Two Koch Insiders Are Creating a New Office Inside the FCC
By Alex Kotch
May 24 2018
Two recent employees from key groups financially supported by billionaire industrialists Charles and David Koch are creating a new office within the Federal Communications Commission (FCC) that will provide economic data and analysis relating to FCC policy initiatives. The office could provide FCC Chairman Ajit Pai with analytical justification for slashing regulations.
The two officials launching the new office both have ties to George Mason University (GMU)—which has been funneling academic conservatives into government roles since becoming a major beneficiary of Koch money. Both have either been employed by or had their academic work funded by the Kochs and by the telecommunications industry. And FCC records obtained by TYT show that one of them met with and corresponded with telecom industry representatives, one of whom was his wife. An email obtained by TYT showed that one of them explicitly hoped to recruit officials for the new office at a telecom industry event.
FCC Chair Ajit Pai last year announced plans to form the Office of Economics and Analytics as a central hub to work with each FCC bureau, describing a market-based approach to communications regulation. “The FCC should have the economic experts it needs to identify market failures and study whether the benefits of Commission action would be warranted given the costs,” said Pai in April 2017. The FCC has not specified when the office will officially open.
FCC Deputy Press Secretary Will Wiquist denied an interview request and did not respond to specific questions over email before publishing time.
Despite the new emphasis on economics, the FCC was established by the Communications Act of 1934 to serve the “public interest, convenience, and necessity.” However, the definition of “public interest” is “a pretty malleable concept,” according to former FCC Chairman Tom Wheeler. Depending on the roster of commissioners, the FCC has approached the public interest in very different ways.
“First, economic analysis plays an important role in all of our work,” wrote Democratic Commissioner Jessica Rosenworcel in a dissenting statement regarding the plan for the Office of Economics and Analytics. “But we need to be mindful that we have legal duties that can be at odds with simple cost-benefit analysis.”
In response to a letter from Sen. Catherine Cortez Masto (D-N.M.) asking how the Office of Economics and Analysis would serve the public interest while prioritizing economic analysis, Pai wrote, “It is critical that . . . the office’s efforts yield better-informed decisions that benefit consumers,” but he offered no specifics. Critics say that Pai has abandoned the public in favor of big business.
To create the office, Pai enlisted Wayne Leighton, the current chief of the FCC’s Office of Strategic Planning & Policy Analysis, which will have its “existing functions” carried out by the new Office of Economics and Analytics. He was previously executive vice president of the Charles Koch Foundation and, before that, head of government affairs for Koch Industries. Leighton earned his economics Ph.D. at GMU—which accepts millions of dollars in funding each year from conservative megadonor Charles Koch for economics and other programs—and has taught at a private college, the Universidad Francisco Marroquín in Guatemala, the president of which was recently head of a Koch-funded organization of free-market academics called the Association of Private Enterprise Education.
Helping Leighton launch the office is Jerry Ellig, whom Pai named chief economistof the FCC in July 2017. Ellig, who has also worked for the Federal Trade Commission, is taking a one-year leave of absence from GMU’s Mercatus Center, an on-campus, free-market think tank heavily funded by Koch. The center, named after the Latin word for “market,” has a reputation for publishing conservative economics analysis, which is sometimes cited in the Congressional Record, occasionally making its way into GOP sponsored legislation.
On January 30, the commission approved the plan to establish the office in a 3-2 vote along party lines.
Earlier that month, a working group led by Leighton released a proposal for the Office of Economics and Analytics. The new office will house most economists currently working in the various FCC bureaus and will contain four divisions for economic analysis, industry analysis, auctions, and data.
The proposal was short on details, leaving Commissioner Rosenworcel with many questions. “I am dismayed that my most basic questions about what this office will entail have not been answered,” she wrote in her dissent. The document outlining the formation of an office of data and analytics does not contain much data and analytics. And to her questions about staffing and how the functions of existing divisions will shift, “No one will answer.”
“I think it’s irresponsible to vote on a conceptual reorganization—which is what we have here— without frank information about how we will populate this effort,” she wrote.
But Pai’s background, his staffing choices to set up the office, and FCC policy decisions so far indicate that the office will offer a corporate-friendly approach. Pai was once an associate general counsel for telecom giant Verizon. At a 2017 FCC event, Pai joked about being “a Verizon puppet” installed as FCC chairman.