Effros: In Defense of Decisionmakers

I was originally going to title this column “in defense of regulators,” but the more I thought about it, I realized that the same fundamental problem faced by regulators is confronting almost all decisionmakers, especially those who are responsible for long-range planning and commitments. But let’s start with the regulators, then we’ll get to the other examples.

This whole subject was triggered for me by a piece in another telecom blog which took issue with what the author cited as the risk of “…static analysis, which examines an economic state at a single point in time, providing a snapshot of conditions without considering how the economy reached that state or how it will change over time.” He was right, of course, about the risk. Things change. Decisions may be overtaken by events, or they may simply be wrong. But I doubt there was no consideration of the rest. It’s far more complicated than that.

The example given was that Starlink has just announced it is drastically cutting prices in some rural states. A Starlink broadband dish which originally cost $600 is now going to be sold, in those states only, for $90. The standard residential plan (with limitations on use) drops from $120 to $85. No doubt about it, that’s quite a change! The implied criticism of the regulators was that they made their decisions, like not including satellite broadband delivery in the BEAD program, solely on the basis of those original, “static” facts. The author cited quotes from folks like the former Chair of the FCC to back up his point.

But what, exactly, were they supposed to do differently? If you, as a regulator, are charged with deciding how to allocate money, for instance, to promote rural broadband and one of the applicants is offering a service with a $600 equipment charge per rural household, should you just assume the price will eventually go down and ignore it? I would note that the anomalous result wound up with a bias toward fiber deployment which, in turn, resulted in almost absurd pricing for some rural fiber buildout proposals.

So this stuff is not easy. The regulators apparently decided that fiber was a better long-term investment than short-term expensive satellite service which was not as comprehensive. Yes, the price suddenly dropped on the satellite side for only some locations and with conditions. Should the regulators have assumed that would be the case? Are they now charged with prognosticating the future of potential business decisions? Unfortunately, in some cases they apparently are, and that’s not great either!

For instance, the business community is now being expected to guess what’s going to happen with electric power availability. Billions are being spent on new power generation to service all the new AI server farms. It wasn’t crazy to start focusing on solar and wind power as part of that process. Until, of course, the new administration came along with a total bias toward oil and cancelled permits for wind farms that were already almost completed resulting in billions of dollars of debt! Was that the failure of “static analysis?” In that case it would seem to be the opposite; they were anticipating the future, not the present. They were wrong. The “present” suddenly changed.

I raise this not because I have an “answer” to it. Rather, I think it’s necessary for all of us to recognize how difficult these long-range decisions are to make, both from the regulatory and the business perspective. It’s really easy to criticize. Not so easy to accurately gauge whether decisions that have to be made today are actually going to work out in the long run. We only have the current facts to work with.  Some humility would be in order. The current speed of change requires it.

Steve Effros was President of CATA for 23 years and is now an advisor and consultant to the cable industry. His views do not necessarily reflect the views of Cablefax.