FCC Plans Votes on Economics Office, CAF II Auction, WEAs, Broadcast/Media Deregulation

A draft order would create an Office of Economics and Analytics (OEA) with four divisions focused on economic analysis, industry analysis, auctions and data. Draft orders and a public notice would resolve various issues and tee up the CAF II reverse auction for July 24. A draft order would set a Nov. 30, 2019, deadline for launching geo-targeted wireless emergency alerts (WEAs). A draft NPRM would, as expected, seek comment on allowing broadcasters to upload contracts to their online public file instead of filing them with the FCC, and a draft order would do away with provisions left over from the digital TV transition. The FCC didn't identify the draft enforcement item for standard law-enforcement reasons because it hasn't been adopted yet. None of the other commissioner offices commented on the drafts.

The OEA would seek to make better use of the agency's economists and data analysts, who are "sprinkled across the Commission," with their policy input too often "ad hoc or an afterthought," Pai said in a blog post. He noted he proposed in April to create the new office and established an internal working group on the issue. "After nine months of study and extensive interviews with several dozen experts both inside and outside the agency, the working group issued a report that included some concrete recommendations," he said. "The new OEA will at long last put economic analysis at the heart of Commission decision-marking." The 29-page report was prepared by a seven-member team led by Wayne Leighton, chief of the Office of Strategic Planning and Policy Analysis (OSPPA), and that included Jay Schwarz, Pai's wireline aide.

The OSPPA would be eliminated and its operations generally moved to the OEA, among other bureaucratic shifts. "The key objectives of this organizational change are to expand and deepen the use of economic analysis into Commission policy making, to enhance the development and use of auctions, and to implement consistent and effective agency-wide data practices and policies," said the draft order. "The Office will be charged with ensuring that economic analysis is deeply and consistently incorporated into the agency’s regular operations, and will support work across the FCC and throughout the decision-making process."

The Economics Analysis Division would work with staff across bureaus and offices "on rulemakings, adjudications, transaction reviews and related activities that require economic analysis," Pai said. He said the Industry Analysis Division "would collect and analyze key data sets that the agency relies on to understand market trends." He said the Auctions Division would consolidate competitive bidding operations from across the agency, even though "people tend to think about wireless spectrum" when FCC auctions are mentioned. The Data Division "would aim to ensure that data can be shared, compared, and analyzed across different bureaus" to better inform regulators' work, he wrote.

Consolidating the FCC’s economists into a single office would recognize that the industries the agency oversees are converging, said Larry Downes, senior fellow at the Georgetown Center for Business and Public Policy. The economics office would position the FCC to better evaluate those changes, Downes said. “That, in turn, should lead to more informed, efficient, and less political decision-making by the Commission on when and whether to intervene.” The proposal puts a more emphasis on economics and data analysis, and should lead to better cost-benefit analyses and better decision-making, said economist and former FCC Commissioner Harold Furchtgott-Roth. Establishing an economics office to provide a foundation for better FCC rules is a rare “feel-good government story,” he said. “It’s not going to be on the nightly news, it’s not going to have thousands of people protesting at the FCC, but it’s a very important development,” he said. Economists and others we contacted recently were split on whether the new office would improve FCC analysis (see 1712210032).

CAF II Auction

The CAF II auction of broadband-oriented subsides for fixed services is a "key part" of the FCC's strategy for closing the digital divide, Pai said. A draft public notice "would finalize the bidding procedures for this first-of-its-kind auction," he wrote. "This is the last significant hurdle before the Phase II auction can get underway." He noted two draft orders would address various remaining policy issues, including those in petitions to reconsider previous decisions. "We want to get these funds allocated efficiently and quickly to bring digital opportunity to rural America as soon as we can," he wrote.

The short-form application deadline for the auction would be March 30, with procedures to "ensure applicants are technically and financially qualified to participate," said the 103-page draft PN. It said the minimum geographic areas parties could bid on would be census block groups. Reserve prices would be set using the Connect America Cost Model to ensure subsidies are no larger than necessary, it said, noting caps also would be set per-location support amounts for extremely high-cost census blocks. A "simplified multi-round, descending clock auction" would be used: "As the clock descends, bidders will indicate whether they will bid to provide service to an area at a given performance tier and latency. Support will be assigned to no more than one bidder per area. The auction will end after the aggregate support amount of all bids is less than or equal to the total budget and there is no longer competition for support in any area." The total budget is a cumulative $1.98 billion over 10 years.

The FCC would decline to adjust broadband performance tier bid weights as Hughes Network Systems had petitioned. "We disagree with Hughes’ contention that low-latency, high-speed bids will always necessarily win," said a draft order and order on reconsideration. "Bids will be scored relative to the reserve price and therefore bids placed for lower speeds and high latency will have the opportunity to compete for support, but will have to be particularly cost-effective to compete with higher tier bids." The draft would modify "letter-of-credit rules to provide some additional relief" for auction winners, codify certain previously decided monthly usage allowance changes, and, in response to an Adtran petition, clarify latency performance testing requirements. It would decline requests to: give Pennsylvania bids preferences despite an extensive lobbying campaign by state entities; change stand-alone voice duties; change broadband deployment milestone rules on locations served; increase location flexibility (as sought by Verizon); and adopt an accelerated payment option for support recipients, among other denials.

WEAs

The 2019 deadline for geo-targeted WEAs that match the geographic area specified by the officials sending the alert to within a tenth of a mile "is both necessary and feasible," the agency said in the draft second report and order, saying the 36-month deadline that had been pushed by some commercial mobile service (CMS) providers lacked "the kind of precise and detailed justification necessary" to outweigh the public safety necessity of moving quickly. CTIA sought a 36-month deadline (see 1801080057). It said Tuesday the FCC "should adopt new rules that are technically feasible along an achievable timeline.” The FCC also said 22 months "is sufficient time" for CMS providers to do the software updates needed so WEA-capable mobile devices preserve alerts for at least 24 hours after the alert is received. In a sister second order on reconsideration, the agency proposes aligning the deadline for supporting alerts initiated in Spanish with the May 1, 2019, deadline for extending the length for WEA messages from 90 characters to 360.

In his blog post, Pai said the agency's 2016 WEA order requiring targeted alerts that approximate the area affected by an emergency (see 1609290060) "is meaningful progress [but] we can and must do even better." He said delivery of alerts to more granular areas will mean local officials have more confidence to use such alerts and the public will take them more seriously, with fewer people opting out of receiving them.

Media Deregulation

The January agenda includes two broadcast deregulation items that industry attorneys told us are expected to be noncontroversial. Current rules require broadcasters to file affiliation agreements, organizational documents and other contracts with the FCC, to be available to the public in the agency’s public reference room. A draft NPRM would seek comment on relaxing those requirements to allow broadcasters to make such items available in their online public file, according to the draft order. Under the proposed changes, broadcasters may even be able to just keep a list of such items in their public file, providing the actual documents on request. Such a change could save a lot of effort, broadcast attorneys and an FCC official told us. The current rule is “unnecessary now that the Commission has imposed online public file requirements," Pai blogged.

A draft order to get rid of rules for the DTV transition and for analog broadcasters doesn’t require the usual notice and comment periods because it targets obsolete regulations, said a fact sheet. “Consistent with the Chairman’s transparency policy, however, the Commission will voluntarily accept comments on the public draft, and the Commission will treat this proceeding as ‘permit-but-disclose,’” the fact sheet said. Since the DTV transition is over and there aren’t any full-power analog broadcasters, eliminating the rules will have little practical effect but will get rid of unneeded regulations, said Fletcher Heald broadcast attorney Frank Jazzo.