Mark Jamison

[Commentary] As Congress is considering whether to overrule the Federal Communications Commission’s net neutrality vote, to write a new Communications Act, or both, it would be good to review what leading economic research has said about the issues.

[Commentary] For all of the good intentions of the Federal Communications Commission, state utility regulators, and Lifeline advocates, numerous academic studies have demonstrated that the program is ineffective. The program has also been the victim of considerable fraud. What can be done? One solution may lie in the technology that made bitcoin possible: blockchain. Here’s how this might work for Lifeline.

[Commentary] Examples of the political divide in the US abound. But how the media conducts its business in this country should also be partly blamed for the political rift. The problem isn't that journalists have opinions, but rather that the standard media business models – daily news for traditional media and talk radio like Rush Limbaugh's and Sean Hannity's programs – drive some media to the left and others to the right, leading large segments of their respective audiences to become caught in media bubbles. What is needed are media businesses that break out of the bubbles, employ contributors, involve consumers of different mindsets and make the consumers, not drama, central to the action.

[Mark Jamison is the Gunter Professor of the Public Utility Research Center at the University of Florida]

[Commentary] Federal Communications Commission Chairman Ajit Pai recently announced that he is forming the Office of Economics and Data (OED) at the FCC. This is a good first step. But what we need is a change that makes it nearly impossible for the agency to return to the situation of the past few years, where letters from senators and videos from the White House were the primary sources of economic analysis. This will require a deeper structural change.

To accomplish this, the commission will need to abolish its industry silos — the wireline, wireless and media bureaus — so that turf wars cannot crowd out economic work. It would also be valuable to establish a research fund so that young economists and engineers are excited to begin their careers at the agency and hopefully spend significant time there, perhaps their entire careers. Chairman Pai’s initiative and the deeper changes I identified are not permanent cures for the problems that plague the agency — bad leadership can destroy even the best organizations — but perhaps we can get the FCC back to being a world leader in rigorous thought. Pai has given the agency a start.

[Mark Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida]

[Commentary] Federal Communications Commission Chairman Ajit Pai recently announced that he is forming the Office of Economics and Data (OED) at the FCC. This is a good first step. But what we need is a change that makes it nearly impossible for the agency to return to the situation of the past few years, where letters from senators and videos from the White House were the primary sources of economic analysis. This will require a deeper structural change.

To accomplish this, the commission will need to abolish its industry silos — the wireline, wireless and media bureaus — so that turf wars cannot crowd out economic work. It would also be valuable to establish a research fund so that young economists and engineers are excited to begin their careers at the agency and hopefully spend significant time there, perhaps their entire careers. Chairman Pai’s initiative and the deeper changes I identified are not permanent cures for the problems that plague the agency — bad leadership can destroy even the best organizations — but perhaps we can get the FCC back to being a world leader in rigorous thought. Pai has given the agency a start.

[Mark Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida]

[Commentary] Now that the White House, Congress, and the Federal Communications Commission (FCC) are getting serious about rural broadband deployment — in contrast with the past eight years — it is time to develop strategies that actually make positive impacts.

Policies for rural broadband have seemed random the past eight years: billions of stimulus dollars were thrown at unneeded and failed projects, the FCC expanded failing systems like Lifeline, the Obama White House and the FCC moved to limit the profitability of rural broadband, and the FCC chose an arbitrary definition for broadband. These failed policies wasted billions of dollars and did little to help rural communities gain broadband connectivity. It is time to let markets lead the way.

Localities often have zoning, permitting, and other regulations that make broadband deployment costly, and procedures vary from location to location. This multiplies the complexity of planning and permitting and adds costs. There is a need to streamline permitting processes, promote nondiscriminatory access to conduits and poles, facilitate infrastructure sharing, and eliminate unnecessary post-construction cleanup requirements.

Restrictions on how broadband providers can generate revenue constrain broadband expansion by limiting profitability. The FCC’s net neutrality restrictions are an example. Broadband service providers in targeted rural areas could also be allowed to charge content providers for access to customers, perhaps making it profitable to provide broadband access without a subsidy.

[Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida. He was also part of President Trump’s FCC Transition Team]

[Commentary] Fake news has become a cause célèbre and fighting it has attracted some powerful players. Facebook just launched its “disputed” tag for possible fake news, and Google has promised to also go on the attack. But can current tech firms really stop or even slow down fake news? Probably not. Frankly, these firms’ business models enable the economic engine that powers fake news, and the demand for a social media site’s version of the truth is probably quite low.

The key to combating fake news probably lies in creating an economic engine that is more powerful than the one that drives fake news. Since costs are already minimal, the engine would have to give consumers more value. Sounds like we need a disruptive innovation, which is what new tech businesses are all about.

[Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida. He is also on the FCC Transition Team for President Trump.]

[Commentary] Count yourself unlucky if you are a US telecommunications customer, because you have been funding a system that is far behind international standards.

It is time for the US to catch up with the rest of the world class for subsidizing broadband, especially if taxpayer money is on the line. International best practice carefully identifies areas where service is not commercially viable, requires service providers to compete for subsidies, and holds subsidy recipients accountable for results. Best practice begins with identifying smart subsidy and true access gap zones. The smart subsidy zone is those rural or high cost areas and low-income population groups for whom service is not commercially viable absent a one-time subsidy for initial investment. The true access gap consists of similar areas but with the added requirement that service isn’t commercially viable without an ongoing subsidy for operating expenses and maintenance. Competition for subsidies ensures that money isn’t wasted. Competition within a market tends to give the best results for customers, but this competition isn’t feasible in smart subsidy and true access gap zones. So the next best solution is competition for the market.

[Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida. He served on the FCC Transition Team for the Trump Administration]

[Commentary] What would happen if the US Department of Energy decided to help low-income households afford solar power by giving money to companies which report that they lease solar panels to these households? In all likelihood, fraud would be a difficult and costly problem, and solar companies would benefit more than the households. Despite the obvious flaws of a system where companies receive money based upon their service claims, this is essentially how the Federal Communications Commission’s Lifeline program works: Telecommunications companies receive money based upon how many households they claim as Lifeline customers. There is a better way — a direct subsidy would be more beneficial to low-income households. If the Lifeline program were ended at the federal level, states would likely need to change their systems as well. That would be complicated, but it is time to get telephone companies and telephone regulators out of the business of public assistance, leaving it to government agencies that are designed to be experts in that field.

[Jamison the director and Gunter Professor of the Public Utility Research Center at the University of Florida. He is also part of the Trump Administration’s FCC Transition team]

[Commentary] There seems to be a growing consensus that the Federal Communications Commission’s structure is outdated and hinders its work. What should be done? Implement a structure that moves away from antiquated silos — wireline, wireless, and media — to one that reflects the dynamic digital ecosystem and that empowers sound analytical work. The existing structure limits how people think, encourages regulations that limit innovation, and facilitates industry capture.

To return the US to a position of world leadership, guiding principles for our policies should include: 1) Any person should have the right to purchase communications services from anyone else at any time (i.e., no entry restrictions for network, functions, applications, and content); 2) Anyone should be allowed to provide any communications service using any legally placed and acquired technologies (i.e., no technology restrictions); and 3) No government activity or regulation should provide a uneconomic favored position to any provider (i.e., no distortion of customer-led markets).

A new structure would include a bureau of economics that analyzes markets and conducts regulatory impact assessments, a bureau of engineering that assesses technologies and is responsible for radio spectrum and equipment licensing, a competition bureau that enforces rules that protect liberal markets, and a consumer protection bureau. The first two bureaus are all about analysis, and the latter two are all about enforcement, with the engineering bureau playing a significant enforcement role with respect to radio spectrum and equipment. Effective leadership will be needed to address the adaptive challenges of letting go of long-held traditions and embracing new values of rigorous analysis, political and industry independence, transparency, etc. Congress will need to act to focus the agency on ex ante regulation only in the presence of monopoly and on managing scarce resources (such as radio spectrum and funds for universal service) consistent with dynamic and competitive markets.

[Jamison is the director and Gunter Professor of the Public Utility Research Center at the University of Florida – and a member of President Trump’s FCC Transition team]