FCC Should Conduct Economic Analysis, Report Says, Urging Congressional Action
The FCC didn't base recent regulatory efforts on economic reasoning and should be reined in by Congress, said a report Monday that called the commission "an agency in search of a mission" in the digital age. “We must get back…
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to the practice of basing regulations on thorough analysis rather than populist rhetoric,” said a statement from Mike Montgomery, executive director of CALinnovates, which funded the report. CALinnovates describes itself as a coalition of tech leaders, startups and entrepreneurs that seeks to be a bridge from the tech community to California and federal policymakers; its partners include AT&T. Previous FCCs made "wise" decisions informed by economic principles that deregulated long-distance phone services, enabled enhanced internet data services and spurred wireless growth, said the report by Gerard Faulhaber, a professor emeritus at the University of Pennsylvania Wharton School and law school, and Hal Singer, a senior fellow at George Washington University School of Public Policy. "The failure of the FCC to ground its regulations in economic reasoning in the last few years, however, has led to inefficient policies and proposals that threaten to eviscerate prior benefits," said their report. "The FCC has made no effort to subject its pending privacy or set-top-box proposals to cost-benefits analysis." They said the net neutrality order highlighted "the quagmire facing policymakers" as a federal appeals court deferred to the agency's policy expertise. "Given the FCC’s willingness to eschew econometric evidence and economic theory as it considers new regulations, the most direct way to re-inject economics into FCC policymaking is via a Congressional mandate for the agency to perform cost-benefit analysis, subject to OIRA [White House Office of Information and Regulatory Affairs] or judicial review," the report said. "There is no reason why the Department of Labor, the Environmental Protection Agency, the Consumer Financial Protection Bureau, and a host of other agencies should be required to perform cost-benefit analysis, while the FCC is free to embrace populism as its guiding principle." The FCC didn't comment. The commission's recent business data service proposal did include a detailed market study by consultant Marc Rysman, a Boston University econometrician, which also was subjected to peer reviews that were recently released.