On January 30, 2018, by a 3-2 vote, the FCC voted to establish a new Office of Economics and Analysis (“OEA”). This decision reflects the Chairman’s ideological emphasis on incorporating a greater degree of economic analysis into the agency decision-making process. Proponents say OEA will bolster the analytical component of FCC rulemaking, but detractors warn that if the Order is not correctly implemented, it will be used selectively or amount to little more than “bureaucratic reshuffling.”

Chairman Pai initially set forth his vision for the OEA in a speech at the Hudson Institute in April, 2017. In this speech, Chairman Pai cited the historic role of economists in shaping FCC policy, with particular emphasis on the pioneering work of Nobel laureate economist Ronald Coase in laying the groundwork for spectrum auctions. However, Pai expressed several concerns about the current state of economic analysis at the agency. In particular, the Chairman was concerned that (1) economists play an ad hoc role in the policymaking process without defined guiding principles; (2) economists are arbitrarily dispersed in silos across bureaus without coherent workflow and resource usage; (3) the FCC is insufficiently committed to cost-benefit analysis; and (4) the FCC does not effectively utilize the data it collects.

Office Composition:

According to the Order, OEA will consist of economists, attorneys, and data professionals from across the Commission. In particular, the FCC intends to reassign the majority of the FCC economists currently distributed across various bureaus and offices to staff OEA.

The OEA will have four divisions - Economic Analysis, Industry Analysis, Auctions, and Data. The purpose of each division is as follows:

Economic Analysis: This division will provide analytical and quantitative support as needed to bureaus and offices engaged in rulemakings, transactions, auctions, adjudications, and other matters.
Industry Analysis: This division will oversee development and implementation of economically-relevant data collections throughout the FCC, supporting bureaus and offices with respect to these data collections, and performing analyses and studies. This division will supplant the functions previously served by the Industry Analysis and Technology Division of the Wireline Competition Bureau (“WCB”).
Auctions Division: In consultation with the WCB and the Wireless Telecommunications Bureau (“WTB”), this division will serve as the Commission’s principal resource with regard to all auction design and implementation issues. OEA’s Auctions Division will collaborate with other Bureaus in developing and conducting spectrum and universal service auctions.
Data Division: This division will develop and implement best practices, processes, and standards for data management to meet the needs of agency staff who rely on data to inform policymaking and other core agency activities.

The Order also eliminates the FCC’s Office of Strategic Planning and Policy (“OSP”). Traditionally, the role of OSP was to work with agency leadership to develop the Commission’s long term plans and policy objectives, as well as to research emerging and non-traditional communications issues. The Order reallocates such functions and authority from OSP to OEA. In making this transition, the Commission hopes to bolster the role of economic analysis in FCC policy planning. In Chairman Pai’s speech last April, he lamented the fact that despite the considerable FCC action over the past several years, FCC economists have not submitted any white papers since 2012. Through the creation of OEA, the FCC purportedly seeks to position economic analysis at the center of FCC decision-making. At Commissioner O’Rielly’s request, the Order also includes a requirement that the OEA confirm it has reviewed each Commission rulemaking before its release so make sure that it is not skipped over.

Dissenting Voices:

Although a Republican majority approved of this order, and Chairman Pai circulated a press release citing to the mostly conservative writers and policy analysts that supported the proposal, Democratic Commissioners Clyburn and Rosenworcel both dissented and treated the OEA proposal with skepticism. Commissioner Clyburn alleged that the Pai FCC has been selectively utilizing economic analysis, eschewing such analysis where it does not fit the Chairman’s ideological agenda (e.g. net neutrality and business data service deregulation). In her view, OEA might amount to nothing more than a political vehicle for FCC leadership to manipulate to its own ends.

In her dissenting statement, Commissioner Rosenworcel indicated that while she was not opposed in principle to the idea of OEA, the Order was too vague about the details of implementation for her to be able to support it. In particular, she pointed out that the Order never specified how many people will staff OEA, whether the office will require hiring new personnel, and what specific functions will be continued (and/or discontinued) from preexisting FCC divisions.

It remains to be seen whether the OEA will be used to drive more data-driven decision-making at the FCC or if it is used for more political ends. However, all participants in Commission proceedings should consider the use of data and economic analysis in their advocacy and be mindful of the role that OEA will play in future rulemakings.

Crunching the Numbers: FCC to Create Office of Economics and Analysis