The Federal Communications Commission has a Procrustean
problem. The agency would do well to acknowledge it as a means of reforming its
regulatory process.
I borrow from FTC Commissioner Maureen Ohlhausen's address, "The
Procrustean Problem with Prescriptive Regulation," delivered at the
Free State Foundation's Sixth Annual Telecom Policy Conference on March 18. If
you missed the conference and haven't seen the C-SPAN
video of Commissioner Ohlhausen's speech or read it, you should. It ought
to be required reading at the FCC.
In her speech, Commissioner Ohlhausen briefly relates the
Greek myth of Procrustes:
"Procrustes
was a rogue blacksmith, a son of the sea god Poseidon, who offered weary
travelers a bed for the night. He even built an iron bed especially for his
guests. But there was a catch: if the visitor was too small for the bed,
Procrustes would forcefully stretch the guest’s limbs until they fit. If the
visitor was too big for the bed, Procrustes would amputate limbs as necessary
to fit them to the bed. Eventually, Procrustes met his demise at the hand of
Greek hero Theseus, who fit Procrustes to his own bed by cutting off his
head."According to Commissioner Ohlhausen, "[t]he general lesson of Procrustes is a warning against the tendency to squeeze complicated things into simple boxes, to take complicated ideas, technologies, or people, and force them to fit our preconceived models." Hence, regulators should resist the urge to simplify – to think they have the expertise or knowledge to simplify – and learn to tolerate complexity.
How should regulators confront the Procrustean problem? Commissioner Ohlhausen offers two fundamental principles, especially for those regulators who exercise authority in markets in which technology plays a large role: (1) embrace regulatory humility and (2) focus on evaluating consumer harm. As Commissioner Ohlhausen puts it: "Because it is so difficult to predict the future of technology, government officials…must approach new technologies and new business models with a significant dose of regulatory humility."
With regard to the second principle, what Commissioner Ohlhausen says about the FTC should be equally applicable to the FCC as well: "By focusing on practices that are actually likely to harm consumers, the FTC has limited its forays into speculative harms, thereby preserving its resources for clear violations. I believe this self-restraint has been important to the FTC’s success in tackling a wide range of disparate problems without disrupting innovation." The emphasis is on protecting consumers, not protecting competitors.
To adhere to the principles of embracing regulatory humility and focusing on consumer harm, Commissioner Ohlhausen emphasizes a point I have made in this space (literally) countless times: an ex post enforcement approach, based on the filing of individual complaints, is preferable to ex ante prescriptive regulations. As she puts it, the ex post enforcement method, employed by the FTC, "typically focuses on actual, or at least specifically alleged, harms rather than having to predict future harms more generally." In contrast, the FCC's general resort to prescriptive ex ante rulemakings necessarily suffers from systemic knowledge problems that are exacerbated in the context of a dynamic market with fast-changing business models and technologies.
Finally, and importantly, Commissioner Ohlhausen rightly takes on the invocation of the now common shibboleth, "data-driven." Too many regulators, including those at the FCC, believe that if they simply repeat the well-worn mantra "our decisions are data-driven" that their actions ought to be accepted, without question, as proper. As Commissioner Ohlhausen reminds us: "[D]ata isn't knowledge or wisdom. 'Data-driven' decisions can be wrong. Even worse, data-driven decisions can seem right while being wrong."
I was pleased that Commissioner Ohlhausen suggested
some skepticism is warranted regarding ritual incantations of
"data-driven" decision-making because, frankly, I have been doing the
same for years. As I said in a blog
three years ago, "data, no matter how
sweet-sounding the oft-repeated 'data-driven' mantra … is viewed differently,
and put to different uses, depending upon one's regulatory philosophy and
perspective." Or, to the very same point, in a 2010 piece I suggested Chairman Genachowski's "data
driven" mantra, even then, already was being overworked because
"regulatory philosophy matters a lot" in deciding how to interpret
and make use of data.
I'm certain that Commissioner Ohlhausen doesn't mean
to imply that regulators should not seek to obtain relevant, accurate data, or
ignore it when they have it. And I don't either.
But I do want to suggest that, by following
Commissioner Ohlhausen's two fundamental principles – embracing regulatory
humility and focusing on consumer harm – the temptation of regulators to cover
shoddy reasoning by invoking the "data-driven" mantra may be
lessened. That is to say that abiding by the principles enunciated by
Commissioner Ohlhausen will lead to sounder decisions that are less
dogmatically pro-regulatory. Overall consumer welfare is more likely to be
improved by such decision-making.
In the next year, the FCC will be making some important
decisions in major proceedings – for example, in the incentive auction, the
Comcast-Time Warner Cable merger, and IP transition proceedings, to name but three.
Free State Foundation scholars have addressed issues in each of these proceedings
before, and I am certain we will do so again in the months to come. I don't
want to do so here.
Except to say, in closing, that I am confident the
Commission's decisions in these matters, and others, will benefit consumers most
if Chairman Tom Wheeler and his colleagues take to heart Commissioner
Ohlhausen's message concerning the virtue of regulatory humility.
That means slaying Procrustes in his own bed at the
FCC.
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