ILECs Seek Computer/Data Access To Replicate FCC Consultant's BDS Analysis
USTelecom asked the FCC for access to certain computer programs and data so its ILEC members can replicate market analysis attached to a Further NPRM on revamping the special access framework for business data services (BDS). USTelecom said ILECs need the computer access and information by May 20 to fully participate in the agency's pleading cycle in which initial comments are due June 28 and replies July 26. The agency didn't comment Thursday. The FCC commissioned a BDS white paper by Boston University econometrician Marc Rysman, who studied industry data and found evidence the ILECs have market power and dominate facilities-based service in their regions (see 1605030001).
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USTelecom said ILEC economists had begun "peer-type reviews" of Rysman's white paper in an attempt to replicate the analysis. "To do this, we first need to prepare the dataset that was used to estimate Dr. Rysman’s various regression models," it said in a filing Wednesday in docket 05-25. "This involves constructing the variables used by those regressions and selecting the estimation sample for them."
But USTelecom said the white paper didn't contain all the information needed to quickly replicate the data. "Understandably, not every small decision made in the handling of these data can be documented in the report," USTelecom said. "Given the complexity of the White Paper's analysis and central purpose that the document has served (and will continue to serve) in shaping the course of this proceeding, parties must have a reasonable opportunity to replicate Dr. Rysman’s important work within the time frame provided for comment, and this cannot reasonably be done without access to certain underlying work."
"We therefore request access to the computer programs (e.g.,Stata.do files) that were used to prepare the estimation samples, and the order in which those programs were run," USTelecom said. "In particular, this program code should indicate which datasets were used to generate the samples, and in the process, whether Dr. Rysman and his staff relied upon ILEC and CLEC submissions of raw special access data and proprietary data sources that are not available to other researchers with access to the NORC-FCC Data Enclave" (NORC is the National Opinion Research Center, a University of Chicago institution). The telco group provided more details of the computer programs and information it seeks. "Without these additional components, it would take significantly more time to unpack and analyze the White Paper, which in turn would preclude us and the public from fully addressing the myriad other questions and requests for comment in the BDS FNPRM," it said.
USTelecom's request drew skepticism from Mark Cooper, Consumer Federation of America research director, who recently said ILEC special access "overcharges" had cost consumers $150 billion in macroeconomic losses since 2010 (see 1604050031). "You want everybody to have access to all the data," he told us Thursday while noting confidentiality safeguards in a protective order. "In theory, if this were an academic exercise, you would want to replicate the analysis. But this is not your level-playing-field academic exercise," he said, calling it a proceeding subject to litigation in which ILECs would try to pick apart Rysman's methods and conclusions: "I think this is an effort from the people who have a tremendous advantage to gain more of an advantage."
Cooper said ILECs should analyze the data and put forward their best "model" for the BDS market. "The FCC can be the arbiter of what makes sense when you have two competing models," he said. "If they want a proceeding where they have people raise their hands, swear to tell the truth and get cross-examined before an ALJ [administrative law judge], that would be an interesting approach. But I don’t think they’ll want that." Other ILEC critics didn't comment.
Phoenix Center Chief Economist George Ford criticized both the FCC and Rysman's paper. He said the FCC still "has no idea how to define or measure market power" in telecom markets. "In fact, its BDS Further Notice offers no apparent definition of market power, which is a significant deficiency for a regulatory regime allegedly based on the presence of market power," he said in a Tuesday blog post. "Since the Rysman Paper is nothing more than an attempt to compare prices in monopoly and competitive markets, it’s reasonable to assume that such a comparison is the basis for the Commission’s definition of market power. That is, to the Commission, market power implies something along the lines of the ability to charge a price above the competitive level. Here’s the problem -- the Rysman White Paper says nothing about market power," he said.