Putting Most FCC Economists Under a Single Office Is Working, OEA Chief Says

Moving most of the FCC’s economists under the Office of Economics and Analytics, a controversial step taken on a Republican 3-2 commissioner vote in 2018 (see 1801300026), has proven helpful to the commission, OEA Chief Giulia McHenry said at an FCBA Engineering and Technical Committee lunch on Thursday.

The FCC “created a much deeper group” of economists, which “can go really deep on various aspects very quickly,” McHenry said. OEA now has about 110 staffers, including 60 economists, as well as lawyers, statisticians, geographic information system specialists, broadband engineers and project managers, she said.

“It’s a diverse group -- probably the most interdisciplinary throughout the FCC” and “we end up supporting just about all the other bureaus and offices across the agency,” McHenry said. OEA's goal is “to inform policy, not make it,” she said. It reviews every notice of inquiry, NPRM and report and order before they circulate -- more than 700 items over the past five years, she said.

Creation of OEA was controversial, with Democrats Jessica Rosenworcel and Mignon Clyburn dissenting. Rosenworcel said she couldn’t vote to create the office because many of her basic questions about it were unanswered.

McHenry said OEA’s biggest request is that industry submit more detailed “data and evidence” in response to NOIs and NPRMs: “When we have to perform the cost-benefit analysis with limited information, we really end up making a large number of assumptions. … The more economic evidence you can provide to us the better, particularly cost information.”

Mary Lovejoy, new chief of OEA’s Auctions Division, said she hoped Congress will restore the FCC’s general auction authority, which expired in March. Granting piecemeal authority for different bands is probably less efficient, she added. “Auctions are orderly, fair and transparent,” she said: They have added billions of dollars to the Treasury, “prevent windfalls and gaming” and “ensure that licenses are awarded to those that value them the most highly.”

General auction authority would facilitate the FCC doing long-term spectrum planning, Lovejoy said. Over the past 30 years, the FCC has completed more than 100 auctions for spectrum or broadcast construction permits, auctioned more than 140,000 licenses and permits, and raised $233 billion for the U.S. Treasury, she said.

The question Lovejoy said she is asked repeatedly is, “Well, you guys don’t have any authority. Are you just sitting around twiddling your thumbs?” In fact, the division is busy working on a proposed 5G Fund and a push to modernize the FCC’s application and bidding systems, she said. “We also have a lot of post-auction clean-up ... that we do” she said.

OEA’s Economic Analysis Division handles the cost-benefit analysis of commission rules, said division Chief Emily Talaga. It works with the bureaus or offices “to identify the problem that we’re trying to solve,” she said. The division asks, “what is this rulemaking for?” she said. Once the problem is clear, “we start looking at data to measure the likely impacts,” she said: “It’s going to cost something, most likely, and it certainly should have a benefit, or we wouldn’t be doing it.” OEA writes the “narrative,” explaining the costs versus benefits, or works with another part of the agency on that, she said.

When the FCC must act, for example, implementing a law, the division instead develops a “cost-effectiveness analysis,” Talaga said. That analysis doesn’t look at benefits “because those are assumed,” but at whether the FCC’s proposed action is “cost-effective,” she said. The division relies on data filed in the record, public data sources and “experiences from comparable rulemakings,” she said. When it has time, the division tries to include a draft analysis in the rulemaking, allowing industry to comment, she said. Specific figures help, but just “saying 'our measure of the costs is too low' is not as helpful,” she said.

Implementation of the FCC’s broadband data collection and of the broadband map has dominated the Data Division's work the past three years, said Chief Chelsea Fallon. The division has “learned a lot of lessons” and been able to work on new procedures that can be applied to other information collections in the future, she said.