Red Lion R.I.P.: FCC Declares the Scarcity Doctrine Dead

by on March 17, 2005 · 13 comments

“[T]he Scarcity Rationale for regulating traditional broadcasting is no longer valid.” So begins a stunning new white paper from the Federal Communications Commission. In the paper, “The Scarcity Rationale for Regulating Traditional Broadcasting: An Idea Whose Time Has Passed,” author John Beresford, an attorney with the FCC’s Media Bureau, lays out a devistating case against the Scarcity Rationale, which has governed spectrum & broadcast regulation in the United States for over seven decades.

Calling the Scarcity Rationale “outmoded” and “based on fundamental misunderstandings of physics and economics,” Beresford goes on to show why just about everything the FCC every justified on this basis was misguided and unjust. He points out what countless economists have concluded through the years, namely that:

(1) the scarcity the government complained of was “largely the result of decisions by government, not an unvoidable fact of nature.” In other words, the government’s licensing process created artificial scarcity.

(2) a system of exclusive rights would have ensured more efficient allocation of wireless resources.

(3) even if there ever was anything to the Scarcity Doctrine, there certainly isn’t today in our world of information abundance.


Beresford doesn’t shy away from pointing out that this also means that the Supreme Court’s key broadcast regulation decisions–NBC v. United States (1943) and, more importantly, Red Lion Broadcasting v. FCC (1969)–got it completely wrong too. By extension, most of the regulations promulgated under the NBC / Red Lion framework are also unjustifiable.

Beresford points out that this may affect the basis for regulating “indecency” on broadcast television and radio. But the government has know that for years, of course, and largely switched to the court’s Pacifica “pervasiveness” framework.

Beresford also points out that those who have long relied on the Scarcity Rationale have now given up on it and concocted other excuses for treating broadcasters like second class citizens in the eyes of the First Amendment. But he each of these rationales also fail, including the old “it’s the people’s airwaves” argument.

Anyway, read this paper. It is very important and provides another signal that Red Lion’s days are numbered.

  • http://infamyorpraise.blogspot.com Colin Samuels

    Not only would this position “affect the basis for regulating ‘indecency’ on broadcast television and radio” but it would utterly devastate the already shaky reasoning behind Alaska Senator Ted Stevens’ recent proposal to extend such regulations to cable and satellite programming. Whatever “scarcity” arguably exists in the broadcast spectrum certainly does not exist in the practically limitless cable and satellite realms. The opt-in nature of these newer channels should serve to defeat Stevens’ and others’ proposed regulation, but a change in the scarcity doctrine will ensure that defeat.

  • http://infamyorpraise.blogspot.com Colin Samuels

    Not only would this position “affect the basis for regulating ‘indecency’ on broadcast television and radio” but it would utterly devastate the already shaky reasoning behind Alaska Senator Ted Stevens’ recent proposal to extend such regulations to cable and satellite programming. Whatever “scarcity” arguably exists in the broadcast spectrum certainly does not exist in the practically limitless cable and satellite realms. The opt-in nature of these newer channels should serve to defeat Stevens’ and others’ proposed regulation, but a change in the scarcity doctrine will ensure that defeat.

  • http://mcgath.blogspot.com garym

    My immediate thought is the opposite of Colin Samuels’; that the FCC is moving away from the bandwidth scarcity doctrine in order to adopt rationales that allow the government to censor cable and satellite broadcasts.

  • http://mcgath.blogspot.com garym

    My immediate thought is the opposite of Colin Samuels’; that the FCC is moving away from the bandwidth scarcity doctrine in order to adopt rationales that allow the government to censor cable and satellite broadcasts.

  • http://infamyorpraise.blogspot.com Colin Samuels

    That may be the government’s new position, but I think the FCC’s is a reassessment of their traditional boundaries — protection of the public trust in a scarce resource. The government’s authority to regulate non-obscene communications must be grounded in something (here, dispensing access to and regulating a scarce public resource) to escape the Constitutional strictures of First Amendment doctrine. In other words, neither Congress’ legislative grant to an administrative agency like the FCC or the FCC’s exercise of its administrative rule-making authority can convey or assume restrictive power over speech contrary to that allowed by Constitution. I think garym’s concern is a valid one, as it reflects the current political climate, but largely-settled judicial doctrines concerning speech protections would seem to be on the side of freedom, not restriction, if applied as-is.

  • http://infamyorpraise.blogspot.com Colin Samuels

    That may be the government’s new position, but I think the FCC’s is a reassessment of their traditional boundaries — protection of the public trust in a scarce resource. The government’s authority to regulate non-obscene communications must be grounded in something (here, dispensing access to and regulating a scarce public resource) to escape the Constitutional strictures of First Amendment doctrine. In other words, neither Congress’ legislative grant to an administrative agency like the FCC or the FCC’s exercise of its administrative rule-making authority can convey or assume restrictive power over speech contrary to that allowed by Constitution. I think garym’s concern is a valid one, as it reflects the current political climate, but largely-settled judicial doctrines concerning speech protections would seem to be on the side of freedom, not restriction, if applied as-is.

  • http://anomalyuk.blogspot.com/ Andrew McGuinness

    Unfortunately, a government department’s reaction to finding its doctrine is dead is more likely to be to find a new doctrine than to stop regulating.

  • http://anomalyuk.blogspot.com/ Andrew McGuinness

    Unfortunately, a government department’s reaction to finding its doctrine is dead is more likely to be to find a new doctrine than to stop regulating.

  • http://infamyorpraise.blogspot.com Colin Samuels
  • http://infamyorpraise.blogspot.com Colin Samuels

    The link to the paper has been moved to http://hraunfoss.fcc.gov/edocs_public/attachmat

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  • OxfordjdlkKayla

    Can i use this blog as reference in my college report

    Regards

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