What Is the Federal Communications Commission (FCC)?

The term Federal Communications Commission (FCC) refers to an independent U.S. government agency that oversees all interstate and international communications. The FCC maintains standards and consistency among types of media and methods of communication while protecting the interests of consumers and businesses. It allocates cellular and wireless access, regulates media company mergers and acquisitions (M&A), protects intellectual property rights, and regulates standards of content and distribution for all media companies operating in the United States. The agency is accountable to U.S. Congress and its actions are monitored closely by investors.

Key Takeaways

  • The FCC is an independent U.S. government agency that answers to the United States Congress.
  • The FCC oversees all interstate and international communications.
  • It also maintains standards and consistency among media types and communication methods while protecting the interests of consumers and businesses.
  • The agency is accountable to U.S. Congress and its actions are monitored closely by investors.
  • The FCC is headed by a chair, who is one of five commissioners appointed by the President.

Understanding the Federal Communications Commission (FCC)

As noted above, the Federal Communications Commission is an independent agency that answers to the U.S. government. It was established in 1934 as part of the Communications Act, which is a law regulating domestic and foreign wire and radio communications. The law was further expanded to include satellite, television, and broadband communications. The agency's reach extends across the 50 states, the District of Columbia, and every U.S. territory.

The FCC is considered the key authority in the United States that oversees communications law, regulation, and innovation in the technology sector. Its mission is to help advance the global communications industry through:

  • economic support to ensure there is enough competition in the communications sector
  • the revision of media regulations to allow new technologies to thrive
  • the promotion of competition, innovation, and capital investment in broadband networks
  • the strengthening of the national communication infrastructure

The agency is headed by a chair, who is one of five commissioners appointed by the president. Each commissioner is confirmed by the Senate and serves a five-year term. Nearly 1,500 employees work collectively work the commissioners. They are divided into numerous bureaus and offices that focus on different aspects of the commission's duties.

The FCC's actions affect public and private companies that engage in communications. Because of this, its decisions are closely monitored by stock market investors. That's because the regulations and resolutions adopted by the agency have a direct impact on corporate business lines and, therefore, people's investments.

Commissioners cannot have a financial interest in any business regulated by the FCC in order to prevent conflicts of interest.

Federal Communications Commission (FCC) Regulations

The agency'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 Law Judges that hear disputes and issues decisions interpreting the agency's regulations.

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.

Federal Communications Commission (FCC) Approvals

The FCC's rulemaking and regulation process is established through what's called the "notice and comment" process. The agency provides the general public with notice, allowing people to submit comments before any rules are established, amended, or developed. These procedures may have wide-ranging effects on the competitive balance in the communication market.

M&A activity of communications companies requires FCC approval. 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. Some don't actually receive approval, which can result in uncertainty for these companies.

The FCC has long wielded significant regulatory powers with radio, television, and telephone providers. In 2015, the commission extended its reach to include broadband internet service providers (ISPs) 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.

The Federal Communications Commission (FCC) Under President Biden

The agency is headed up by acting chair Jessica Rosenworcel, who was appointed by President Joe Biden on Jan. 21, 2021. Prior to her appointment, Rosenworcel worked in communications policy and public service. She worked as the United States Senate Committee on Commerce, Science, and Transportation as senior communications counsel and practiced communications law.

Under her leadership, the commission is expected to undertake several key initiatives. There is a great expectation the agency will take a different direction under the Biden administration than it did when Donald Trump was president. This includes:

  • Making changes to Section 230, which protects content providers and users from "liability for publishing, removing, or restricting access" to someone else's content
  • The advancement of 5G technology
  • Security throughout the country and providing access to broadband where in areas where it is lacking

Issues surrounding broadband privacy, the agency's transparency, industry mergers and ownership, and enforcement of penalties and regulations may also be addressed.

Net Neutrality

This is one of the major issues that the administration is expected to explore. The framework for the nation's net neutrality policies was laid out by the Obama administration. In effect, ISPs were required to give "equal and non-discriminatory access" to content that is available online. Put simply, the policies prohibited corporations from slowing down and blocking content from users. These policies were eliminated under the Trump administration in 2017.

Biden hinted that the agency could penalize providers who go against these policies by blocking or prioritizing content to "create artificial scarcity and raise consumer prices." There is a possibility that the commission may also ban data caps, fees, and rates through its rulemaking process.

2-2 Deadlock

As of June 2021, the commission remained deadlocked, following the resignation of Ajit Pai, who served as chair under then-President Donald Trump. Two Republicans and two Democrats serve as commissioners:

  • Brendan Carr is the senior Republican on the commission. Nominated by Trump, he was confirmed by the Senate in January 2019.
  • Nathan Simington, another Trump nominee and Republican, was confirmed by the Senate in 2020.
  • Jessica Rosenworcel, acting chair and Democrat, appointed by Biden
  • Geoffrey Starks, a Democrat, was nominated by Trump and confirmed in 2019

Lawmakers and advocacy groups continue to urge the president to nominate someone to fill the remaining open seat in order to allow rules to be established and advanced by the commission, especially those surrounding net neutrality. There's also increased pressure for the president to name a permanent chair for the FCC.

Federal Communication Commission (FCC) FAQs

Why Was the FCC Created?

The Federal Communications Commission was established in order to regulate interstate and international wire and radio communications. This mandate was expanded to include satellite, television, wireless, and broadband communications. The FCC governs in all 50 states, the District of Columbia, and every U.S. territory.

When Was the FCC Created?

The FCC was created in 1934 as part of the Communications Act of 1934.

What Does Net Neutrality Mean?

Net neutrality is a policy that was adopted by the Obama administration in 2015 that would prevent corporations, including internet service providers, from blocking content and slowing down access to the internet. As such, these companies were required to provide equal access to online content. These policies, though, were eliminated in 2017 under the Trump administration.

Who Controls the FCC?

The FCC is an independent U.S. government agency that answers to the United States Congress.

The Bottom Line

The Federal Communications Commission was established in 1934 as part of the Communications Act. It aims to serve the interests of corporations and consumers by regulating the actions of communications networks, including the access they provide, competition and innovation in the industry, and maintaining consistency throughout the media landscape and methods of communication. Although it is an independent agency, it answers to the government. Its decisions also influence the stock market, which is why investors choose to monitor its actions.