FCC Economics Office Approved 3-2

Democratic Commissioners Mignon Clyburn and Jessica Rosenworcel dissented Tuesday on an order creating a new Office of Economics and Analytics (OEA) within the FCC, which was approved 3-2 (see 1801230066). Commissioner Mike O’Rielly said the order was strengthened since it was circulated to ensure the office plays a major role in policy formation. Officials told reporters after the meeting the office likely would have under 100 staffers.

Chairman Ajit Pai agreed to changes requiring OEA to “prepare and review a rigorous, economically grounded cost-benefit analysis for all rulemakings deemed to have an annual effect on the economy of $100 million or more,” O’Rielly said. Now, OEA, like the Office of General Counsel, will confirm it has reviewed each rulemaking to ensure it's “complete” before it's released, he said. "These reforms will give the new office greater involvement in the drafting, editing and finalizing of the commission’s rules."

The office "will use existing staff resources by bringing into one office FCC economists, attorneys, and data professionals who work on economic analysis, data policy and management, and research,” said a news release. “In support of and in coordination with other FCC bureaus and offices, this new office will provide economic analysis for rulemakings, transactions, adjudications, and other Commission actions.”

With the creation of the new office, “one might conclude that the commission is laser-focused on integrating neutral economic analysis into the work of this agency,” Clyburn said. “But what the current administration is actually doing is putting in place a mechanism to justify its own interests, while disregarding any analysis that runs counter to their views.” Where was the “balanced, detailed economic analysis on the impact to edge providers, small businesses and consumers when the FCC majority gutted net neutrality protections last month?” Clyburn asked. “What about the analysis the FCC majority relied on, when they deregulated the $45 billion business data services market?”

Rosenworcel said she had to dissent after she couldn’t get answers on basic questions. How many staffers will the office have? she asked. “No one will answer.” Another unanswered question, she said: “Will we be hiring new experts for this office or simply relying on moving around those we have?” Rosenworcel said after the meeting that despite asking repeatedly, she hadn't been told the office would have about 100 staffers.

The agency needs more transparency in how it uses economic data, Rosenworcel said. “We need to be honest about how much of the economic data presented to the FCC is advocacy,” she said. “We want to avoid the risk of relying on numbers masquerading as fact when they simply add up to an effort to champion a desired outcome.”

Some argue renewed commitment to cost-benefit analysis is “somehow an attack on the public interest standard set forth in the Communications Act,” said Pai. “But thoughtful cost-benefit analysis has historically been a bipartisan tradition.” A Monday release had supportive comments.

“Today’s order might be the most important 2-1/2-page decision the FCC has issued,” said Commissioner Brendan Carr.

“Great point by @JRosenworcel especially b/c Big Mobile has the $$$ to hire brand name economists to justify anything; indeed, hard for consumer groups to even find a former @FCC chief economist not conflicted out on ISP contract work,” tweeted Michael Calabrese, director of the Wireless Future Program at New America.

Meeting Notes

Commissioners voted unanimously for an NPRM seeking comment on doing away with rules requiring hard copy filings of broadcaster contracts and documents such as articles of incorporation, as expected (see 1801240038). Some FCC rules don’t require much explanation, Commissioner Mignon Clyburn said: “This is one of them.” Broadcaster public files will provide sufficient access to the public for this sort of information, she said. The rule change gets rid of rules dating from 1930 that have not “aged gracefully,” Chairman Ajit Pai said. The NPRM tentatively concludes the paper filing requirement for such documents should be eliminated, and broadcasters instead could keep copies or lists of the required documents in their online public files, Media Bureau staff said. International stations don’t have public files, but would have to make the documents available to the FCC on request under the proposal.

Commissioner Jessica Rosenworcel again called for scheduling a new spectrum auction (see 1801240025). "Other nations are speeding ahead with plans for auctioning airwaves for the next generation of wireless services," she said in her statement on Connect America Fund Phase II auction items (see 1801300032). "All we have now is a blitz of bands being discussed in regulatory proceedings. If we want to lead in 5G we need to take action -- and not the misguided effort to nationalize networks recently leaked to the press -- but real action. ... We can’t rest on our laurels with the universal service auction." Chairman Ajit Pai and aides say the FCC can't hold a spectrum auction because it can't deposit upfront payments into a bank due to legal restrictions, urging a congressional fix (see 1801160034). Asked about that hurdle, Rosenworcel told reporters afterward the FCC was able to hold the 600 MHz incentive auction despite the complication. The FCC "found a way" then and should find a way now, she said. It's "imperative" the FCC move ahead, as the reason for not doing so is "ridiculous," she said. A Pai spokeswoman said: "As we’ve previously indicated, the Federal Reserve Bank that agreed to hold the upfront payments for the incentive auction has made clear to us that was a one-time arrangement, and it will not do so again."

The FCC proposed fining DataConnex $18.7 million for apparently violating rules in the USF Rural Health Care (RHC) Program. Commissioners voted 5-0 to adopt a notice of apparent liability after an Enforcement Bureau investigation. The provider "is charged with violating the Communications Act, the program’s competitive bidding rules, and using forged, false, misleading, and unsubstantiated documents to improperly seek funding," said a release. "DataConnex’s apparent financial relationship with a consultant hired by rural health care providers to help select a service provider undermined the competitive bidding process." The FCC said DataConnex paid more than $220,000 to Harrison & Howard Advisors, under common ownership with consultant Healthcare Connect United. "DataConnex and Healthcare Connect United apparently developed coordinated plans and strategies targeting rural health care providers, and undermined the basic fairness required of competitive bidding," the release said. "DataConnex apparently encouraged rural health care providers to retain Healthcare Connect United as their consultant prior to the initiation of the competitive bidding process. In many instances, after Healthcare Connect United was retained to help manage the bid process, DataConnex was awarded program contracts." Rural health care providers weren't aware of the relationship, the FCC said. Chairman Ajit Pai said "this conduct deserves a stiff penalty." The case highlights the need to review the RHC program, he said, noting a December NPRM on "ways we can stop waste, fraud, and abuse" (see 1712140054). "This is especially critical because the program is hitting its current funding cap." DataConnex couldn't be reached for comment.