Report: Net Neutrality Would Harm Economy

Published November 12, 2010

As the economy continues to struggle with unemployment near double digits, allowing the Federal Communications Commission to impose network neutrality regulations could  cause the loss of another 300,000 jobs, according to a report from the Washington, DC-based Phoenix Center.

It’s not just any jobs that would be affected, the authors observe. The average earnings of a communications sector employee are approximately 45 percent higher than the typical U.S. private-sector job. Thus each job lost or gained in communications is equivalent to about 1.5 average jobs lost or gained, in income terms. So far, employment in the sector has remained relatively robust during the downturn.

Report authors George S. Ford and T. Randolph Beard warn proposed network neutrality regulations could result in a 10 percent decline of capital expenditures in the information sector.

“At a time when unemployment is high and the economy is faltering, anti-investment telecom and broadband policies are ill-advised,” says Phoenix Center President Lawrence J. Spiwak, “The heavy-handed regulatory mindset of the current FCC is not good for investment, so it is not good for jobs. Moreover, there is no evidence that the proposed regulations are good for consumers.”

‘Investment, Jobs Will Flee’

“Net neutrality tasks the government with the regulation of business,” notes Bennett Kelly, founder of the Internet Law Center in Santa Monica, California. “The Internet will be regulated anyway. Without net neutrality the Internet is regulated by cable and telecom providers under the standards they choose.”

There was plenty of grassroots support for net neutrality a few years ago, but that has largely waned, according to Kelly. He says former proponents of the policy are now concerning themselves with more important issues such as the overall economy.

“The Phoenix Center report underscores and puts the exclamation point on what has been the central and most obvious reason that FCC regulatory intrusion would be a disruptive rather than helpful force: That it will badly damage, if not outright crater, one of, if not the only, parts of our economy that continues to expand on the back of billions of dollars of private investment,” said Bartlett D. Cleland, director of the Institute for Policy Innovation (IPI) Center for Technology Freedom in Dallas, Texas.

“As IPI has been writing for years in relation to the network management debate, if government seizes control, then investment, and hence economic prosperity and jobs, will flee,” said Cleland. “If the market is allowed to function as it always has been, then we can expect growth, opportunity, innovation, and jobs.”

Market Solution Offered
Steve Titch, a telecom policy analyst for the Reason Foundation in Los Angeles, says the FCC’s concerns can be addressed without harming investment and cutting jobs,.

“The ball is in the FCC’s court,” Titch said. “The framework proposed by Verizon and Google seems acceptable to most—it guarantees that no Web sites will be blocked, yet allows ISPs to manage their networks effectively, especially on the wireless side.

“The FCC would be wise to declare victory and go home,” Titch added. “What it really comes down to is how much they want to regulate business going forward.”

Phil Britt ([email protected]) writes from South Holland, Illinois.

Internet Info:

“Substantial Profits in the Broadband Ecosystem: A Look at the Evidence,” Phoenix Center for Advanced Legal and Economic Public Policy Studies: