On February 23, 1927, President Calvin Coolidge—on the advice of Commerce Secretary Herbert Hoover, America’s first radio regulator—signed the Radio Act. In political folklore, this law saved the rational use of frequencies based on “public interest, convenience or necessity”. As the US Supreme Court later summary this: “Prior to 1927, the allocation of frequencies was left entirely to the private sector, and the result was chaos. It quickly became apparent that… without government control, the environment would be of little use due to the cacophony (chic) of competing voices.”

Spelling mistakes cacophony was not the only serious mistake in Red Lion Broadcasting Co. v. FCC (1969). By 1927, mass-market electronic communications had already emerged under the common law first-come, first-served rule and needed no federal micromanagement. What the new Federal Radio Commission later considered “five years of orderly development” (1921–26) was disrupted by the strategic regulatory dance that prevented the enforcement of such property rights. Sen. Clarence Dill (D–Wash.), author of the Radio Act of 1927, explained that the purpose “from the beginning … was to prevent private ownership of wavelengths or rights of any kind in the use of radio transmitting apparatus “.

Not because of “chaos”, but because of “orderly development”. The goal was to maintain centralized and political authority, bypassing the First Amendment’s free speech protections.

After nearly a century, that ruse deserves to end. The National Association of Broadcasters led the lobby for a radio commission, which predictably turned out to be a cartelization device. Command and control regulation has put up barriers that block new technologies and business models, exploiting incumbents’ profits and favoring insider play in licensing. FM radio, invented in the 1930s, was blocked for decades; mobile phone networks, designed during the Second World War, were subjected to the spectrum allocation process by the 1980s. Countless other wireless innovations were stillborn.

But gradually, with the observed social losses, the wise criticism of Ronald Coase, and the participants clamoring to compete, liberalization began to take hold. Property rights re-emerged in the 1970s, 1980s and 1990s. Access rights for spectrum use were expanded, allowing for “flexible use”. The explosion of rivalry is great to watch because the idea that interference required strict government control was backwards: only with open markets could creativity take flight and complicated conflicts be managed.

Today, rival mobile operators determine how the spectrum is best used; there is no cacophony. Literally millions of apps – never explicitly licensed, but launched as competitive services on wireless platforms – now sit happily on your portable devices. Each service interferes with any other: Angry birds hit your neighbor’s Facebook posts checking those Waze directions that might affect your scaredy-cat-dog TikTok video. He doesn’t care about any commission. The “chaos” of the open market is smoothly remedied by spectrum rights holders.

The 1927 framework that now powers the FCC provides a system of registration of rights and a formal means of resolving disputes. Both are theoretically useful, but extremely expensive. The Commission’s endemically long delays are atrociously wasteful. The resulting regulatory processes provide an attractive nuisance – regulators trading favors with influential interests is too much fun and far too much profit. Relinquishing federal discretion would clean up and streamline these clerical functions. Using the FCC’s “overlapping” templates—already tried, tested, and sold to high bidders in numerous FCC auctions—defines a wide range of liberal spectrum rights. Vacant spaces can then be filled and made productive with existing usage rights. These incumbents aren’t blocking progress, but are now cooperating with wireless innovation, taking cash to contribute spectrum to promising projects.

It took too long to understand the wonder of spectrum markets. Another century for Herbert Hoover’s creation seems needlessly inert. Let the invisible hand regulate the invisible resource.

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