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The FCC would be eliminated and future available spectrum auctioned to the highest bidder under a proposal unveiled last week by a D.C. think tank with close ties to House Speaker Newt Gingrich (R-Ga.).

The plan from the conservative Progress & Freedom Foundation calls for replacing the independent Federal Communications Commission with a stripped-down Office of Communications operating out of the White House.

Assisting PFF on its report was a Who’s Who list of right-leaning telecom scholars, many of whom toiled previously at the FCC when the agency was under GOP rule in the 1980s. They argued that the FCC has too often thwarted competition by policing spectrum. The solution, argued PPF, is to privatize spectrum based on a “private property” model.

Peter Pitsch, the one-time chief of staff to Republican FCC chairman Dennis Patrick who now works at the Hudson Institute, claimed the FCC is “captured by the forces of the status quo” and needs to be replaced.

Ironically, the assault on Democratic chairman Reed Hundt’s agency comes just as Republicans on Capitol Hill are crafting telecommunications reform legislation giving the FCC broad new power. Bills in both the House and Senate would require the FCC to make as many as 80 new rules to ensure competition in telco, broadcast and cable TV markets.

Hundt is taking the think tank attack seriously; he recently powwowed with fellow FCC members to plot strategy for preserving the agency. Sources said that after the release of the report, Hundt also gave a pep talk to the heads of various FCC bureaus.

Under the PPF proposal, current holders of electromagnetic spectrum would be given their existing spectrum free, with no strings attached.

National Assn. of Broadcasters prexy Eddie Fritts said his group has “long been concerned about excessive government regulation” and “welcome(s) an in-depth review of FCC policies.” But Fritts said there will “always be a need for an independent governmental entity free from partisan politics” to arbitrate telecom industry disputes.