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Curious and Curiouser: As Economists’ Anti-Common Carriage (#NetNeutrality)/FCC Case Crumbles, Industry Advocacy Group Lawyers Threaten Armageddon

Just over a week ago, the International Journal of Communication published an article that I co-authored with Jeff Pooley, “A Curious Tale of Economics and Common Carriage (Net Neutrality) at the FCC”—a reply to another IJOC article published in late March by Gerald Faulhaber, Hal Singer and Augustus Urschel that had claimed that economics was “curiously absent” at the Obama-era FCC.

In that paper, the authors hold up the FCC’s 2015 landmark ruling to reclassify broadband internet access services as common carriers (the historical bedrock principle that informs what most people now refer to as ‘net neutrality’) as exhibit A in support of their claim. They also point to a raft of other decisions over the past half-decade that addressed high levels of concentration in key segments of the mobile wireless, broadband internet access and TV industries as further evidence of the supposed triumph of populist politics over economic reason at the Obama-era FCC. Finally, they claim that the FCC’s refusal to file cost benefit analyses to justify any of these actions clinches their case about the “curious absence of economics at the FCC”.

The claims became a big deal after the Trump Administration’s new FCC chair Ajit Pai repeatedly cited them to justify his bid to roll back the common carrier rules and to create a new Office of Economics and Data (see here, here and here). Pundits, think tanks and telcos, not just in the US but in Canada and the European Union too, have pointed to the “curious absence” charge in their support of Pai’s rush to remake the regulatory landscape in the image that they have wanted all along: no common carrier rules and regulations premised on the assumption that communication markets are fiercely competitive.

As we show in our reply, however, the authors’ claims about the “curious absence of economics” are baseless. Our review of the FCC’s public docket for the Open Internet Order, several blockbuster mergers and acquisitions, roundtables, seminars, workshops, and so on shows that the public record of the Commission’s work is stuffed full with the contributions of economists—including those of Faulhaber and Singer. A better interpretation, we argue, is that, having lost many hot-ticket regulatory items in recent years, the authors have thrown up a dubious pretext for what amounts to a regulatory do-over in which they hope to score big under the Trump regime.

Not only does the paper’s main claim fall apart upon inspection, its undisclosed origins as a commissioned piece of policy advocacy runs afoul of scholarly publishing norms and ethics. Indeed, the paper is a model of information laundering, whereby paid policy advocacy prepared for an industry-friendly group—in this case, CALinnovates—is put on the public record in two separate FCC proceedings (see here and here), then recycled as an original article in a prestigious, peer-reviewed scholarly journal with no acknowledgement of these origins, and finally recycled back into the policy process on several occasions by Pai to justify his sprint to reverse many of the signature accomplishments of his predecessor—all with the telcos, consultants, industry-friendly think tanks such as the American Enterprise Institute, etc., cheering him on from the sidelines, both within the US and beyond.

Legal Threats

We had plainly struck a nerve. After a draft of our reply was shared with the article’s authors in late May, they started to backfill their missing disclosures (compare the lack of any disclosure in the original March publication, the terse one-liner that followed in mid-April after we called them out on Twitter, and a fuller but still wholly inadequate disclosure in June). And instead of dealing with any of our substantive criticisms about the complete lack of any evidence to support their main claim about the alleged “curious absence of economics” at the FCC, the authors along with the executive director and PR rep for the industry-friendly advocacy outfit, CALinnovates, wrote weak replies that protested loudly and threw a lot of mud, but did absolutely nothing to shore up their allegations. You can see those replies here, here and here.

As our article was being prepared for publication, CALinnovates also lawyered up and sent a barrage of letters to the editors of the International Journal of Communication—and its host, the University of Southern California. The legal threats—explicit and implied—ramped up in each letter (see here, here, here, and here).

In the first missive, the group’s attorney charged that the “academic portion” of our paper—those pages that constitute the bulk of our article and that challenge the original article’s sidelined-economists storyline and which provide copious details refuting that claim—is merely a “vehicle to serve incorrect and potentially libelous messaging to the public” about the group. He asked the journal to disclose our funding for the article (we have none), and to remove the CALinnovates discussion altogether.

The second letter, sent a week later, detailed “concerns” about our reply and warned that its “potentially libelous rebuttal,” the lawyer wrote, “seeks to tarnish the reputation of CALinnovates,” an organization whose “only role in this imbroglio was the funding of the [original] paper.” Quoting liberally from the journal’s code of ethics, the letter lays out 13 charges. “Winseck and Pooley,” he wrote, “have weaponized their rebuttal for the purposes of their own mischievous political goals.” The letter accuses us of serving “corporate interests,” which we—so said the attorney—failed to disclose.

Another week, another letter, this one from a second firm (“litigation counsel to CALinnovates”) and delivered not just to the editor but to the general counsel of USC, where the journal is hosted. It is, this attorney wrote, “extraordinarily surprising and deeply disappointing” that USC “would even consider publishing what appears to be a bias-motivated hit piece”. The letter concludes by warning USC that it would “expose itself to significant liability” by publishing our reply.

To its credit, the journal stood its ground, asking us to furnish documentation on just those errors of fact flagged by the lawyers. We replied with a point-by-point accounting. “Neither of us,” we wrote, “has ever received a single cent of funding for this reply or for work whatsoever from any parties.” Bluster aside, the innuendo and legal threats had the opposite effect, strengthening our resolve to publish the reply. Sponsored surrogacy like the “Curious Absence” paper needs ummasking now, before the Pai-led FCC recasts the evermore internet-centric communications universe in an industry-serving mold. If Pai succeeds, it will be hard to go back—hard, that is, to get the regulatory toothpaste back in the tube. At that point, exposing the industry scholar-lobbyist network’s campaign would be (merely) academic.

Information Laundering, Economists and Ajit Pai’s Race to Roll-Back the Obama-era FCC’s Net Neutrality Rules

Today, the International Journal of Communication published my reply (co-authored with Jeff Pooley) to a recent paper in the same journal by economists Gerald Faulhaber, Hal Singer and Augustus Urschel. That paper has become especially influential after the Federal Communication Commission’s Chairman Ajit Pai repeatedly called on its “independent” evidence to justify his plan to roll-back common carriage (net neutrality) rules for internet access providers and to create an Office of Economics and Data. As our reply shows, the paper contains undisclosed ties to the telecommunications industry and is riddled with factual errors. Most importantly, its central claim that economics and economists have been “curiously absent” at the FCC in recent years is simply incorrect.

Faulhaber, Singer and Urschel’s “The Curious Absence of Economic Analysis at the Federal Communications Commission” is a prominent example of how industry-friendly think tanks have commissioned academic economists, legal scholars and others to flood the ‘marketplace of ideas’ with dubious ideas and ‘white papers’, often without disclosing these origins. These efforts, in turn, give a veneer of academic legitimacy to Pai’s sprint to reverse not just the net neutrality rules adopted two years ago, but a raft of measures that deal with concentration in the broadband, mobile wireless, cable TV and broadcasting markets, broadband privacy and pricing, and on and on. If the rollback is successful, Pai’s FCC will deliver a regulatory agenda beyond the biggest telecom-ISP and media companies’ wildest dreams.

In their paper, Faulhaber, Singer and Urschel purport to tell the story of the rise and fall of economic analysis at the FCC. They hold up the Commission’s landmark 2015 decision to reclassify broadband internet access services as “common carriers”—the bedrock historical principle underpinning what most people call “net neutrality”—as Exhibit A in support of their “curious absence” allegation. The authors also point to the FCC’s alleged failure to conduct cost-benefit analyses as further evidence of the agency’s supposed indifference to economics. Finally, the authors singled out John Oliver’s 2014 late-night rant on net neutrality for triggering “four million angry letters”. The episode exemplified, in their telling, the triumph of unruly populism over economic expertise—a gaping wound that needs to be redressed, and fast, they urge.

Straight away, however, the article’s main claim that economists have next to no influence at the FCC struck us as preposterous. This must be, we thought, the first article ever published to claim that economists don’t have enough influence on federal policy making. The story of social science and U.S. policy since World War II just is the story of economics (see, for example, Bernstein, 2004 and Franklin, 2016). More to the point, economists have been extensively—and disproportionately—involved in FCC rule-making for decades, this one included. What could the authors possibly mean?

Adding to our doubts, we quickly discovered that a longer version of the same paper had been submitted to the FCC’s official docket last summer, not once but twice, by CALinnovates—an “advocacy” group with deep ties to the telecommunications industry (see the submissions to Broadband Privacy and Business Data Services proceedings). In other words, the paper published in the IJoC originated as a white paper commissioned by a telecommunications industry advocacy group but without disclosing any of this background do the journal’s editors or readers.

Digging deeper, it soon became evident that the paper’s authors have been especially active in many hot-button issues before the FCC in recent years, including its landmark Open Internet Order in 2015—the main object of their criticism. They have also cast doubts on how the FCC has dealt with blockbuster mergers and acquisitions and sky-high levels of concentration in the mobile wireless market, backed an unsuccessful legal appeal of those 2015 net neutrality rules, and lent their work to a volley of actions now underway by the Trump administration’s new FCC Chair, Ajit Pai (see here and here).

In April—just five days after the peer-reviewed article appeared—Pai gave a major speech at the Hudson Institute lamenting that the views of economists “have become an afterthought.” Citing the paper (but with no mention of its provenance), Pai announced a new FCC Office of Economics and Data (OED). The authors’ “curious absence” claim supplied the warrant for creating the OED. Pai soon issued his fateful plan to roll back net neutrality regulations—set to take effect in a matter of weeks—and again invoked the authors’ work as a warrant for taking the course that he has (see here and here).

In short, an industry front group commissioned and funded research that was put on the public record in two FCC proceedings and then published in a leading academic journal. Soon it was cited by the country’s top policy-maker to justify his industry-friendly regulatory rollback. We contend that this is a clear case of information laundering.

Murky origins aside, does Faulhaber, Singer and Urschel’s core claim that the FCC has “abandon[ed] the dismal science” (p. 1215) hold water? Our reply argues an emphatic “no”. Our review of FCC workshops, roundtables, working papers, seminars, reports, dockets and rulings—including during its landmark 2015 Open Internet Order and several blockbuster mergers and acquisitions—provides detailed evidence to refute the paper’s core “curious absence” charge. Indeed, the public record is stuffed full with economists’ contributions—including those of the authors, though they mention none of it. As we show, the agency has actually been working in earnest to bolster, not sideline, economic analysis in recent years—a conclusion in line with other researchers’ findings (e.g., Copeland, 2013).

Moreover, while the authors charge that the FCC’s cavalier disregard for sound economic judgement is revealed by the fact that it does not do proper cost benefit analyses, the truth is that there are nineteen federal, independent regulatory agencies and none of them does such analyses along the lines they call for—except the Consumer Financial Protection Bureau (and for reasons specific to its own creation in 2011 in the aftermath of the financial crisis of 2008). While there have been calls since at least the Reagan Administration for things to be otherwise, those calls have been rejected because to concede to them would undercut regulators’ independence. In short, despite the authors’ misleading suggestion to the contrary, the FCC is not unique in this regard and as a matter of fact all federal independent regulatory agencies except the CFPB report to Congress (see Breger & Edles, 2015; Sunstein, 2013).

When Faulhaber, Singer and Urschel bemoan the “curious absence” of economists at the FCC in the IJOC paper, what they’re really objecting to is their own string of policy losses across several high-profile issues in recent years. What they want, in effect, is an across-the-board do-over on these issues. Their paper—with its serial non-disclosure—is already helping that effort. Indeed, the authors have been fighting on this project’s front-lines for years and their IJOC paper and its undisclosed precursors have been weaponized for this campaign.

The stakes couldn’t be higher. Pai is sprinting to reverse the most prominent accomplishments of the Obama-era FCC—and leaning on Faulhaber, Singer and Urschel’s paper to legitimate his efforts. The IJOC paper, and its undisclosed predecessors, also serve as the touchstone for op-eds across think tanks and their blogs as well as the business and popular press. The authors’ appeal to the authority of economics, in short, cloaks a full-throated political project designed to remake communications markets along the lines that incumbent telecommunications, broadband internet, and media industries have desired all along.

If the lessons of the last century are a guide, the outcomes of these battles could shape the emergent internet- and mobile wireless-centric communications universe for many decades to come. Moreover, the fact that much the same charges are being lobbed at regulators in Canada, the EU, India and other countries underscores the point that while the specifics of the US situation—and the FCC—are unique, the lessons to be learned are far more global in scope.

Legal Threats

We plainly struck a nerve. After a draft of our reply was shared with the article’s authors in late May, the journal’s editor received a barrage of letters from attorneys representing CALinnovates, the telco-linked group. The legal threats—explicit and implied—ramped up in each letter.

We will address more of the substance of these letters in a subsequent post in short order but for the time being we’ll close by saying that, to its credit, the International Journal of Communication stood its ground, asking us to furnish documentation on just those errors of fact claimed by the lawyers. We replied with a point-by-point accounting. And on their claim that we ourselves had written the “hit piece” under hire to either Free Press, Open Media, Mozilla or Google, we had a blunt response of our own: “Neither of us has ever received a single cent of funding for this reply or for work whatsoever from any parties.”

Bluster aside, the innuendo and legal threats had the opposite effect, strengthening our resolve to publish the reply. As a general matter, sponsored surrogacy like the “Curious Absence” paper needs ummasking because it tries to harness the academic credibility of scholarly, peer-reviewed publishing for private gain—typically without disclosing either the interests or processes in the information laundering behind such efforts. And if such critiques are necessary in general they are acutely so now before the Pai-led FCC recasts the evermore internet-centric communications universe in an industry-serving mold. If Pai succeeds, it will be hard to go back—hard, that is, to get the regulatory toothpaste back in the tube. At that point, exposing the industry scholar-lobbyist network’s campaign would be (merely) academic.

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