Federal Communications Commission: Onerous Regulations and High Cost

February 28, 2013

The Federal Communications Commission (FCC) is the federal government's third most expensive agency. The compliance cost of the FCC's regulations coupled with a lack of transparency within the agency is cause for alarm, say Ryan Young and Christine Hall of the Competitive Enterprise Institute.

The FCC, which was established as an independent agency in 1934, initially took over regulation of telegraph and telephone communications but has since expanded to broadband, television and the Internet. It currently employs roughly 2,000 full-time equivalent employees and has a requested 2013 budget of $364.78 million.

  • The FCC costs $142 billion a year and is behind only the Department of Health and Human Services, with $184.8 billion in cost, and the Environmental Protection Agency, with $353 billion in cost.
  • Between 2000 and 2012, the FCC published 2,705 proposed rules, some of which were never formally proposed and many of which received minimal press coverage.
  • The fall 2012 Unified Agenda lists 86 proposed rules currently in some stage of the rulemaking process, seven of which would impose compliance costs greater than $100 million.

It is challenging to understand the full scope of the FCC's regulatory actions because information on the more than 25,000 specific regulatory restrictions it enforces is scattered among obscure sources. As new rules are passed, old rules are rarely deleted, which increases the FCC's total regulatory burden year after year.

  • Wireless spectrum and broadband regulations are the two biggest drivers of FCC compliance costs, which in 2005 were estimated to total $77 billion and $27 billion, respectively.
  • Many of the FCC's rules affect local governments and 76.6 percent of the 1,386 final FCC rules from 2002 to 2010 affect small businesses.

Controversy also surrounds the upcoming FCC auction of the wireless spectrum on which smartphones, tablets and other data-intensive devices operate. Critics suspect that the auction, which could raise tens of billions of dollars, might be rigged by the FCC for political reasons to purposefully limit the ability of Verizon and AT&T to grab large shares of the frequencies up for auction.

The FCC should be more forthcoming in its cost analyses, reevaluate old rules as new rules are enacted and support an independent agency in assessing the FCC's yearly activities.

Source: Ryan Young and Christine Hall, "FCC Is Third Most Expensive Agency of Federal Government," Competitive Enterprise Institute, February 21, 2013.

 

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