By Mark Jamison
American Enterprise Institute
It is no secret that partisan politics infiltrated and shook the Federal Communications Commission’s decision-making during the waning years of the Obama administration. The party line divide lowered the quality and constancy of FCC decisions, with the most prominent example being the 2015 economics-free decision on net neutrality (actually the decision was free of good economics, not of economics in general) that was quickly reversed once the commission had a Republican majority.
What made this rise in partisanship possible? There were many factors, including a willingness on the part of some members of Congress to involve themselves directly in FCC decision-making, such as the vote delay in 2016 that allowed lawmakers to pressure an FCC commissioner to vote along party lines. Lawmakers and then-FCC leadership were both complicit in this politicization of what is supposed to be an independent agency.
The rise of political considerations in FCC decisions, and the concomitant decline in substantive considerations, are also symptoms of a larger problem at the FCC — namely, an organizational structure that encourages a silo mentality, favors people with legal training over people schooled in analysis, and muffles expert voices. After becoming FCC chairman, Ajit Pai wasted no time addressing this problem. He led his colleagues in forming an Office of Economics and Analytics that raised the status and influence of the FCC’s economists. This was a good step, but more should be done.
How do we know that there has been a decline in rigorous analysis to support FCC decision-making?
The decline has been documented. As I wrote in an earlier blog about the decline of economic analysis:
Economists Gerald Faulhaber, Hal Singer, and Augustus Urschel trace the evidence. They note that the FCC’s in-house think tank — originally called the Office of Plans and Policy — produced 46 working papers from the early 1980s to 2012, laying the groundwork for world-leading regulatory policies. Then the working papers stopped. The agency also held numerous economic symposia in earlier times — averaging 16 per year from 2010 to 2014 — and then held just four in 2015.
In 2017, my AEI colleague Roslyn Layton also documented the traditional marginalization of subject matter experts and prominence of lawyers in the agency: The “FCC has a preponderance of attorneys — 600 actually, compared to 250 engineers and just 50 economists.”
What is the FCC’s current structure?
The main body of FCC staff is organized into industry silos. Staff in the media, wireless telecommunications, and wireline bureaus lead most of the policy and rulemaking work. This structure maps to legacy industry silos that are no longer relevant. As some colleagues and I said in a recent letter to FCC commissioners:
For generations, our media and telecommunications market participants have been regulated, for the most part, by separate FCC bureaus that remain too narrowly focused on the particular market segments to the exclusion of the broader marketplace. Meantime, nearly all of the markets subject to the FCC’s regulatory jurisdiction have evolved, generally in the direction of increased cross-platform convergence and competition. Concomitantly, economic policy issues surrounding them have grown in complexity and depth. Because companies offering essentially substitutable services are often regulated by different bureaus, and thus receive different treatment, the FCC’s legacy “silo structure” is no longer viable. Indeed, it undermines the agency’s performance of its mission.
What should be done?
There are several options for restructuring the FCC, but any successful reorganization must emphasize function over antiquated silos. As [MMTC Chairman Emeritus] David Honig wrote in a recent law review article: The FCC’s “structural organization in ‘silos’ that match up with technologies it regulates—media, wireline and wireless—should be replaced with an organization based on functions—policy, economics, licensing, grantmaking, and engineering.”
He articulated four advantages for this approach: (1) It would enhance efficiency by treating all technology platforms the same; (2) it would incorporate into the organizational structure the lines of communications that currently must be “created artificially through cross-bureau task forces or, worse yet, through random communications among bureaus; (3) “decision-making would automatically adjust to changes in technology”; and (4) it would allow subject matter experts to apply best practices across all industry segments.
Honig also explained that a function-based reorganization would improve the FCC’s abilities to carry out its “civil rights regulatory responsibilities: equal employment opportunity (EEO), equal transactional opportunity, equal procurement opportunity, and advertising nondiscrimination.” Embarrassingly, I had been completely unaware of the ways uneconomic decision-making at the FCC has suppressed minorities and others out of power. Honig chronicles the sad history.
How would raising the status and visibility of good analysis help?
Developing good analyses and displaying them in public make it harder for regulatory agencies to justify decisions with conjecture and to bias decisions toward favored constituencies. At least, this has been the experience with federal agencies (except independent agencies, such as the FCC) once they were required to conduct cost-benefit analyses of proposed decisions. (See research papers here and here.) Improving the effectiveness of quality analysis at the FCC should have similar impacts.
Mark Jamison is a visiting Fellow with the American Enterprise Institute’s Center for Internet, Communication, and Technology who serves as Director and Gunter Professor of the Public Utility Research Center at the University of Florida.
