General

The Federal Communications Commission has been extremely active as of late, and this rush to regulate has not been without its headaches. Case in point: The Commission’s proceeding in relation to Special Access services (Business Data Services (BDS).

Specifically, the recent release of peer reviewed responses to a third-party economist study commissioned by the FCC for the Special Access proceeding. Inexplicably, the FCC decided to release these peer reviewed responses on the very day that comments were due on the FCC’s Special Access Notice of Proposed Rulemaking, even though these responses were in the agency’s possession since late April.
   
This surprise last minute dump of critical information is bad enough, but what makes the headache a potential migraine for interested parties is the fact that the peer review responses make clear that the data the FCC relied upon to propose new regulations on business services is flawed. As Hal Singer notes on his website:

As revealed in the peer review, the flaws in the underlying economic work that undergirds the proposed regulation of BDS (previously called “special access” services) are potentially fatal, rendering the analysis useless as the basis for the agency’s proposed regulations.

The fact that the FCC’s data is so severely flawed — even useless — is critical information that should have been made known to commenting parties before they submitted their comments. The FCC’s decision to sit on this data until after comments were filed represents a breach of trust between regulators and the public. Moving forward to adopt new regulations in light of now useless data would compound that breach and signal a potential political motive to achieve a certain policy goal. Here’s Singer again:

In seeming disregard to these significant criticisms, the FCC presses forward with its radical proposal, which would subject both telcos (incumbents) and facilities-based entrants (cable companies) to price controls. None of the economic statements released by the staff this week credibly addresses the critical errors reviewed here. Peer review is great in theory, but if doesn’t cause the Commission to alter its approach, then what good is it?

The simple solution for this mess is for the FCC to immediately extend the reply comment deadline for their BDS NPRM. This would give all interested parties and Congress an opportunity to review and provide input on the peer review study and the related economic statements. After all, billions in broadband investment dollars are potentially at stake. Let’s hope the FCC is listening.