Do not go gently into that regulatory night
The FCC’s relationship with small business has soured over several issues:
o regulatory policies that seem to focus only on global markets for the largest U.S. telecom companies.
o the substitution of bidding credits for entrepreneurial spectrum blocks.
o the use of obtuse, revenue-based guidelines that permit fronts for megalithic telecom companies to obtain small-business bidding credits.
o infrequent use of discretionary authority to create rules that are scalable to business size.
o the FCC ignoring its obligations under federal regulatory flexibility and administrative statutes.
The last item on the list is the most likely to create real trouble for the agency. The Regulatory Flexibility Act (RFA) tells federal agencies, basically: As part of a rulemaking, first do a cost-benefit analysis that describes the impact on people and businesses (particularly small businesses), and then detail the ways to ameliorate those consequences for the victims of your rule.
We would think that the FCC would jump at opportunities to do comprehensive RFAs. First, it could trim back on engineers and hire more economists. Second, if you’re moving inexorably from a regulatory role to becoming an agent of social change, impact analysis is good practice. But saying “We don’t think there’s any problem, so there shouldn’t be any adverse effects” is not the kind of diligence we’ve come to expect from late 20th-century federalism.
Courting disaster The federal courts may agree. An access charges reform order is being challenged by a small long-distance reseller on lack of RFA compliance. Key points in another Court of Appeals case that will be heard in January hinge on the commission playing hopscotch over its statutory duties regarding administrative procedure and regulatory flexibility.
The jurists aren’t likely to be interested either in fairness or in visions of the future. They tend to get hung up on whether or not an agency broke the law. At stake is the entire 1997 auction proceeding for the upper 800MHz channels. If the court vacates the rules, the 800MHz auction may become one big “do-over.”
The issue is not just access to licenses. All of small business – 95% of all U.S. enterprises – suffers when rules and procedures are anticompetitive. When telecom’s small-business customers – concrete companies, taxicabs, florists, delicatessens and rent-a-cops – have limited service choices, they lose access to innovative products and their resources are strained by higher costs.
Fallout in the federal family The Small Business Administration (SBA) has grown more strident in criticizing the commission’s lackadaisical attitude toward compliance with the RFA. A year’s worth of comments on FCC rulemakings, filed by the SBA’s Office of Advocacy, reads like a tormented defensive coordinator repeatedly explaining the concept of “off-sides” to a dim-witted tackle:
o August 1999 (on applying mutual exclusivity to PLMR to enable auctions): “The NPRM does not consider the effects of the proposed rules on small business … nor does it discuss alternatives to minimize this impact.”
o April 2000 (on auctioning of the 4.9GHz band): “… the Commission fails to propose or discuss a single alternative that would minimize impact on small business … The Commission is not fulfilling its legal responsibility to analyze options and to share these analyses with the public to elicit informed commentary.”
o In one comment filed in August, the long-ignored SBA could only splutter its conclusion: “The FCC is inexplicably developing a very impressive record of flaunting RFA. It is not clear what it will take for the FCC to begin to take its legal responsibilities seriously. The noncompliance of the FCC will be highlighted in Advocacy’s next report to Congress.”
Maybe the football analogy wasn’t right. It’s more like an exasperated little sister who repeatedly tells her errant brother “Don’t do that! You’re going to get in trouble!” and who finally plays the trump card: “I’m telling MOM!”
Self-help: Admit you have a problem FCC Chairman William Kennard, testifying on Oct. 6 before the U.S. House Subcommittee on Government Management, Information and Technology, downplayed any lack of cooperation between the FCC and the SBA. But, responding to questions from Subcommittee Chairman Rep. Stephen Horn (R-CA), Kennard admitted that the agency has issues to redress with small business:
“We do coordinate with the SBA and they participate in our conferences. In fact, at the end of this month, we’re having a presentation by the SBA on how to sensitize the agency into becoming more attuned to small business issues, which has been a problem, historically.”
Interestingly, in an Aug. 9 triennial report to Congress, required by law, the FCC listed its efforts to reduce entry barriers for small business, but in the cover letter Kennard alluded to forthcoming studies that are intended to document those barriers. It’s always interesting to see a catalog of cures before you learn the causes of the disease.
Failures to explore regulatory impacts or to monitor bidding credits aren’t as innocuous as a wink and a nudge exchanged with the ticket taker at the local bijou to falsely get the senior citizen discount. They’re a lapse of delegated authority that hurts real people and businesses. If the cause is chronic malfeasance in how the FCC staff prepares for rulemakings, then it’s incumbent on the commissioners to put their house in order.
If these lapses are a methodical attempt to squeeze small businesses out of the telecommunications economy, then small telecom business owners better tell Congress to flex its legislative and fiduciary muscles if it wants to retain their political and economic support.