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Phoenix Center Gets Flamed

10/06/2010 4:52 PM

The Phoenix Center will need to rise from the ashes of the incendiary criticisms labeled at its latest study by an FCC official.Paul deSa, the chief of the FCC’s Office of Strategic Planning took aim at the center in a claw-baring blog posting Wednesday.The Center had released a study earlier this week, Jobs, Jobs, Jobs: Communications Policy and Employment Effects in the Information Sector, arguing that FCC broadband regulation could hurt job creation and the economy.

Phoenix called it a “significant contribution to the existing literature.”

DeSa would have none of it, mocking the study and the group. He called it a “frothy mix of algebra and math jargon,” then quoted from the dense language to support the argument: “a 2 × 1 speed of convergence parameter vector, C is a matrix that defines the contemporaneous structural relationship among employment and investment expenditures, and et = [e1,t e2,t]’ is a vector of mutually orthogonal structural shocks to these variables.” He spoke of the press release as mercifully equation-free.

“While it would no doubt be fun to wander over to the Phoenix Center to sip lattes while using “the estimates from the vector error correction model [to] conduct a variety of simulations to measure the effect on jobs from a change in capital expenditures,” this Commission would rather do the hard work of implementing real-world policies that help incumbents and innovators create real jobs and investments to strengthen our nation’s broadband economy today and for the future,” said deSa.

I am often similarly offput by pages worth of equations and algebraic explanations, but apparently they do often mean something, like how to get rockets to the moon and back. If the Phoenix study equations are off, that is one thing, but just because they are equations doesn’t make them de facto mockable. I must trust DeSa that he has drawn a distinction because I would not be able to distinguish between algebraic doubletalk and Noble prize- winning formulas if the future of mankind hinged on it.

By the “decipherable” measure, the FCC’s Herfindahl-Hirschman Index is in the same category as the Phoenix study to me. And I challenge anyone out there to read the Earthlink addendum to its Comcast/NBCU filing currently on file at the FCC and explain it, which does not mean it isn’t explicable.

Here is a sample of the Earthlink paper: “[G]iven a density function f and its cumulative distribution function F, we use the assumptions that both F(x)=f(x) is monotone increasing and (1F(x))=f(x) is monotone decreasing.”

The latte-sipping remark seemed a bit unnecessary to me, but that is from someone who was once described in an online column as a “champagne-swilling sybarite ramming indecencies down the gaping maws of school children,” or something to that effect. (Don’t ask.)

Bottom line is, I wonder, and have wondered before, at the wisdom of government officials taking aim at critics in blogs unless it is to rebut the arguments in the normal bureaucratic monotone that is less engaging but perhaps more appropriate to the venue (the FCC not a blog, for which almost anything seems to go).

Just a thought.

Phoenix Center President and former FCC official Lawrence Spiwak had his own thoughts.

This is the reply he was planning to post on deSa’s blog:

“While we always welcome the opportunity to sit down with our good friend Dr. de Sa to enjoy a beverage of his choice, we would like to make clear that our analysis was never meant to take away from the good work the FCC has done to develop and implement a truly excellent National Broadband Plan.

“As we and others have pointed out, the FCC risks sabotaging its own efforts by trying to impose common carrier regulation on broadband transport. Our paper simply provides an econometric multiplier to measure the effect of these proposed regulations on jobs, finds this effect to be significant, and will serve to undermine any good that they’ve done.”

September