FCC Net Neutrality Regulation Would Hurt Economy & Jobs

November 18, 2010

After not mentioning net neutrality at all in his annual speech Monday to NARUC, FCC Chairman Genachowski appeared to signal to a Silicon Valley Web 2.0 audience on Wednesday that new net neutrality rules are indeed on the way from the FCC.

  • If recent rumblings are true, the FCC could propose new net neutrality rules next week that then could be voted on at the FCC’s December 15th meeting.
  • The highly uncharacteristic silence from FreePress and its allies suggests they may expect FCC net neutrality rules favorable to them soon.

If the FCC Chairman is to be taken at his word, in saying Monday that “At the FCC our primary focus is simple: the economy and jobs” — it is hard to imagine how the FCC could spin that new unnecessary, unwarranted regulation of the Internet could somehow help grow the economy or create jobs.

FCC net neutrality regulation of the Internet is a no-brainer jobs killer.

First, according to research by Bret Swanson of Entropy Economics, companies skeptical of, and at risk from, net neutrality regulation employ ten times more people than those companies that support net neutrality regulation of the Internet.

  • That’s 10-1!
  • That means companies supporting net neutrality would have to create 100% more jobs just to stay even with a potential 10% reduction in jobs by net neutrality opponents.
  • With a sluggish economy that is not even creating enough jobs to keep pace with population growth, how could the FCC imagine that its new regulations could create more jobs than it could destroy?
  • And where are their studies and analyses why FCC regulation of the Internet would create net jobs and net economic growth?

Second, effectively regulating the infrastructure of one sixth of the Nation’s economy with new unproven, unnecessary, and unwarranted FCC regulations could not help but create major new investment and economic uncertainty.

  • On the margin, how would new complicated FCC regulations make it easier or more certain for a business to invest or make money, when the regulations will highly likely be challenged in court and ultimately take several years to resolve definitively?

Third, how could the FCC argue that their new Internet regulations would inspire new confidence in economic growth and job creation among the public, businesses and capital markets when:

  • The EU just decided net neutrality regulations were not needed;
  • The midterm elections showed no support for net neutrality regulations;
  • ~299 members of this Congress wrote the FCC that Congress was the appropriate body to resolve net neutrality policy;
  • The DC Court of Appeals is skeptical that the FCC has legal authority to regulate the Internet; and
  • There is no evidence of a problem that the FCC needs to solve.

In sum, the single most destructive decision to the economy and job creation that the FCC could make, would be to make a politically-polarizing, legally-suspect, uncertainty-creating decision to mandate net neutrality regulation in opposition to the electorate, the Constitution, the Congress, the Courts, the law, and the facts.

  • Regulation has consequences, intended and unintended, and especially negative consequences for economic growth and job creation.

 

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