The FCC's Arbitrary and Capricious Obstruction of Deregulation

by

Seth L. Cooper *

[Below is a short summary of this latest FSF Perspectives. A PDF version of the complete Perspectives is here.]

On August 6, the U.S. Court of Appeals for the Tenth Circuit upheld the FCC's 2010 Qwest Phoenix MSA Order. The Phoenix Order threw up significant hurdles for wireline voice providers seeking relief from network forced-sharing mandates and other outdated legacy-era telephone regulations. The FCC's Order rejected a Qwest forbearance petition by invoking a new and previously unannounced framework for evaluating such petitions. That framework excluded wireless competition from its analysis.

The Tenth Circuit's decision approved the FCC's almost insurmountable procedural barriers to regulatory forbearance. With more than 31% of all households nationwide now wireless-only, wireless competition with wireline has become too obvious for the agency to continue to deny. That wireless competition should drive policy further toward free market solutions. But the Tenth Circuit's decision gave a shot in the arm to economically counterproductive regulations.

FCC Chairman Julius Genachowski called the Tenth Circuit's decision "a win for competition and smart government." When it comes to competition, that statement is hard to reconcile with the Qwest Phoenix MSA Order's pro-regulatory approach and its rejection of wireless as a competitor to wireline. As to smart government, the Chairman's statement hardly fits with the Tenth Circuit's understatement that the Order's "goalpost-moving does not reflect and optimal mode of administrative decisionmaking."

Unfortunately, the Tenth Circuit nevertheless accepted the FCC's standards-shifting and wireless-excluding maneuvers as a basis for rejecting regulatory forbearance. Bending over backwards to uphold agency power, the Tenth Circuit glossed over or explained away the FCC's arbitrary actions.

If arbitrary agency power is the ultimate winner in Qwest v. FCC, then the rule of law is the ultimate loser. If nothing else, the Tenth Circuit's highly deferential review of the FCC's arbitrary action lends support to FSF President Randolph May's argument that the actions of independent agencies such as the FCC should receive less deference upon review than those of executive branch agencies.

* Seth L. Cooper is a Research Fellow of the Free State Foundation, a non-partisan Section 501(c)(3) free market-oriented think tank located in Rockville, Maryland.

Read the complete Perspectives here.