Federal Communications Commission
Washington, D.C. 20554
April 14, 2016
MEMORANDUM
TO:
	
Andrew Sweeting
Associate Professor, University of Maryland
FROM:
	
Matthew S. DelNero
Chief, Wireline Competition Bureau
SUBJECT:
	
Peer Review ofAnalysis of the White Paper "Empirics ofBusiness Data
Services" by Dr. Marc Rysman (April 2016)
Overview
The Federal Communications Commission (Commission) is in the process of an ongoing
rulemaking evaluating the appropriate regulatory framework for business data service (BDS)
industry, i.e., special access, in areas where the incumbent local exchange carrier (ILEC) is
subject to price cap regulation (WC Docket No. 05-25, RM-10593).1 As part of this rulemaking,
the Commission collected data and information from providers and purchasers in the industry for
an analysis of the marketplace.2 Through this memorandum, I request that you perform a peer
review of the attached White Paper produced by Boston University Professor of Economics Marc
Rysman examining the nature of competition and marketplace practices in the supply of BDS.
Background
On December 18, 2012, the Commission released the Data Collection Order, outlining a
data collection for an analysis of the BDS marketplace.3 Services covered by the collection
included traditional special access service (including DS1s and DS3s), packet-based dedicated
service such as Ethernet, and best efforts business broadband Internet access service."4 Those
SpecialAccess Rates for Price Cap Local Exchange Carriers; AT&T Corp. PetitionforRulemaking to
Reform Regulation of Incumbent Local Exchange Carrier Rates for Interstate Special Access Services, WC
Docket No. 05-25, RM-10593, Order and Notice of Proposed Rulemaking, 20 FCC Rcd 1994, 1998, para.
11(2005) (2005 BDS NPRM); see also Special Access for Price Cap Local Exchange Carriers; AT&T
Corporation Pet ition for Rulemaking to Reform Regulation of Incumbent Local Exchange Carrier Rates for
Interstate SpecialAccess Services, WC Docket No. 05-25, RM-10593, Report and Order and Further
Notice of Proposed Rulemaking, 27 FCC Rcd 16318, 16320, para. 31(2012) (Data Collection Order or
BDS NPRM).
2 Data Collection Order, 27 FCC Rcd at 16360, App. A.
3
Id. at 16326-27, paras. 16-19.
required to respond included providers and purchasers of BDS and certain entities providing best
efforts business broadband Internet access service.5
Relying in part on this data collection, the Commission is in the process of conducting a
one-time, multi-faceted market analysis of the BDS industry.6 The analysis will evaluate "how
the intensity of competition (or lack thereof), whether actual or potential, affects prices,
controlling for all other factors that affect prices" and would provide an evidentiary record for
reforming the Commission's BDS rules.7 The analysis will evaluate market structure and
include, to the extent practicable, econometric regressions "of the prices for special access on
characteristics such as 1) the number of facilities-based competitors (both actual and potential); 2)
the availability of, pricing of, and demand for best efforts business broadband Internet access
services; 3) the characteristics of the purchased service; and 4) other factors that influence the
pricing decisions of special access providers, including cost determinants (e.g., density of sales)
and factors that deliver economies of scale and scope (e.g., level of sales)."8 Because of the
various factors that may influence competition at a particular location, the Commission designed
the collection to obtain detailed data at the location level.9 The Commission also proposed to
analyze the information from purchasers, as well as providers, to assess the reasonableness of
terms and conditions offered by ILECs for special access service.'0 To assist with its analysis of
the collected data, the Commission contracted with Professor Rysman to produce the attached
White Paper.
Parameters of Review
Before a federal agency may disseminate influential scientific information, such as the
White Paper, as part of a rulemaking, the material must be peer reviewed to enhance the quality
and credibility of the government's scientific information.1' Guidance from the Office of
Management and Budget (0MB) requires agencies to provide peer reviewers with "instructions
regarding the objective of the peer review and the specific advice sought."2 The objective of this
peer review is to establish whether the White Paper provides a solid foundation for analyzing the
data collected in the BDS rulemaking proceeding. Please note that the standards for evaluation
are not necessarily the same as those one might apply in evaluating studies for publication in a
professional journal. For example, it is not necessary that the study present new or novel
theoretical results or empirical tecimiques. Consistent with the requirements of the 0MB
Bulletin, we are not asking you to "provide advice on policy" or to evaluate any policy
implications that might arise from use of the White Paper.'3
Id. at 16327-28, para. 22.
See BDS FNPRM, 27 FCC Rcd at 16343-49, paras. 66-71.
See id. at 16343-47, paras. 66-69.
Id, at 16346, para. 68.
91d. at 16327, para. 22.
10 Id. at 16354-56, paras. 91-93.
See FINAL INFORMATION QUALITY BULLETIN FOR PEER REVIEW, OFFICE OF MANAGEMENT AND BUDGET,
EXECUTIVE OFFICE OF THE PRESIDENT, 70 Fed. Reg. 2664 (2005) (0MB Bulletin), available at
https://www.whitehouse.gov/omb/memorandafy2005mo5-03/ (last visited Aug. 2, 2013).
12 Id. at 2668.
13 The 0MB Bulletin states in relevant part: "Peer reviewers can make an important contribution by
distinguishing scientific facts from professional judgments. Furthermore, where appropriate, reviewers
2
Guidance from 0MB further requires that "[r]eviewers shall be informed of applicable
access, objectivity, reproducibility and other quality standards under the Federal laws governing
information access and quality."4 The 0MB Bulletin also requires that "peer reviewers ensure
that scientific uncertainties are clearly identified and characterized."5 Finally, please be aware of
three other aspects of the peer review process. First, the peer review will not be anonymous.
Reviewers are identified and reviews placed in the public record. Past peer reviews conducted for
the FCC can be found at: http://www. fcc. gov/ornd/dataquality/peer-agenda.html . Second, the
agency will not be providing any financial compensation to reviewers; your time and effort will
be considered as donated in contribution to science and public service.
Third, the 0MB Bulletin requires us to assess whether potential peer reviewers have any
potential conflicts of interest.'6 In particular, a "conflict of interest" would exist if you have "any
financial or other interest that conflicts with the service of an individual . . . because it could
impair the individual's objectivity or could create an unfair competitive advantage for a person or
organization."7 To assist our determination of whether there are any potential conflicts, please
indicate whether you have participated in this rulemaking proceeding in any capacity. Please
provide us any information relevant to evaluating whether you might have a real or perceived
conflict of interest, including whether you have participated in the rulemaking in any capacity and
whether or not you have financial ties to regulated entities, other stakeholders, and regulatory
agencies.'8 We note that the 0MB Bulletin makes clear that "work as an expert witness,
consulting arrangements, honoria and sources of grants and contracts" could trigger a potential
conflict.'9 To evaluate any real or perceived conflicts of interest, potential peer reviewers should
consult applicable federal ethics requirements, applicable standards issued by the Office of
Government Ethics and the prevailing practices of the National Academy of Sciences (NAS) •20
should be asked to provide advice on the reasonableness ofjudgments made from the scientific evidence.
However, the charge should make clear that the reviewers are not to provide advice on the policy...." Id. at
2669.
14 See id. at 2675. These standards are discussed in greater detail in OMB's GUIDELINES FOR ENSURING
AND MAXIMIZING THE QUALITY, OBJECTIVITY, UTILITY, AND INTEGRITY OF INFORMATION DISSEMINATED
BY FEDERAL AGENCIES, 67 Fed. Reg. 8452 (2002).
0MB Bulletin, 70 Fed. Reg. at 2669. The Bulletin further states that since not all uncertainties have an
equal effect on the conclusions drawn, reviewers should ensure that the potential implications of the
uncertainties for the technical conclusions drawn are clear. In addition, peer reviewers might be asked to
consider value-of-information analyses that identify whether more research is likely to decrease key
uncertainties. Value-of-information analysis was suggested for this purpose in the report of the
PresidentiallCongressional Commission on Risk Assessment and Risk Management. A description of
additional research that would appreciably influence the conclusions of the assessment can help an agency
assess and target subsequent efforts. Id.
'61d at 2670.
'71d.
18 Id.
'91d.
20 Specifically, peer reviewers who are Federal employees (including special government employees) are
subject to Federal requirements governing conflicts of interest. See, e.g., 18 U.S.C. § 208; 5 C.F.R. part
2635 (2004). With respect to reviewers who are not Federal employees, agencies shall adopt or adapt the
NAS policy for committee selection with respect to evaluating conflicts of interest. See POLICY AND
PROCEDURES ON COMMITFEE COMPOSITION AND BALANCE AND CONFLICTS OF INTEREST FOR COMMIrFEES
USED [N THE DEVELOPMENT OF REPORTS, THE NATIONAL ACADEMIES, NATIONAL ACADEMY OF SCIENCES,
3
The Commission's Electronic Comment Filing System (ECFS) for WC Docket Nos. 05-25 and
15-247 and RM-10593, will assist you in identifying potential conflicts with parties participating
in the BDS rulemaking proceeding.21
Report on Findings
I request that you provide a written report of your review that describes the nature and
scope of your review and your findings and conclusions with regard to this influential scientific
information by April 29, 2016. The report shall include a short paragraph on your credentials
and relevant experiences.
Because the White Paper contains and relies on information submitted by companies in
the underlying rulemaking proceeding that is non-public, conimercially sensitive, and protected
by a protective order, you previously executed a non-disclosure agreement prior to reviewing the
White Paper and any Confidential or Highly Confidential information on file with the FCC for
this proceeding. If you have any questions regarding this agreement, please contact William
Layton, 202.418.0865, Wil1iam.Laytonfcc.gov .
Attachments
Dr. Marc Rysman, Empirics of Business Data Services (April 2016)
FINAL INFORMATION QUALITY BULLETIN FOR PEER REVIEW, OFFICE OF MANAGEMENT AND
BUDGET, EXECUTIVE OFFICE OF THE PRESIDENT, 70 Fed. Reg. 2664 (2005).
NATIONAL ACADEMY OF ENGINEERING, INST. OF MEDICINE, NATIONAL RESEARCH COUNCIL (May 12,
2003), available at http://www.nationalacademies.org/coilbi-coi form-0.pdf (last visited Aug. 2, 2013).
21 See Electronic Comment Filing System (ECFS) Home Page, Federal Communications Commission,
http://apps.fcc.gov/ecfs/.
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