Reforming the FCC

A critical failing of the FCC is that, with limited exceptions, it rarely acts strategically. The agency’s tendency towards making reactive judgments operates both on the macro-level-in terms of what issues the FCC prioritizes-as well as on the micro-level-how the FCC conducts and manages its particular proceedings. With respect to the macro-level, the FCC generally does not set forth and commit to a clear agenda of what issues it will prioritize; indeed, when it does address specific issues, it generally seeks to preserve its discretion (to act in an ad hoc manner) by avoiding standards that constrain its policy choices.^[61] On the micro-level, the FCC tends to use NPRMs that set forth broad and vague lines of inquiries, giving parties very little guidance on what issues to address while preserving its discretion to proceed in any number of directions. This practice gives a decided advantage to “inside players,” who are sophisticated in reading tea leaves, skilled at keeping up with leaks of information, and able to follow the ex parte process, which has long been abused at the FCC.^[62]

Going forward, the FCC has the opportunity to set a strategic agenda and commit to procedures that ensure a high level of transparency. On the strategic level, the FCC needs to establish a pre-set agenda and begin to undertake overarching evaluations of broad policy such as maximizing the use of spectrum, the impact of market structure (on prices, innovation, and, in the media sector, the availability of local and diverse content), and the use of advanced technology by public safety agencies.^[63] All too often, the FCC approaches these topics in an isolated fashion-say, in the context of a merger review or a proceeding involving a band of spectrum-and is forced to invent its entire approach to an issue on the fly.^[64] In so doing, the agency improvises on a series of dimensions at once-whether to use a rulemaking or an adjudication to set or refine rules, how to emphasize back-end enforcement versus front-end restrictions, and whether to impose disclosure requirements.

The upshot of the FCC’s method of decision-making is that it often makes important judgments with limited data, an artificially constrained set of alternatives, and, in many cases, a penchant for delay.^[65] As is evidenced in a number of cases (including the ones discussed Part I), this approach produces suboptimal results and leaves both Commission staff and affected parties without a clear sense of the agency’s goals or direction.^[66] But the impact of the FCC’s process is more subtle and insidious than that. Notably, because the agency’s flawed processes undermine the ability of investors and entrepreneurs to predict how and when the agency will act, the FCC’s institutional processes discourage new firms from developing technologies that will depend on FCC decisions (say, as to spectrum regulation). Thus, whereas the poor results that flow from the FCC’s flawed processes are sometimes apparent and may be corrected at some point down the road (say, on judicial review), the lack of investment and innovation that ensues from an absence of predictable, expeditious, and reasoned decision-making invariably remains unaddressed and constitutes a loss to the economy and society as a whole.