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

by on March 17, 2005

“[T]he Scarcity Rationale for regulating traditional broadcasting is no longer valid.”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.

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