What Is the Federal Communications Commission?
The Federal Communications Commission (FCC) is an independent U.S. government regulatory agency that oversees all interstate and international communications. The FCC maintains standards and consistency among ever-growing types of media and methods of communications while protecting the interests of both consumers and businesses. The agency is accountable to Congress.
The FCC's actions are watched closely by stock market followers because they affect companies along many different business lines. The FCC allocates cellular and wireless access, regulates media company mergers and acquisitions, protects intellectual property rights and regulates standards of content and distribution for all media companies operating in the United States.
Understanding the FCC
The Federal Communications Commission is headed by a chairman, who is one of five commissioners appointed by the president. Each commissioner is confirmed by the Senate and serves for a five-year term. To prevent conflicts of interest, commissioners cannot have a financial interest in any business regulated by the FCC. Working for the commissioners are more than 1,500 employees divided into numerous bureaus and offices that focus on different aspects of the commission's duties.
Tasked with enforcement of the Communications Act and FCC regulations, the commission's enforcement bureau conducts investigations, levies fines and initiates administrative judgments against violators. FCC fines can tally as high as the tens of millions of dollars for some violations, which can affect the value of some companies. The FCC's regulatory powers include the setting of manufacturing standards for communications equipment, decency standards in radio and television broadcasts, and ensuring competition. The commission includes an Office of Administrative Judges that hears disputes and issues decisions interpreting the agency's regulations.
The commission's rule-making procedures can have wide-ranging effects on the competitive balance in communication's markets. Mergers and acquisitions of communication companies require FCC approval, and while this approval process is designed to protect consumers and prevent monopolies, it occasionally creates uncertainty for companies and investors while FCC approval is under review. Additionally, some mergers or acquisitions do not receive approval, which can result in uncertainty for the companies involved.
The FCC has long wielded significant regulatory powers in regards to radio, television and telephone providers. In 2015, the commission extended its reach to include broadband internet service providers by classifying the companies as common carriers under Title II of the Communications Act. The commission's decision to list broadband providers as common carriers occurred via a 3-2 vote that was along party lines. This vote highlights the potential effect the political affiliation of appointed commissioners can have on the regulatory interpretation of the commission.