How Congress can fix the FCC

The Federal Communications Commission (FCC) is one of the most important regulatory agencies in the U.S. government, and perhaps in the world. With statutory authority over the nation's communications apparatus, systems and devices, the FCC holds the power to approve or deny mergers; assess liability; levy fines and penalties; bring suit; award licenses and contracts; allocate spectrum; conduct hearings and inquiries; promulgate and interpret rules; establish standards and codes; and exercise a wide range of regulatory actions affecting television, radio, telephone, wireless, mobile, Internet, cable, satellite and international telecom services in the multibillion dollar communications and information technology sector.

Despite all of its power, the FCC is broken.

The agency raises millions of dollars for the U.S. Treasury through fees, fines and penalties, even though it has operated at less than full capacity for years. It is home to exceptionally capable and committed attorneys, economists, engineers and public servants who belie the term "bureaucrat." Although these officials implement the laws passed by Congress, they do not set the regulatory agenda, which is reserved exclusively for the chairman and commissioners — three Democrats and two Republicans.

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As these decision-makers deliberate on the fate of entire industries, a disquieting anti-business bias has become manifest. Under the beneficent cloak of consumer protection, the FCC has struck blow after blow against business. Beyond hedging on net neutrality, mergers and media ownership, there is growing concern that puffed-up enforcement, jurisdictional overreach, and the claw-back of well-settled rules are all antithetical to the needs, interests and well-being of the telecommunications, media and technology sector.

Today, most of the FCC's major decisions fall along a 3-2 party fault line, and allegations of improper process are now the rule, not the exception. What's more, it is clear that the FCC — intentionally or not — has alienated entire industries by virtue of its "thumb on the scale" decisions in favor of its own priorities. With billions of dollars in investment capital often hinging on a single ruling, business leaders have lost confidence that the commission will always act prudentially. While broadcasters have levied this charge most often, it has resonated across the panoply of communications providers.

Whenever talk turns to rewriting the Communications Act, FCC reform invariably arises — and rightfully so. Reform, however, is a mixed bag. First, the FCC desperately needs a bigger budget to tackle the growing communications agenda it is tasked with regulating. It already is doing more with less, and the agency simply needs greater human and financial resources to be effective. Of course with more money comes more oversight, accountability and responsibility. And in that regard, Congress should be prepared to do its job without the partisan animus it has shown the agency thus far. Haranguing oversight hearings and prodigious requests for documents will not accomplish the intended goal of making the agency work better.

But there are several important communications laws that could use some enlightened congressional intervention. For example, in an anti-business ruling sure to keep corporations at risk and class action litigants happy for many years, the FCC's July ruling on the Telephone Consumer Protection Act (TCPA) needs a reality check from Congress. The FCC left businesses hanging when it comes to the real-world interpretation and application of the TCPA relating to automatic telephone dialing systems, called parties and reassigned numbers. Its in-your-face message to business was that even a rule of reason will not insure compliance with the law. Surely, this is not what Congress intended when it passed the TCPA in 1991.

Separately, Congress should provide relief for soon-to-be disenfranchised low-power television (LPTV) station and translator owners, who could lose their spectrum, livelihood and the right to broadcast local news, religious, educational, sports and cultural programs following the FCC's broadcast incentive auction next year. Hundreds of religious and local low-power broadcasters have begged the FCC to exercise discretion to save a quintessential American institution, but the agency has wrung its hands in deference to Capitol Hill. It is not too late for Congress to correct a legislative wrong when it comes to preserving low-power TV and ensuring a fair auction.

And equally important, lawmakers should settle on legally sustainable rules for minority and small-business ownership of communications properties. Currently, the FCC encourages designated entities (DEs) to lease facilities in the wireless space as a way to compete in a high-dollar industry. But the FCC has foreclosed small and minority broadcasters from entering into joint sales agreements (JSAs) with bigger television stations, even though that would allow them to stay afloat in a capital-intensive business. This glaring inconsistency among the rules is troubling and needs correction.

Businesses need regulatory certainty to survive, thrive and innovate in competitive markets. That means mergers should not be held hostage to special interests seeking entitlements, annuities or bonuses from the transaction, nor take more than a year to review and approve. Companies in non-regulated industries need to know which rules will be enforced before being slapped with headline-grabbing fines out of left field. Bidding rules should not be changed after the game.

An ambitious list to be sure, but it has been quite some time since the leadership in Congress has been as capable, committed or conscious of fixing what ails the increasingly important FCC. These issues, and several more, deserve the focused attention and common sense that only Congress can bring to communications policy, even close to a high-stakes election year.

Hoffman is chairman of Business in the Public Interest and an adjunct professor at Georgetown University. He is a former committee counsel in the House of Representative and senior legal adviser to an FCC commissioner.