The Case for a Dynamic Scarcity Doctrine - Reviving the FCC's Licensing Power in Response to the Spectrum Crisis

This paper presents an argument for reviving the scarcity doctrine as a supplementary means of resolving the anticipated spectrum crisis. The scarcity doctrine, in short, holds that because the electromagnetic spectrum is a limited and valuable (or “scarce”) natural resource that rightfully belongs to the public, the federal government must regulate it in the public interest to ensure that it is always used for the greatest public good. Though it has long been neglected and misinterpreted, the scarcity doctrine has never been invalidated, and remains a foundational pillar of American communications law. If reborn in the modern context, the scarcity doctrine could be used to reestablish the federal government’s lawful authority to exercise broad discretion and flexibility in licensing the commercial use of electromagnetic spectrum to ensure that it continues to serve the greatest needs of the public as they evolve. The greatest public need is now for unrestrained growth in the use of wireless broadband, and it is in danger of not being met. Thus the scarcity doctrine is due for a second look.In order to ground the discussion in an appreciation of what is at stake, the paper begins with a section entitled “The Wireless Broadband Revolution,” which provides an overview of the numerous and profound socioeconomic advancements that America stands to realize in the near future through technological progress and expansion in the use of wireless broadband. Section II, “The Spectrum Crunch,” explains why achievement of these potential gains depends on the availability of ample spectrum for broadband use, and why America will soon face a shortage of such spectrum unless commercial broadcasters (targeted for reasons that are explained) vacate the airwaves in large numbers. Section II also addresses the government’s plan for overcoming the anticipated spectrum shortage through incentive auctions, and suggests that this method is inherently flawed (on account of the voluntary nature of the auctions and, more fundamentally, the lack of property rights and adequate free market dynamics in spectrum licensing) and could ultimately prove insufficient. Section II thereafter concludes with a brief indication of the paper’s thesis, i.e., that the scarcity doctrine could be used to add incentive to the incentive auctions by enhancing the criteria for broadcast licensing. As a thorough explanation of the scarcity doctrine is needed before the argument can be developed any further, section III, “Red Lion and the Scarcity Doctrine Rationale for Broadcast Regulation,” provides an in-depth history of the scarcity doctrine, showing that despite widespread criticism and brushes with extinction it remains the theoretical basis for broadcast spectrum licensing and continues to justify the government’s imposition of affirmative content obligations on broadcast programming. But section III also shows that, while it was never discarded, the scarcity doctrine gradually diminished over the years from its original proportions and, in the modern era, has been viewed as inseparable from broadcasting, with its guiding principle of concern for the public interest confined to a demand for quality television. In section IV, “The Digital Transition and the Scarcity Doctrine,” the popular argument for overturning the scarcity doctrine on account of the efficiency of digital broadcasting is discussed and evaluated. Though digital broadcasting has significant potential to alter or eliminate the scarcity doctrine as a legal justification for government regulation, it has not done so, because the efficiency gains possible through digital technology in theory have not translated into greater availability of broadcast spectrum in practice. The end of section IV completes the discussion of relevant history and resumes development of the paper’s thesis by citing several recent indications that broadcasters are not eager to participate in incentive auctions, reinforcing the argument that some kind of supplementary compulsion is needed. In the final section, “Restoring the Scarcity Doctrine,” the thesis is fully presented. In short, the scarcity doctrine was confined to broadcast regulation because that was the only meaningful context in which to apply it. With the advent of the wireless age, this is no longer true and the doctrine should be exhumed from its confinement and reinstated as a principal legal argument for government action to repurpose spectrum where it is most needed. Moreover, if exhumed from narrow confinement to broadcasting and rightfully re-applied to commercial licensing of the spectrum in general, the surge in demand for wireless usage would be properly recognized as exacerbating the overall scarcity of spectrum and thereby enhancing the government’s power to regulate it in pursuit of a scheme of allocation that adequately reflects the public’s highest priorities. I have dubbed this view of the scarcity doctrine “dynamic,” and have attempted to prove that this is the correct interpretation, as intended by the Communications Act of 1934 and the foundational jurisprudence. The paper concludes by suggesting that enhanced regulatory power could be used to increase broadcast licensing obligations, and that the additional burden on broadcasters from these new obligations could supply the necessary supplementary incentive for them to avail themselves of the incentive auctions.