Case Studies in Abandoned Empiricism and the Lack of Peer Review at the Federal Communications Commission

Abstract

In far too many instances, the Federal Communications Commission ('FCC') engages in results-driven decision making that accrues political dividends at the expense of the public interest. Remarkably, the Commission has used questionable and unverifiable statistics to confirm both the need for greater regulation, but also its abandonment. In the former, a former Chairman of the FCC insisted that data, not even compiled by Commission staff, proved that the cable television market had become so concentrated as to meet a Congressionally legislated trigger for heightened regulatory scrutiny. But in the latter, the FCC has used its statistics to support the conclusion that such ample facilities-based competition exists in broadcast, broadband and wireless markets that the Commission can further reduce ownership caps, approve multi-billion dollar, market concentrating mergers, and claim that the United States continues to benefit from best in class access to telecommunications services. In far too few instances, normal governmental checks and balances do not detect and reverse instances where the FCC has deliberately or inadvertently failed to compile a credible record. Many reviewing courts gladly defer to the FCC’s 'expertise' rather than appear to second guess, or to legislate from the bench in highly technical matters. One court accepted the FCC’s arguments that data about commercial ventures’ decisions not to provide broadband service in specific localities constituted a business trade secret qualifying from protection from public disclosure instead of identifying areas of market failure requiring heightened scrutiny in view of the legislative goal of achieving universal access to basic and advanced telecommunications services. Too often, the FCC reaches policy conclusions based on statistical interpretations that do not make sense, and do not have corroboration through peer review. For example, the FCC first concluded that per channel, 'ala carte' access to cable television programming would not save consumers’ money as an alternative to having to acquire a bundle of channels. However, the Commission quickly subsequently reversed itself with limited explanation for its change in findings. The Commission also erected a media diversity index to support relaxation of a cap on media ownership that a reviewing court rejected based on its lack of supporting evidence. Only after a stinging judicial rebuke did the FCC think to subject its statistical analysis and modeling to external review from unaffiliated experts, rather than simply rely on the research and findings sponsored by stakeholders with a financial interest in the outcome of the Commission’s decision. This paper will identify several instances where the FCC could have used empirical research and peer review to achieve a true sense of the marketplace. The paper will suggest ways the Commission could have avoided judicial reversal and public ridicule if it had embraced accepted social scientific practices, including peer review.

Keywords: peer review, telecommunications policy, Federal Communications Commission, regulation

JEL Classification: K23, L50, L96