Eisenach's Industry Ties Draw Criticism; Conservatives Supportive, Liberals Wary

Eisenach has deep Republican roots and strong deregulatory beliefs, and most contacts we interviewed view him through a predictable lens, with conservatives and some industry parties commenting favorably and liberals voicing concern. "He's a superb regulatory economist and I know he understands the need to roll back many FCC regulations that no longer are justified in light of the development of marketplace competition," emailed Free State Foundation President Randolph May, who has known Eisenach for years. "He's also open to considering all viewpoints but definitely brings a free market disposition to his work."

"Eisenach historically and habitually opposes safeguards for competition and the communications rights of real people, always prioritizing the views of incumbents and monopolists. How that will square with his new boss Donald Trump’s statements about undue media consolidation and the AT&T-Time Warner merger is anybody’s guess," emailed Free Press Policy Director Matt Wood.

Questions had arisen about Eisenach's reported status as the transition team's FCC point man (see 1611170041) after his industry advocacy for Verizon and others drew public notice, including in two high-profile New York Times pieces (here and here). In an earlier interview on CBS' 60 Minutes, correspondent Lesley Stahl told Trump his transition team was "filled with lobbyists." When Trump said, "That's the only people you have down there," Stahl replied, "You have lobbyists from Verizon, you have lobbyists from the oil gas industry, you have food lobby." Eisenach is not a registered lobbyist for Verizon but has done consulting work for the telco and others before the FCC, according to public records.

Sen. Elizabeth Warren, D-Mass., called Eisenach one of the "swamp monsters" on the Trump transition team that belied his promises to combat the "corrupt" political system controlled by lobbyists, donors and special interests. “Trump is not draining the swamp. Nope. He’s inviting the biggest, ugliest swamp monsters in the front door, and he’s turning them loose on our government and on our economy,” Warren said in a Senate floor speech last week, hammering Trump for having “elevated a slew of Wall Street bankers, industry insiders and special-interest lobbyists to run the show in his transition team.” She used Eisenach as her lead example: “The guy in charge of staffing the Federal Communications Commission was on Verizon’s payroll and has produced studies aimed at knee-capping the net neutrality rules.”

As the rumors surfaced that he might be kicked off the transition team in a purge, Eisenach generally declined comment, but did offer one rebuttal. "Not wanting to engage on this, but the facts are: Not a lobbyist; not consulting for Verizon; no consulting business before the FCC at all," he said in a Nov. 14 tweet.

Eisenach's own bios show he has Republican and conservative ties in Washington going back to 1981, when he worked in the Reagan administration's Office of Management and Budget, on a Presidential Task Force for Regulatory Relief. While pursuing a Ph.D. in economics at the University of Virginia (completed in 1985) he worked as a special adviser to the Federal Trade Commission's chairman (1983-85). He subsequently was chief of staff for the OMB director (1985-86); research director for the presidential campaign of former Gov. Pete du Pont, R-Del. (1986-88); a visiting fellow at the Heritage Foundation (1988-91); a senior adviser to Rep. Newt Gingrich, R-Ga. (1989-1993); president of the Progress and Freedom Foundation (1993-2003); chairman or senior executive of various consulting firms (2003-present); an FCC/agency personnel leader for the Romney Readiness Project in 2012; and currently he's also adjunct professor at George Mason University's Antonin Scalia Law School. In the 2015-16 cycle, he contributed to the campaigns of Trump and Marco Rubio, among others.

Along the way, Eisenach has consulted for various industry parties, including at the FCC for Verizon on special access and the Expanding Opportunities for Broadcasters Coalition (EOBC) on the spectrum incentive auction, and for Facebook on differential pricing for data services in India. He has an extensive paper trail, most recently at AEI (here), NERA (here) and GSMA (here), a global wireless group. Much of his most-recent AEI work has been on cybersecurity and broader cyber policy, which includes an ambitious paper called "An American Strategy for Cyberspace."

Eisenach is a critic of net neutrality regulation, which FCC imposed in reclassifying broadband under Title II of the Communications Act in 2015. In September 2014, he took clear aim at net neutrality, in testimony to the Senate Judiciary Committee that made three basic points: "First, net neutrality regulation cannot be justified on grounds of enhancing consumer welfare or protecting the public interest. Rather, it is best understood as an effort by one set of private interests to enrich itself by using the power of the state to obtain free services from another -- a classic example of what economists term 'rent seeking.' Second, the potential costs of net neutrality regulation are both sweeping and severe, and extend far beyond a simple transfer of wealth from one group to another. Third, legitimate policy concerns about the potential use of market power to disadvantage rivals or harm consumers can best be addressed through existing antitrust and consumer protection laws and regulations."

Wood said Eisenach's telecom consulting may help explain his net neutrality opposition, "despite the wild popularity of such rules and the nonpartisan support for them outside of the Beltway." The Republican FCC "could try to walk away from the rules. It could refuse to enforce them, try to wipe them off the books, or stop defending them on appeal. It will face stiff legal, political and popular opposition to any such tactics," Wood emailed. "Congress could also try to undo real Net Neutrality by passing a new law, or by sneaking an attack into a must-pass budget bill," he said: "They claim, whether in good faith or not, that their dispute is with the legal framework for the rules not the rules themselves. In the end, there is every reason to suspect Eisenach and people like him will try to repeal good rules and give in to monopolists' desires. Yet Trump's wildly unpredictable nature -- ranging from populism to horrific attacks on journalists and the First Amendment -- make it hard to predict what any of his appointees might do."

But others gave Eisenach high marks and welcomed his role on the Trump transition. “Jeff is one of the most substantive, respected, and influential economists and thought leaders in the communications space. He brings a valuable mix of entrepreneurial leadership, academic cred, and relevant government experience,” emailed Scott Cleland, chairman of NetCompetition, an ISP-backed e-forum.

Economist Hal Singer said he has "complete confidence that under Jeff's guidance there would be a return to fact-based analysis at the FCC, and a dispassionate weighing of the costs and benefits of particular interventions." Singer, of the George Washington Institute of Public Policy and a principal at Economists Inc., hailed Eisenach as a "friend, co-author and former business partner," and suggested Eisenach may play a key role. There have been some whispers Eisenach is a potential FCC chairman or commissioner.

"President-elect Trump said some things on the campaign that could be in tension with sound economics -- his embrace of tariffs, his threatened blocking of the AT&T-Time Warner merger without further inquiry, his threatened unwinding of the Comcast-NBCU merger," Singer said. "I am hopeful that this populist rhetoric, as well some other rhetoric, was designed merely to arouse the passions of certain voters. If it was just rhetoric, and if serious folks like Jeff take the reins, then the Trump era could re-infuse economics into FCC decision making and detoxify an telecom ecosystem that was badly polluted by [FCC Chairman] Tom Wheeler. If it was not rhetoric, and if the FCC continues to be marked by fits of populism, then I will criticize Trump’s FCC with the same passion I criticized Wheeler’s."

Several broadcast industry officials -- including Preston Padden, former Expanding Opportunities for Broadcasters Coalition executive director -- praised Eisenach, who has worked as an economist for the NAB and the coalition. For NAB, Eisenach prepared economic reports on retransmission consent and broadcast ownership, including "The Effects of Regulation on Economies of Scale and Scope in TV Broadcasting." The report was cited in many broadcaster filings seeking looser ownership regulations. “Current FCC regulations are limiting, and potential future regulations could further limit, the ability of broadcasters to realize beneficial economies of scale and scope, thereby lowering economic returns to broadcasting, depressing investment below the economically optimal level, significantly reducing the output of news programming, and threatening to shrink the size of the industry,” said Eisenach and co-author Kevin Caves.

Other economists also see him as supporting deregulation. He's “less concerned” about market power than many, one economist familiar with telecom issues said. Eisenach doesn't believe the government should intervene to keep a company from growing too large, but instead should allow market forces to work, said an economist. Eisenach “is generally more free market,” said another economist, Mark Fratrik of BIA/Kelsey, who worked with Eisenach.

Public Knowledge Senior Vice President Harold Feld was more critical. Eisenach has written "things that are fine for a think tank but simply untenable politically," Feld emailed. "For example, he wrote in 2012-13 that rural people didn't want or need broadband access, and that access to satellite 'solved' the rural broadband problem for those. If he repeats that at his confirmation hearing, I guarantee that Republican Senators from rural states will give him a chilly reception. The question is whether Eisenach has what it takes to go from a standard bearer for the conservative government-in-exile to the realpolitik of governance."

Feld also said Eisenach and Republicans should learn lessons from Michael Powell's FCC chairmanship. "He was determined to get rid of what he considered to be the outdated and counterproductive media ownership rules," Feld said. "He walked into a political firestorm. The backlash was incredible. It didn't matter that Powell acted from sincerely held belief and consistent theory, what mattered was that he ignored the real world politics of the situation. The Republican Congress promptly passed a law reversing the FCC's relaxation of the national ownership limit. It also kicked off the 'media reform' movement, which has acted very effectively to frustrate further relaxation of the media ownership rules."