PRESS RELEASE: FSF Submits Ex Parte Regarding the "Economic Feasibility" Test and Responding to Public Knowledge

 

Free State Foundation President Randolph May and Director of Communications Policy Studies Seth Cooper submitted the attached written ex parte presentation to the FCC explaining why the definition of “economic feasibility” proposed in the Commission’s draft Report and Order in its Digital Discrimination proceeding is so problematic and wrongful and why a suggested “clarification” by Public Knowledge is even more problematic and wrongful.

Below are two paragraphs excerpted from the beginning of the ex parte submission and three from the end:

The Free State Foundation offers these ex parte comments regarding the Commission’s draft Report and Order and Further Notice of Proposed Rulemaking in the above-referenced Digital Discrimination proceeding. The focus of these ex parte comments is on the draft Report and Order’s definition of “economic feasibility” to implement Congress’s express requirement in Section 60506(a) of the Infrastructure Investment and Jobs Act of 2021 that the Commission take into account issues of “technical and economic feasibility” in evaluating claims of discrimination. And, even more specifically, these ex parte comments focus on an ex parte submission by Public Knowledge dated November 1, 2023.

 

Regrettably, as explained below, the draft Report and Order defines “economic feasibility” in a way that will induce, if not require, the Commission to conduct old-fashioned public utility style rate cases, including rate of return determinations, akin to the ones found in the FCC’s case books back in the 60s, 70s, and 80s. And akin to those thousands of public utility rate case decisions of the state public utility commissions. Public Knowledge’s November 1 ex parte is even more troublesome because, by making the agency’s rate case decision-making task even more complicated, the “clarification” sought by Public Knowledge would further destroy the Commission’s ability to comply with the congressional direction to consider “economic feasibility.” The suggested “clarification” language would render the task of evaluating “economic feasibility” even less practically implementable, especially within any reasonable timeframe, than the already problematic test proposed in the draft Report and Order.

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In considering draft Paragraph 71, PK’s November 1 ex parte, and this submission, the Commission would do well to remember the admonition of William Kennard, President Clinton’s FCC Chairman, back in 1999, when he said: "I have been there on the telephone side. . . [I]f we have the hope of facilitating a market-based solution here, we should do it, because the alternative is to go to the telephone world, a world that we are trying to deregulate and just pick up this whole morass of regulation and dump it wholesale on [Internet providers]. That is not good for America."

Whether intentionally or not, the draft Report and Order indicates that the present Commission, needlessly, is about to dump the “whole morass of regulation” on Internet service providers. And PK would dump even more morass “wholesale” on top of that. The draft’s approach to defining the “economic feasibility” standard is misguided. PK’s suggested “clarification” is doubly misguided. As former Chairman Kennard might say: Neither is good for America.

It is entirely possible, and surely preferable, including for those in the classes Section 60506 seeks to protect, for the Commission to adopt rules that go in a different direction. In an ex parte submission dated October 20, 2023, we explained how the Commission can adopt rules that comport with Congress’s direction to prevent digital discrimination and properly consider “economic feasibility,” while not requiring the agency to engage in complicated, time-consuming rate cases, involving rate of return assessments, and almost certainly involving controverted evidentiary submissions.