A fight is coming.

By Jeff John Roberts
April 5, 2017

The telecom industry and consumer advocates have been watching closely to see if the chairman of the Federal Communications Commission, Ajit Pai, will follow through on a controversial pledges. Among them is to roll back the agency’s recent net neutrality rules, which forbid Internet providers from favoring one type of website over another when they deliver content to consumers.

On Wednesday, Pai gave a fresh signal he intends to do just that. Speaking in Washington, D.C., Pai decried an alleged failure by the FCC in recent years to conduct sound empirical assessments of its rules, and singled out in particular the agency’s net neutrality rules—known as the Title II Order—which passed in early 2015.

“This practice significantly raises the odds of policies that do more harm than good, actually producing net negative benefits,” said Pai. “A great example of this problem is the Commission’s Title II Order. The FCC’s Chief Economist at the time of the Title II Order’s adoption has joked that it was an “economics-free zone.” It certainly didn’t include a traditional cost-benefit analysis. Pai then clarified more seriously that “a fair amount of economics [in it] was wrong, unsupported, or irrelevant.”

The remark was just a small part of a wide-ranging and wonky talk, which included numerous analogies to successful baseball teams like the Boston Red Sox and Kansas City Royals, which have devoted evermore resources to data analytics in their pursuit of championships.

But for those who are waiting to see if Pai will push forward with changes with net neutrality, which would likely result in a massive political fight, the remark is a new sign the battle is about to be joined. President Trump has likewise expressed support for overturning net neutrality, though it is unclear for now if the FCC or Congress will make the first move to do so.

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The FCC has already been in the headlines this month after Congress passed a law to throw out impending privacy rules, passed by the agency last year, that would have been restricted internet providers from reviewing consumers’ personal browsing histories.

Pai, who supported the rollback, on Wednesday also published an editorial in the Washington Post with his counterpart, FTC Chair Maureen Ohlhausen, saying privacy complaints about the new law are overblown, and arguing consumer choice in a free market helps to protect privacy.

This sentiment is a familiar one for Pai, who is a graduate of Chicago Law School, a hot house for free market economic theory. It remains to be seen, though, how persuasive Pai’s economic arguments will be in the coming debate over net neutrality.

Critics, for instance, are likely to argue market theory is not appropriate in many telecom markets, many of which are dominated by monopoly suppliers. Another potential objection is that Pai’s theories may treat values such as privacy or free speech as what economists call externalities—considerations that should not figure into the cost and benefit calculations of a given rule.

In closing his speech, Pai made a final baseball analogy.

“In baseball, as at the FCC, using analytics doesn’t dictate what your choices will be. But not using it means your decisions are more likely to go wrong. As the nation celebrates Opening Day, I’m delighted and excited that the FCC is getting back into the game of economic analysis,” he said.

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