach on your TikTok cat-scares-dog video. No commission cares. The open market "chaos" is seamlessly remedied by spectrum rights holders.

The 1927 framework now powering the FCC does supply a rights registration system and a formal means to adjudicate disputes. Both are theoretically helpful but are hugely overpriced. The Commission's endemically long delays are atrociously wasteful. The resulting rulemaking processes offer an attractive nuisance—regulators trading favors with influential interests is too much fun and way too much profit. Stripping away federal discretion would cleanse and streamline these clerical functions. Using FCC "overlay" templates—already tried, tested, and sold to high bidders in numerous FCC auctions—defines broad swaths of liberal spectrum rights. Unoccupied spaces can then be filled and made productive, with existing usage rights grandfathered. These incumbents don't block progress but now cooperate with wireless innovation, taking cash to contribute spectrum to promising ventures.

It's taken too long to grasp the marvel of spectrum markets. Another century for the brainchild of Herbert Hoover seems needlessly inert. Let the invisible hand regulate the invisible resource.