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FCC’s Office of Economics and Analytics: The Remaining Need to Ensure Independence and Relevance

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On January the 9th, the FCC released a draft of its order creating a new “Office of Economics and Analytics” (OEA). While some view a separate economics office as a step toward strengthening the role of economics at the FCC (here, here and just recently here at TPI), I have had my doubts, expressed in a TPI post last September. I was concerned that the proposal for an “Office of Economics and Data” lacked mechanisms to ensure that decisions would actually take economics into account and that moving economists out of the bureaus would create a “Siberia risk” if this or future Commissions choose not to follow economic guidance. Moreover, the proposal did not include concrete policies regarding publication and ensuring independence that would help the FCC attract excellent economists and retain the excellent economists it has.

Does the new proposal help? It could, but I remain cautious. Let’s take a look at the four proposed divisions with OEA.

Data Division: The original “OED” name could have perpetuated the view that economists do not independently assess policies, but instead only supply numbers to those who already know what they want to do. Changing the name from “and Data” to “and Analytics” may be a good step away from that. Sometimes people need a number, however, and uniformity in the process of generating numbers can be a good thing.

Auction Division: Over the decades, auctions may be the most successful economic effort undertaken by the FCC, which raises the old question, “if it ain’t broke, why fix it?” Part of that success arose because the FCC combined economics leadership with people who can work out engineering, legislative, administrative details. The proposed OEA would include non-economists, but just as I’ve wondered how independent economists can be when supervised by non-economists, I also wonder how independent non-economists can be when supervised by economists.

Industry Analysis Division: I think this has existed on a somewhat stand-alone basis for many years, providing useful consistency in data collection the OEA proposal appropriately envisions. I believe the long-time economist who ran that operation was on the task force to develop OEA, leading me to think that this operation will not change very much. More important is that nothing in the proposal ensures that other bureaus will request and use these data, and economic analysis in general. This leads to the …

Economic Analysis Division:  The charge to this division is to “provide analytical and quantitative support as needed to Bureaus and Offices engaged in rulemakings, transactions, auctions, adjudications, and other matters.”  That’s great in theory, but the proposal includes no mechanisms to ensure that economic analysis would influence regulatory investigations and determinations. The proposal does not include instructions for how bureaus are to incorporate OEA analyses into their work. One way to induce bureau chiefs to incorporate economics analysis would be to require OEA input before the FCC can proceed with a notice or order. The lack of a mechanism for bureaus to at least consider the economic analysis may risk reducing the role of economics if economists currently “scattered throughout the agency” are moved from bureaus and into an office that has no influence.

The fine print includes an intriguing suggestion. It appears that OEA could hold rulemakings on economic matters “Insofar as authority is not delegated to any other Bureau or Office.” One might not want to hold one’s breath waiting for an OEA-issued Notice of Proposed Rulemaking. However, ability to issue Notices of Inquiry could yield benefits. For example, since I was FCC Chief Economist in 2014, I’ve wished that the FCC would issue a NOI on policy toward exclusive dealing in telecommunications and media markets—as that idea has been central to media mergers and net neutrality policy. If an OEA can bring that about, I’ll become a fan.