Competition and Cost-Effectiveness Analysis should Drive FCC Policy

Competition and Cost-Effectiveness Analysis should Drive FCC Policy

Wallsten Suggests Framework for Reform in Comments to House Commerce Committee

Contact: Amy Smorodin
(202) 828-4405

January 31, 2014 – Promoting competition, entry, and experimentation with innovative business models should be the goal of an updated Telecommunications Act, states Technology Policy Institute’s Scott Wallsten in comments sent today to the U.S. House Energy and Commerce Committee in response to their recent white paper. In order to achieve these goals, Wallsten urges the Committee to require the Federal Communications Commission to apply competition analysis and cost-effectiveness analysis to its decision making. In addition, Wallsten advises Congress to continue to support schemes for efficient and flexible uses of spectrum.

In his comments, Wallsten, TPI Vice President for Research and Senior Fellow, identifies the FCC’s current “public interest” standard as “too vague for coherent and consistent policy decisions.” Instead, the Commission should apply a better-defined consumer welfare standard, which could make use of competition analysis in its decisions. Such an approach would have two advantages. “First, it becomes possible to construct a framework that allows the Commission to make coherent and consistent decisions,” Wallsten explains. “Second, such analysis explicitly makes it possible to think about and quantify how different technologies, products, and services compete with each other, reducing the ‘silo’ problem.”

For projects involving social goals that are not easily subjected to competition analysis, Wallsten urges that a cost-effectiveness analysis be performed, as it would yield two benefits. “First, it makes the costs explicit, allowing policymakers to decide if the social objective truly is worth the cost or if those resources might be better spent elsewhere. Second, it can be used to compare different, less costly, methods of achieving the same goals so as to achieve any given benefit at minimum cost.”

In regards to spectrum allocation, Wallsten explains, “The FCC should continue working to make as much spectrum as possible available, and Congress could aid the process by continuing to work on schemes that incentivize federal agencies into relinquishing their spectrum for higher-value uses.”

Wallsten’s comments are available on the TPI website.

The Technology Policy Institute

The Technology Policy Institute is a non-profit research and educational organization that focuses on the economics of innovation, technological change, and related regulation in the United States and around the world. More information is available at https://techpolicyinstitute.org/.

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