Thursday, September 08, 2016

FCC Analysis Shows No Evidence of Market Power in BDS Market

This week, George Ford, Chief Economist at the Phoenix Center for Advanced Legal & Economic Public Policy Studies, published a paper entitled “How (and How Not) to Measure Market Power Over Business Data Services (BDS).” Dr. Ford finds that the analysis of the FCC’s white paper “Empirics of Business Data Services” by Professor Marc Rysman “is unsupported by basic economics and good econometrics, and is thus incapable of providing any meaningful evidence regarding the presence or absence of market power.” 

I wrote in a June 2016 Perspectives from FSF Scholars that the FCC’s analysis lacked consistent data collection and a robust understanding of the variables that impact BDS prices. Moreover, FSF President Randolph May and Senior Fellow Seth Cooper stated in a July 2015 Perspectives from FSF Scholars that the FCC’s Notice of Proposed Rulemaking is infected with special pleading and rent-seeking. If adopted, the FCC’s NPRM may have the unintended consequence of creating market power in the BDS market.