Friedman in the News

On February 27th, the New York Times posted an article regarding a more efficient use of the usable radio spectrum, of which is regulated by the Federal Communications Commission (FCC). In particular, this article discusses the part of the spectrum that is used for over-the-air television. Deemed the "beachfront property" of the spectrum, the over-the--air television spectrum is attractive based technical grounds and scarcity: its frequencies can travel long distance and permeate walls. Considering that 91% of American households are now using cable and satellite to receive their television broadcasts, it is argued that the over-the-air television spectrum could be allocated for better uses, other than for television. In particular, the FCC could potentially sell off this spectrum and raise "$100 billion for the government, and more importantly, create roughly $1 trillion worth of value to the users of the resulting services." These resulting services include improved wireless internet access, increased cellphone coverage, among other innovations.

This article appears to highlight Friedman's issue with public monopolies. In this case, the FCC has a monopoly on the use of radio spectrums, in which one requires a license in order to use certain frequencies. Aside from the issues of censorship and violation of free speech surrounding the FCC (35) as discussed in Capitalism and Freedom, this article primarily highlights the inefficiency of the FCC as a public monopoly. Rather than efficiently allocating the scarce over-the-air television frequencies, the FCC has kept its usage restricted to only 17% for the sake of preventing frequency interference. Friedman would argue that the FCC's role of setting technical standards and assigning spectrum could be more efficiently run through the use of the private market. Hence, as this article argues, the FCC should sell off this spectrum, reap the profits, and allow the private market to run this spectrum.

In greater sense, this article also brings into question the existence of the FCC. While its existence was initially justifiable on grounds of a technical monopoly, with the rise of the internet, satellite radio, and cable television, it appears there is no longer a need for government control of the the airwaves -- in tune with Friedman's argument against the Interstate Commerce Commission and its monopoly on railroads. Thus, Friedman would argue that the FCC should be abolished as a whole and the entirety of its technical role be left to the private market.