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Incentives Matter:  Decision Making at the FCC
Speech by Commissioner Meredith A. Baker
Free State Foundation
September 10, 2009
I want to thank Randy May for inviting me here today.  I also want to congratulate Randy and all 
of the authors of New Directions in Communications Policy.  The book is a thought-provoking and timely 
look forward at where we go from here, more than 13 years after the Telecommunications Act of 1996.  
Shortly after the 1996 Act became law, then-Commissioner Michael Powell remarked that “[w]e 
are in the throes of a revolution.  This statement is not intended to be melodramatic, but rather descriptive 
of the breathtaking moment in which we in the communications field find ourselves.”  
Here we are—13 years later—and we are at such a moment again.  Broadband has become 
critical infrastructure.  The new digital media landscape is abundant and diverse.  And communications—
especially with recent wireless innovations—is becoming personalized.  This revolution has and will 
continue to transform our lives.
Our Commission’s policy choices will either limit or expand and build on this revolution.  New 
Directions in Communications Policy is timely as we begin a new Administration and a new 
Commission—of which I am privileged to be a part.  It’s timely in light of the severe economic condition 
in which our nation and the world find ourselves.  Now more than ever, a deliberate and carefully 
considered approach to regulatory policy is all the more important for the communications sector that is 
such a large part of the economy.  This book is also timely as we at the FCC look forward to a renewed 
spirit of cooperation and coordination within the Commission, throughout government, and with 
consumers and industry.  There couldn’t be a better time to celebrate the release of New Directions in 
Communications Policy, and I’m honored to be part of that here today.
As a new Commissioner, and with this as my first speech since being sworn in, I thought that it 
would make sense to try to give you some insight into my approach to decision making for the policy 
issues that will come before me, and then briefly give you an idea of a few of my policy priorities as we 
move forward.  
As a threshold matter, I fundamentally believe that consumers will benefit most from continued 
investment, innovation, and competition. I start with an assumption that markets work better than 
government intervention and that competition regulates market behavior more efficiently than regulators 
can.  We should not adopt regulations to address anecdotes where there is no fact-based evidence that 
persuasively demonstrates a problem exists.  Or, as a collaboration of Hippocrates and the Free State 
Foundation puts it:  “Don’t try to solve a problem unless you know there is a problem to solve.”
Finally, and perhaps most importantly, I believe that incentives matter.  Actions government 
takes—or doesn’t take—affect market behavior and create incentives.  I recognize that nearly any 
regulatory change the Commission makes will disturb the balance of the market—maybe for better, but 
possibly for worse.  Therefore, our decisions must be fact based, fully considered, and reasoned.  Good 
intentions are not enough.
Having said that, I do see a role for government in creating incentives that encourage investment, 
innovation, and competition.  Undoubtedly, some changes in the way we regulate the communications 
industry are needed—and are coming—to address the changes in the market and point us in the right 
direction.  
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I see a role for government in promoting consumer welfare, although that need not be through 
stagnant, prescriptive rules of business conduct.  The government can have a leadership role in 
encouraging and coordinating industry best practices that may obviate the need for regulation altogether.  
For example, in 2003, CTIA, the wireless trade association, and a number of wireless carriers voluntarily 
adopted a “Consumer Code” to facilitate the provision of accurate information to consumers by wireless 
service providers that addressed consumer concerns without government intervention.  In the wake of our 
Report to Congress on the Child Safe Viewing Act, I hope the Commission will lead, without regulation, 
by identifying and encouraging industry best practices to empower and teach parents.  
With those principles in mind, I want to give you a glimpse into how I reach decisions.  I think it 
is critical to approach policy making in a principled and systematic way.  When a policy decision is 
before me at the Commission—and a few have been already—my analytical framework is to (1) identify 
the objectives; (2) look at the statute and to Congress; (3) consider the context; and (4) weigh the costs 
and benefits.
First, as a guiding principle, we should identify objectives when launching proceedings, and 
design the scope of our proceedings deliberately.  All actions that we take at the Commission are carefully 
watched—both here and abroad—to divine the nation’s regulatory directions.  That is never more true 
than at the beginning of a new Commission.  
If we seek information well beyond that needed to support our identified goals—and especially 
when we seek information about matters clearly beyond the scope of our statutory authority—we 
needlessly send signals to the market that can create regulatory uncertainty.  When regulatory uncertainty 
skews business decisions to invest and innovate, it is consumers who suffer in the end.  As policy makers, 
we must be particularly sensitive to this dynamic in the current economic environment.  Thus, as issues 
come before me, I will be looking to identify these objectives and will be measuring our policy outcomes 
against those objectives over time.  
Second, we must look to the statute.  The Communications Act, as amended many times since 
1934, gives the FCC a broad mandate.  Congress has also given us powerful tools in section 10 
forbearance and ancillary jurisdiction to tailor the Communications Act to competitive conditions and the 
public interest.   But to be candid, as the book says, a “very real history of mission creep . . . has 
characterized communications regulation” over the decades.  Our authority under the statute is not 
unbounded. 
Where the authority is not clear and broad, I will need to satisfy myself that the Commission is 
acting within its statutory mandate, within Congressional intent.  Indeed, we should not strain the limits of 
our jurisdiction to fit the political pressures of the day.
And I would be remiss if I did not mention here the role of the courts in our decision making.  
Few significant Commission orders go unchallenged.  There is usually a lot of money at stake.  Over the 
many decades, this has yielded a significant body of case law.  We need to consider what it tells us about 
the parameters of our authority, what it tells us about what the Commission has done right in the past, and 
where the Commission has overstepped.  
Third, I want to understand the context of the policy at issue.  Many of the issues that come 
before us today have long and complicated, even tortured, histories—not only from a judicial perspective 
but also in policy, economics, politics, and technological development.  Some issues with which we still 
struggle have been with us for more than a hundred years—universal service comes to mind.  Even 
though we are a new Commission, I think it’s important that we not pretend that we are starting with a 
clean slate every time; we need to understand how we got to where we are now.  
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We should consider how our proposed action relates to the jurisdiction and responsibilities of 
other agencies.  I am no doubt particularly cognizant of this issue coming from NTIA, but an increasing 
number of agencies have some responsibilities related to communications—the Departments of 
Commerce, Justice, Homeland Security, Agriculture and even Health and Human Services, the Federal 
Trade Commission, and the Securities and Exchange Commission, to name a few.  As the new 
Administration tries to coordinate agency activities, for example with cybersecurity or broadband, it 
makes sense for us to consider how our actions fit with the broader puzzle of government.  
And of course, we must consider the public record of the proceedings before us.  Here, I must 
take a moment to recognize the efforts, already, of Chairman Genachowski to improve the process at the 
Commission—to the benefit of the commissioners, staff, and the public.  He is working diligently to make 
FCC decision making more transparent, less opaque, both within the agency and to the outside world.  
The Chairman has come up with innovative approaches to gain greater, and more substantive, 
public participation in our proceedings.  You heard from Blair this morning about the innovative way we 
are developing the record for the National Broadband Plan to elicit needed information, often from parties 
who are new to our proceedings.  I also appreciate the Chairman’s efforts to release voted items in a 
timely manner.  This small thing improves information flow to the public and reduces uncertainty in the 
market while people wait for details of orders already voted.  I commend the Chairman for these efforts, 
and although I too am new to the agency, it’s obvious that there is new, more positive, energy at the 
Commission.  
Fourth, I will carefully weigh the benefits and costs of any decision.  So long as the Commission 
is acting within its authority, this is the most important part of the analysis.  All regulation imposes 
costs—we cannot lose sight of that fact.  We have a responsibility to weigh the benefits of any proposed 
regulation against the costs—and to carefully consider potential unintended consequences of our actions.  
As regulators, we must strike the right balance.  If we fail, we risk imposing costs and other regulatory 
burdens on providers.  That in turn raises prices, reduces quality of service, and harms innovation.  These 
outcomes damage consumer welfare and endanger economic growth in this dynamic sector of the 
economy at a time when we can least afford it.
So next, I would like to turn briefly to a few of my policy priorities.  I don’t have time here—and 
there will be more speeches to come, I’m sure—to discuss particular policy issues in depth.  But I do want 
to highlight for you some of the themes I will be pursuing in the many—many—votes that I have ahead 
of me as I start my tenure.
It will come as no surprise that broadband is our and my priority.  Broadband is the enabling 
technology for everything from the future of education and health care to the smart energy grid and public 
safety.  From an economic standpoint, broadband infrastructure is essential for restoring sustained 
economic growth, opportunity and prosperity; and for maintaining American competitiveness in the 21st
Century.
I do not want to prejudge any ideas that might be in the Plan presented to us or approaches 
developed out of the innovative methods employed to build a solid record for decision.  But I do want to 
briefly talk about a few things that I will bring to the discussions with my fellow Commissioners on this 
important topic, particularly developed during my work on NTIA’s Networked Nation: Broadband in 
America report. 
The United States is the innovation capital and content capital of the world.  Getting broadband 
policy in the National Broadband Plan right is essential to keeping it that way.  In the global marketplace, 
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and with an Internet that knows no borders, the world is watching.  We set an example.  Our policy 
choices are watched—and emulated—in many nations.  Inconsistent or imprudent policy decisions at 
home can have significant policy ramifications abroad.   
We should recognize that the United States is not a one-size-fits-all place.  Rather, we are a 
country of individuals with a communications market with many different types of services and pricing 
structures to suit the diversity of the nation.  Competition best serves consumers.  Where competition 
thrives, consumers can best decide what services and pricing structures fit them best.  But where 
competition doesn’t thrive—or no market exists at all—the Commission will likely need to step in to 
ensure that broadband critical infrastructure gets to everyone and no one is left behind. 
Accordingly, our highest priority in broadband policy should be to get broadband to all remaining 
unserved areas of the country.  Where the market does not provide sufficient incentives for businesses to 
deploy, the government may need to step in with carefully targeted policies to ensure the availability of 
critical infrastructure without foreclosing the possibility of future competition as the market and 
technology progress.  
Finally, good data is critical.  I feel strongly that we need granular and reliable geographic data 
and mapping to properly target our policies and programs, so that we achieve the broadband goals of the 
Communications Act and the Recovery Act with a minimum of intrusive regulation.
The fastest-growing sector of America’s broadband economy is wireless.  According to CTIA, 
wireless carriers directly employ more than 268,000 people, and these carriers have invested $22.8 billion 
per year, on average, to upgrade networks to provide broadband services.  From my vantage point, it is 
clear that the wireless industry continues to be highly competitive due, in large part, to the government’s 
deregulatory approach.  As demand for wireless broadband services continues to increase, so will demand 
for spectrum.  I have a keen interest in spectrum policy and I am convinced that it is critical that we 
pursue policies that foster the efficient use of spectrum to promote continued innovation and investment 
in the wireless marketplace to the benefit of the American consumer.  
In conclusion, I am encouraged by the road that lies ahead for the Commission specifically, and 
the communications industry as an engine of our economy more broadly.  I commend our new Chairman 
for both his commitment to a cooperative approach at the Commission and his emphasis on fact-based 
policy analysis founded on evidence in an open and transparent record.  As a member of the minority at 
the Commission, I look forward to working together with my fellow commissioners where we can to 
make better communications policy, and I look forward to disagreeing without being disagreeable where 
our policy perspectives just cannot line up.  I think that New Directions in Communications Policy is a 
meaningful and thoughtful contribution to the policy debates ahead.  I thank the Foundation for that 
contribution and for including me here today.