FCC Internal DOGE Review Results in Big Expected Savings

On May 14, FCC Chairman Brendan Carr announced initial findings and anticipated savings by an internal "DOGE" team of FCC staff in coordination with the federal government’s Department of Government Efficiency (DOGE) team totaling over $567 million in wasteful or unnecessary but authorized contract spending. 

According to the announcement released by Chairman Carr's office:

In the near term, the elimination or modification of contracts has generated more than $6.7 million in savings for the remainder of 2025 from the cancellation of obligated spending. In addition, this effort has also generated more than $21.1 million in savings for 2026, effectively reducing planned contract spending for 2026 by 20 percent.

The Commission's internal review was undertaken under President Donald Trump's Executive Order 14222, "Implementing the President's 'Department of Government Efficiency' Cost Efficiency Initiative."

 

Thanks go to Chairman Carr, the FCC's internal staff team, and the DOGE team for their efforts to save over half a billion dollars. Hopefully, further efforts at the Commission and by DOGE will reveal any remaining wasteful spending and yield additional cost savings. 

O'Rielly Asks FCC to Stop Censoring Commissioners

On February 24, 2016, FCC Commissioner Michael O’Rielly published a blog entitled “Stop Unfairly Censoring Commissioners.” Commissioner O’Rielly, who has published many blogs on process reform at the FCC, discusses the need for more transparency within the FCC rulemaking process. He argues that draft items should be released publicly, but at the very least, he says Commissioners and their staffs should be able to discuss items with the public, whether through blogs, tweets, fact sheets, or interviews. Commissioner O’Rielly stresses the importance of transparency and public feedback:

It is common sense that, if the Commission wants the strongest and most defensible items, it needs to talk to the outside world, including interested and affected parties.  This simple principle is embodied in the Administrative Procedure Act notice and comment rulemaking process.  Similarly, Commissioners also need the opportunity to discuss ideas, problems, and alternative ways to do things than the prescribed proposal contained in any draft item.  As it stands now, it is immensely frustrating to sit in ex parte meetings and be unable to test out other concepts and options or correct any misunderstandings of those in attendance.  But if we were to have such conversations today, my fellow Commissioners and I would risk potentially violating the Commission’s disclosure rule by revealing nonpublic information about items.  The end result is weaker Commission items.

Commissioner O’Rielly was the keynote speaker at the Free State Foundation’s July 2015 lunch seminar on FCC process reform, which can be viewed here. Free State Foundation President Randolph May has testified three times in front of the House Subcommittee on Communications and Technology regarding the need for process reform at the FCC (May 2015, July 2013, and June 2011). Mr. May also released two blogs in the summer of 2015 on this important topic, “Why Process Matters” and “Why Process Matters – Part II.”

Commissioner O’Rielly has been a strong leader on process reform at the FCC and we hope he continues his fight for more transparency and accountability at the Commission.

Procrustes at the FCC

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.

Free State Foundation President Randolph May To Participate in Nov. 1 Teleforum Call

Free State Foundation President Randolph May is participating in a Teleforum call on November 1, 2013, at 1 p.m. EDT, on The FCC and the States: A Division of Authority. The call is sponsored by The Federalist Society’s Telecommunications & Electronic Media Practice Group. This Teleforum conference call will examine how the Federal Communications Commission and states can work together to address the transition from circuit-switched to Internet Packet (IP) telecommunications. Other participants include Mr. David W. Danner, Chairman, Washington Utilities and Transportation Commission, and the Hon. Paul Kjellander, President, Idaho Public Utilities Commission. If you would like to join the Teleforum call, the dial-in number is 888.752.3232.

Congressman Latta Delivers Keynote Remarks at FSF Event

We were pleased to have Congressman Bob Latta deliver keynote remarks at the Free State Foundation’s event last week, “A New FCC or the Same Old, Same Old.” Congressman Latta recognized the efforts of the Free State Foundation and of FSF President Randolph May in the areas of FCC reform and advocacy of free market-oriented communications policies. Congressman Latta then discussed the dramatic innovation in the Internet ecosystem over the past thirty years, and urged Congress to review laws and regulations to ensure that they reflect current marketplace realities, and that they do not impede further advancements in communications and other sectors of the economy.

In particular, Congressman Latta advocated for comprehensive review of the “outmoded”1996 Act. He also argued for reform of the FCC’s operations and role in the communications sector through his FCC ‘ABCs’ Act. He stated reform is necessary “to ensure that outdated and unnecessary legacy-era regulations don’t stifle current and future investment, innovation, economic growth and consumer choice in the digital age” and to make “a pro-investment, pro-competition, and, most importantly, pro-consumer framework a reality.” 

FCC Reform: Putting Consumers First

Even while the government is in shutdown mode, here at the Free State Foundation we continue to work hard. In other words, we keep on thinking. 

After I founded the Free State Foundation, when my mother was alive, we had this little routine going. She would say: "Randy, I don't get it. What do you do in a think tank?" 

And I would respond: "We think!" 

And my mother would say: "Randy, what do you think about?" 

And I'd always answer: "Well, Mom, I've got to think about that first!" 

Well, over the weekend, as I was looking back over our work from the past couple of weeks, I found myself thinking about consumers and consumer welfare – and about how the focus of our work is, or at least always aspires to be, about promoting consumer welfare, and not the interest of any particular company or industry segment over another. 

In other words, it's not about whether any particular company, product, or service ultimately thrives or survives. Some will and some won't. It's not about "leveling the playing field" for the benefit of one company or another, for, in reality, "level the playing field" pleas are often just cries for government intervention by one set of competitors seeking advantage over others. 

No, it's about whether the marketplace is working – or, especially with respect to the communications marketplace, whether the marketplace is allowed to work – in a way that enhances consumer welfare. 

Our orientation at FSF is, unabashedly, in the free market direction. That is to say that when sufficient marketplace competition exists, such marketplace competition generally protects consumers better than government regulation. Or put in more economic lingo, the costs of relying on government regulation in such a situation generally are greater than the benefits. Or, in such a situation, the marketplace is more efficient and welfare-enhancing in protecting consumers than government regulation. 

Now, I appreciate that there are differing views as to the extent of competition that is sufficient to forego regulation and the extent of competition that presently exists in various communications market segments. Fair enough. 

I don't propose to resolve those differing views here. I'll just say, having watched – and participated in – the evolution of the communications marketplace for over thirty-five years now, in my view sufficient competition now exists in most communications market segments for the FCC to regulate considerably less than it presently does. The agency needs to rely more on marketplace competition to protect consumers and less on regulatory mandates. 

In reading over several of our pieces this past weekend, I was reminded how effectively – at least to my mind – they make the case for less regulatory intervention by the FCC and more reliance on the marketplace, all with the welfare of the consumer foremost in mind. Here I just want to list some of these pieces, with their links, in case you haven't had a chance to read them, or would like to take another look. The subject matter ranges from net neutrality mandates to video navigation device deregulation to incentive spectrum auctions and more. 

It's The Consumer, Stupid! – Randolph May 

Proposals Like the AT&T/Leap Merger PromiseConsumer Benefits – Seth Cooper 

Two Sides of the Internet’s Two-Sidedness: A ConsumerWelfare Perspective – Justin (Gus) Hurwitz 

Consumers Would Benefit from Deregulating the VideoDevice Market – Seth Cooper

Let Them Eat Cake and Watch Netflix – Justin (Gus) Hurwitz

No Picking Favorites: The Proper Approach to theUpcoming Incentive Auction – Sarah Leggin

*  *  *

Now, a final note: At the outset I mentioned the government shutdown. And throughout this piece, I have suggested that the FCC ought to be intervening in the marketplace less, considerably less, than it presently does. It follows that if it implemented this less regulatory course and reoriented its mission, the agency could, and should, be slimmed down.

But this does not mean that there are not, at present, important functions for the FCC to perform, or important work for the agency to do. And nothing I have said is meant to imply that the FCC commissioners, and the vast majority of the staff, are not dedicated, knowledgeable public servants. They are. When the shutdown ends, I'm sure they'll be back on the job doing their best.

FCC Reform: The Video

With what my mother always called "the dog days of summer" fast upon us, and while we're anxiously awaiting Homeland or Boardwalk Empire to start up again, I've got just the hot short video for your August viewing. I'll call it "FCC Reform: The Video" to get your juices flowing. 

OK, Homeland or Boardwalk Empire it's not... 

But, as regular readers know, I am passionate about FCC regulatory reform, even during dog days. In the video immediately below, which runs only 10 minutes, I discuss the "FCC Process Reform Act" and the "FCC Consolidated Reporting Act" bills put forward in the House Subcommittee on Communications and Technology by Chairman Greg Walden and the "FCC's 'ABCs' Act" put forward by Subcommittee Vice Chairman Bob Latta.

In the video, I explain why the proposed changes to the FCC's rulemaking requirements in the FCC Process Reform Act are needed in order to reorient the FCC away from its tendency to default to regulation even when there is no clear and convincing evidence of market failure or consumer harm. And I support the adoption of revisions to the FCC's forbearance and periodic regulatory review authority. Indeed, I proposed just such changes in April 2011. 

I also explain in the video why the merger review reform provisions contained in the Process Reform Act should be adopted and why the proposed Consolidated Reporting Act makes perfect sense in today's multi-platform competitive, converged marketplace environment. 

And there's more...but I shouldn't keep you from watching any longer.   

 

My testimony before the House Subcommittee at the July 11, 2013, hearing on "Improving FCC Process" is here. My July 16 blog entitled "FCC Regulatory Reform and Administrative Law" is here.

FCC Reform: Return to the Rule of Law

For Deborah Taylor Tate

Congressman Greg Walden should be applauded for doggedly holding a Congressional hearing on the much needed review, reform, and reinventing of FCC procedure and process. He is expected to introduce legislation similar to the FCC Process Reform Act and FCC Consolidated Reporting Act that passed the House of Representatives last year, only to die in the Senate.

In the meantime, the FCC should not wait for legislation to pass to adopt some simple, common sense reforms of their own. In fact, first they just need to return to the "rule of law,” not the "rule of man" (With two female Commissioners, I suppose this will have to be the "Rule of Women" now!).

Too often the personality of the agency leadership has resulted in expansion – broad expansion in some cases – of the specific legal authority granted by Congress to the FCC. The office of FCC Chairman has been expanded far beyond the letter of the law. It needs to be curtailed by self-control, aside from whether a new law is passed. Some people remember a time when two or more commissioners could bring forward a proposed order or place an item on circulation. During my tenure as an FCC commissioner, even four commissioners – a bipartisan group of four – were unable to do so.

In other examples, the Chairman has expanded the agency's oversight into areas of the law which are clearly beyond any legal authority. In most of those cases, after thousands of hours of work by public employees, and taxpayer and industry dollars spent, courts generally have overturned this abuse of power. Just think if that energy and money had been used on reports to Congress, review of consumer complaints, and enforcing the law of the land.

Another specific example of this expansion of the agency's legal authority involves mergers. While we have all become accustomed to the imposition of merger conditions, those conditions should only relate specifically to a "harm" which is likely to occur as a direct result of the specific merger under consideration. Mergers conditions somehow have become “the kitchen sink” for every policy notion or alleged "wrong that needs to be corrected," whether or not they legitimately relate to the merger at hand. In addition, the merger conditions take on quasi-statutory significance and are then applied to other companies in the sector or those in the "same circumstance."

I regret that I, too, voted to approve mergers with such conditions during my tenure and hope the present FCC will use a little more restraint in what may be a very busy merger time in the days and months ahead. Certainly, competitive harms or other potential wrongs should be addressed, but only through proper legal vehicles and certainly not in the dark of night just to get a deal done.

The Free State Foundation’s President Randy May has repeatedly called upon the FCC to reform itself and his testimony at last week's House Commerce Committee hearing again addressed these important issues. FSF recently held a standing-room only luncheon on the topic of “FCC Process” where scholars, industry representatives (regulated through these processes), and former commissioners presented a number of thoughtful ideas on Commission reform.

Many of the issues mentioned address the topic of speed of process – or lack thereof – a constant criticism of the agency. I have previously suggested utilizing any and all willing commissioners to oversee an item and draft a proposed order, working in conjunction with the relevant expert staff, to speed up the time required to get an order on circulation. Oftentimes, a particular commissioner has had specific industry or issue expertise which could provide great insight along with alacrity.

Other ideas regarding expediency include setting a specific timeline for completing consideration of each order – a "shot clock" that could be keyed to the subject matter. Or the establishment of a true mediation process in appropriate cases as a way to achieve quicker turn around, allowing regulated parties to opt for mediation. Not only have trial courts learned this is often a more efficient process, but also one in which the parties often have more control over outcomes. Other creative procedures could include a "weekly docket call" to dismiss hundreds, if not thousands, of filings that have languished for years.

Often the FCC has failed to utilize its own expert advisory bodies effectively – or at all. In fact, the Commission could pose a question with a specific timeline and/or even request a list of solutions and alternatives from which to choose. Why have expert advisors if you don't utilize their real world experience and expertise? And, once delegated authority over issues or complaints has been thoroughly vetted and specifically granted by a vote of the Commission, Bureau Chiefs should utilize that authority – and nothing more – to resolve identical issues with identical decisions. This enhances both agency efficiency and provides consistent outcomes for industry. Further, in very specific cases in which a decision may actually have broad, industry-wide impact, the Commission should proactively grant broad waivers for similarly situated entities rather than clogging up the system with unnecessary and redundant case-by-case-by-case reviews.

While it may take congressional approval to change the "Sunshine Law" (which should be known as the "Unable to Communicate Law"), perhaps it will only take a dose of personal humility, a clear understanding of legal authority, and a little trust in one's fellow commissioners to make the agency operate more efficiently – so that it hums like the industries and sectors it oversees.

Time to Reconsider Reforming FCC Competition Reporting

On Friday, July 19, the FCC is expected to release its Fifteenth Video Competition Report in the course of its public meeting. I wrote about the Fourteenth Report in my Perspectives from FSF Scholars paper, "FCC's Video Report Reveals Disconnect Between Market's Effective Competition and Outdated Regulation." This new report should at least summarize more recent data on competitive developments in the video market.

The timeliness, scope, and frequency of FCC competition reports to Congress were all touched on during the U.S. House Subcommittee on Communications and Technology's hearing on "Improving FCC Process."

FSF President Randolph May provided testimony at that hearing. And his blog post, "FCC Regulatory Reform and Administrative Law," offers a further response to the hearing's discussions.

At the hearing, one of the discussion draft bills that Chairman Greg Walden called attention to a discussion draft bill that would consolidate the FCC's competition reports into a single, biennial "State of the Industry" report. In the 112th Congress, the House passed such a measure – the Consolidated Reporting Act of 2012 (H.R. 3310) – on a voice vote. Unfortunately, the Senate gave the legislation no consideration.

In my Perspectives paper, "Convergent Market Calls for Serious Intermodal Competition Assessments," I explained why I thought consolidated reporting legislation was ripe for reintroduction:

Combining disparate competition reports would structurally conduce to intermodal competition assessments. It should come as no surprise if the current system of separate FCC reporting on specific services results in largely silo-like analyses. That is what current law all but invites. A more comprehensive approach to digital age communications services – combined with a specific directive regarding intermodal competition assessment – could offer a better perspective on the competitive state of voice, video, audio, and data services as well as the substitutability of wireline, wireless, satellite, and other platforms. It could even shed light on the unnecessary and outdated regulatory burdens that now saddle communications services on a variety of platforms. Combined FCC reporting could also reduce the administrative burdens.

Combining future FCC reports is something that a June 25 GAO report also called attention to. And the forthcoming release of the FCC's Fifteenth Video Competition Report should likewise provide occasion to consider the benefits of reform.