Over the next several months, the public and Congress will have an opportunity to comment on a torrent of proposed new regulations from the Federal Communications Commission, affecting the entire communications sector. This regulatory expansion is at odds with President Obama’s January promise to review all federal regulations and eliminate those no longer needed. But FCC rules approved during Obama’s administration — and prior administrations — are written without the slightest effort to quantify the total benefits or costs of those regulations.
The Telecommunications Act of 1996 requires the FCC to review all its rules every two years and eliminate those no longer necessary. Fifteen years later, the FCC has yet to review all its rules even once, much less once every two years.
Few FCC rules have ever been evaluated by what an economist might consider even an approximate cost-benefit analysis. Does even one FCC rule have benefits that demonstrably exceed costs? The answer is almost certainly yes. In fact, even the majority of FCC rules may be beneficial.
For instance, rules saying wireless transmitters can’t interfere with other wireless licensees have clear benefits. Why, then, is the FCC unwilling to document the rules with such benefits? Because many other rules might not have clear benefits. Such dubious rules might have to be eliminated, possibly including the new network neutrality rules.
Instead of describing in detail the benefits and costs of a rule, the FCC claims that it regulates in the “public interest,” as if it were possible to do so ignorant of whether it does more harm than good.
It is not too much to ask the FCC to publish the benefits and costs of each rule it proposes and writes. In fact, it is the law under the Regulatory Flexibility Act. Instead of writing detailed analyses of each and every proposed and final rule, the FCC writes a boilerplate “Initial Regulatory Flexibility Analysis” for collections of proposed rules and a “Final Regulatory Flexibility Analysis” for collections of final rules.
The FCC prepares these analyses with minimal effort, apparently copying the same boilerplate structure of the report from one rule to another, without providing a clear quantifiable estimate of the costs and benefits of the proposed or final rule. If the costs and benefits are not quantifiable, the FCC could provide detailed qualitative assessments.
If the FCC had consistently evaluated its previous rules, it would have a wealth of studies every two years of the costs and benefits of each of its rules. Without such a foundation, its new rules are recklessly uninformed.
One example: The FCC recently wrote new rules for data roaming, the contracts between wireless carriers for the exchange of data traffic. The new rules are similar to ones for voice roaming that were promulgated nearly 10 years ago.
If the FCC had been following the law, it would have published several reports on the benefits and costs of voice roaming, which could have been used to evaluate whether to expand to data roaming.
Instead, in the new data roaming rules, the FCC marshals no compelling evidence to support its contention that the benefits of the new rule exceed the costs. It just asks courts and the public to trust its judgment. America should insist on higher standards from our government.
Obama is right in calling for the benefits of regulations to exceed their costs. Before engaging in its ambitious campaign to expand substantially federal regulation in new directions, the FCC would be well advised to evaluate the rules it already has on the books.
Harold Furchtgott-Roth is a former FCC commissioner.
