EX-FCC Economist Thomas Hazlett Comments on the Present Rulemaking
A note from Thomas Hazlett, a supporter of micro radio who used to work as
an economist at the FCC:
submitted by Jesse Walker
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I am enjoying the ongoing regulatory process for low power radio, and appreciate the FCC updates.  But you must be careful to distinguish between an open entry policy and the existence of a regulatory proceeding
to consider licensing new competitors.

1.  The opening of a rulemaking will often lead to no conclusion whatever. Traditionally, a Notice of Inquiry is issued, followed by a Notice of Proposed Rulemaking, followed by some number of Further Notices,
followed by a Report & Order (or multiple Report & Orders; some cable rate reg issues went up to the 13th Report & Order at least -- I lost track after that).

2.  When a rulemaking does lead to a conclusion, it may take many years. Look at the recent (1997) auction of DARS (satellite radio) licenses: the rulemaking begins with a "90" -- the allocation and assignment processes
took 7 years.  The 1997 auction of LMDS licenses began, officially, in 1992.  And these are in the era of auctions and liberalization, when the Commission boasts that it has eliminated red tape.  In a sense, they have
a point.  Cellular licenses weren't distributed until 1989; the rulemaking officially began in 1968.

3.  When the rulemaking determines that some licenses will be issued, the rules are often crafted such that very licenses will be made available or, conversely, very few applicants can economically justify operating under
such rules.  The DARS applicants were four in number; only two licenses were eventually issued.  UHF television was allocated a huge block of spectrum in 1952, but the frequency and power assignments were so inferior to VHF that many operators went bust trying to compete, discouraging still others from even trying.

4.  The incumbents will fight entry.  They will raise "technical" issues and devise "public interest" rationales for delaying or denying rivals permission to operate.

Moral of the story:  The political skirmishing is only just beginning. The Commission will decide the public interest based on the relative payoffs to Congress, on the one side, and the White House, on the other.  It will
be interesting to watch the struggle unfold, as the First Amendment claim of the potential entrants has only rarely been so obvious -- and photogenic.

Keep us posted.

Tom Hazlett

P.S.  One interesting aspect of the low power rulemaking is that the entry of DARS and the emergence of Internet radio may make change the issue considerably by the time an Order is issued.

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