Long, long ago, in the dim distant recesses of public memory, which is to say about four months ago, the chattering classes were worried that the nation's communications regulator had run amok. The Canadian Radio-television & Telecommunications Commission had become a kind of provisional government of the air; it was ''policy by regulation,'' the chatterers huffed, and CRTC Chairman Andre Bureau was denounced from bully pulpits.

But ever since the federal government's ''the CBC if necessary but not necessarily the CBC'' second-guessing of the commission's judgment on the all- news TV license, the chatter has reversed. The CRTC's independence from government is now sacred and inviolate; let this cabinet kibitzing continue, after all, and we'll soon have ''regulation by policy.'' Bureau has meanwhile worked himself into a good sulk, and last weekend called on the government to give up its veto power over CRTC decisions. If it doesn't like the results, he said, it should fire the chairman and all the commissioners.

Clearly, some sort of reasonable compromise should be struck between these two extremes: the CRTC should stop setting communications policy, the cabinet should stop making regulatory decisions, and the government should fire all the commissioners. In other words, it's time to think seriously about abolishing the CRTC.

Just exactly why this will be necessary can be seen in two key CRTC decisions in the two major areas of its jurisidiction, telephone and television. The commission continues to block all applications to provide competition to the Telecom Canada monopoly in long-distance telephone service. Likewise, it refuses to license a new method of delivering television signals called ''pay-per-view,'' in which viewers pay directly for an individual program or bundle of programs, rather than a whole channel. In each case, it is standing in the way of essential reforms offering lower costs, greater consumer choice, and, in the latter example, the resolution of one or two outstanding national dilemmas.

In part, this can be explained by the well-known phenomenon of regulatory capture: regulation tends to be run in the interests of the regulated. It's not hard to see how this comes about: where the market might fairly deny a profitable rate of return to a particular firm, it would be manifestly unfair to regulate the firm out of business. Profits are thus assured.

Competition in long-distance would threaten Bell Canada's profitability. Competition from pay-per-view would threaten the profits of existing pay channels (or, as the CRTC puts it, ''there are divergent opinions as to the potential impact of the introduction of pay-per-view services upon existing discretionary services''). Neither can therefore be permitted.

But the real reason neither proposal has made any headway is that each in its own area would ultimately eliminate any need for a CRTC. Membership on the commission confers prestige, power, and a supply of steady cash. Endless rounds of hearings allow commissioners to demonstrate their command of complex policy questions, and to be flattered by the attention of hundreds of individuals, corporations, and interest groups. It should hardly be expected they would want to give all this up.

If long-distance telephone rates were governed by competition, as in the U.S., where deregulation has driven rates far below Canadian levels, then the CRTC would be left with nothing to do in the telephone business but approve periodic requests for offsetting higher local charges.

The threat posed by pay-per-view is more abstruse. It is first necessary to understand traditional broadcast television as a case of market failure. Consumers cannot purchase television programming directly, as they can other goods. Selling advertising time, the first attempt at a market solution to this problem, produces a bias toward the mass audience, since consumers cannot express the intensity of their preferences in programs, as they can in other markets, say for Faberge eggs, by the prices they are willing to pay. Moreover, it was long believed that ''spectrum scarcity'' limited the number of channels available. Hence the need for a regulatory agency, to decide who would broadcast and what programs they would show.

FRONTIERS ALTERED

But technology alters the frontier of markets. With the advent of cable and fibre optics, spectrum scarcity has receded. Addressable receivers and encoding devices now allow television programs to be paid for directly and individually. As it leaves its primitive stage of technology, television is becoming more like other media: we buy books by the title, rather than taking the publisher's entire line. The minority tastes that might once have justified a CRTC, namely for high-brow and Canadian content, can thus find expression via pay-per-view, without need of regulation; cultural sovereignty and consumer sovereignty, reconciled at last.

There is no Canadian Book & Magazine Commission (though the Canada Council comes close). With its own demise on screen, the CRTC has switched off the pay-per-view channel, just as it has hung up on long-distance competition. Time instead to pull the plug on the CRTC.