April 6, 2017
Discussing the importance of economic analysis in the development of regulation, FCC Chairman Ajit Pai said he is establishing the Office of Economics and Data (OED) at the Commission, in comments yesterday before the Hudson Institute in Washington, DC.
“This Office will combine economists and other data professionals from around the Commission. I envision it providing economic analysis for rulemakings, transactions, and auctions; managing the Commission’s data resources; and conducting longer-term research on ways to improve the Commission’s policies.,” Pai said.
As reasons for creating the OED, Pai described several problems in the FCC’s gathering of data and in its use of data. He noted that economists do not have a seat at the table in developing policy. Second, staff economists are currently “scattered about the agency” working separately in silos and are unable to coordinate their work. Third, the results of economists’ work, especially when it comes to cost/benefit analysis, is “poorly used.” He also criticized the data collection methods of the agency as expensive for industry and not always on target for the information the agency needs.
“On data collection, the FCC almost certainly collects too much information through reporting requirements that are duplicative or unnecessary,” Pai said. “This imposes a high cost. In fact, according to OMB, the paperwork costs to comply with the FCC’s rules are approximately $800 million per year—and that doesn’t include the 73 million hours each year that private sector employees spend filling out paperwork rather than building next-generation networks.”
As further proof of the need for the OED, Pai pointed to other government agencies, Now let’s put the FCC’s structure in context. Look across government at comparable agencies that have organization-wide groups dedicated to economic analysis, such as the Federal Trade Commission, the ustice Department’s Antitrust Division and the Securities and Exchange Commission
“Each office is integrated into policy-making across their agencies or divisions. We don’t do this at the FCC,” he said.
The new OED will have an emphasis on developing white papers to assist the commission its long range thinking on regulation. Pai noted that white papers have diminished in importance at the Commission in recent years. In fact, none have been produce since 2012, while nearly 90 papers have been written since 1980,
“I want to create a culture of economics at the FCC that supports big-picture thinking once again,” Pai said. “We intend to restore the tradition of staff economists spending time thinking about the future and publishing in the present influential white papers that keep us from being stuck in the past.”
Pai’s OED would give economists early input into the decision-making process. The OED would also be designed to better manage data, reports and analyses. Third, through the development of whitepapers, the OED would bring strategic, long-term thinking to the FCC’s processes.
“We need bright people who can focus on big-picture, out-of-the-box thinking. The FCC’s history shows how truly valuable this can be for the agency, and ultimately, for the American people,” he said. “To me, the FCC should always take economics seriously, because the alternative is regulation by anecdote.”