At the Phoenix Center’s Law and Economics blog, Larry Spiwak examines the role of government stimulus in improving the economy:
During periods of economic sluggishness (such as the current situation), we found that government spending has zero effect on private-sector job creation. This result is consistent with the apparent impotence of huge federal government spending increases aimed at reducing unemployment. In contrast, when it comes to job growth, expansions in private investment are effective in both regimes, but its efficacy is greatest during economic stagnation. By implication, policies that discourage private investment may have more severe job-killing effects during economic downturns, since it is during the low growth periods that private investment is most effective at creating jobs.
While Spiwak is looking at the effect on the economy as a whole, it’s worth remembering that private investment in our broadband infrastructure — be it wired or wireless — continues to at a blistering pace. All the more reason for regulators to make sure not to get in the way and ensure its regulatory framework keeps up with the changing times.
Speaking of Apple, Nick Wingfield of the New York Timesreports the company — which has faced some criticism lately for its offshore business practices — is touting its role as an American job creator:
On Friday, the company published the results of a study it commissioned saying that it had “created or supported” 514,000 American jobs. The study is an effort to show that Apple’s benefit to the American job market goes far beyond the 47,000 people it directly employs here.
[B]eing disconnected isn’t just a function of being poor. These days, it is also a reason some people stay poor. As the Internet has become an essential platform for job-hunting and furthering education, those without access are finding the basic tools for escaping poverty increasingly out of reach.
“The cost of being offline is greater now than it was 10 years ago,” said John Horrigan, vice president of policy research at TechNet, a trade association representing high-tech companies. “So many important transactions take place online. If you don’t have access to high-speed Internet, you’re missing out on a lot.”
Today’s final article in David Goldman’s series on the spectrum crunch for CNN Money shows that he gets it — there is no “catch-all fix.” It is promising, though, that wireless carriers are actively seeking solutions to the spectrum shortage that will enable continued innovation in the industry and allow them to better serve their customers. These users’ quality of service on their iPhones, Androids, BlackBerries and tablets will significantly improve when wireless carriers, as pointed out by Goldman’s piece, bid on spectrum at auction and kick the build-out of networks into high gear.
Yet another benefit: this investment by wireless companies means more U.S. jobs. Wireless companies winning spectrum is a win for American consumers and the American economy — the FCC should act quickly to set these open incentive spectrum auctions in motion.
Calls for humbler government are as old as the republic. In this era of frenzied media coverage and hyperpartisan dialogue, few would apply the humble label to anything related to the federal government. It’s time for at least one agency to heed the call.
As it writes rules for the availability of additional spectrum through incentive auctions, the Federal Communications Commission should apply a light touch — a truly humble approach — to the wireless sector, which is a major contributor to our national economic recovery.
A new study from policy group TechNet sheds some light on just how important the mobile app economy — and mobile broadband — are to America’s economy. The full study, titled “Where the Jobs Are: The App Economy,” is available here (PDF), but some of the highlights include:
• The App Economy is now responsible for over 466,000 jobs in the U.S., which is pretty amazing when you take into account the fact that it was only in 2007 and the release of the iPhone that the industry started.
• In December of 2011, Apple’s App store had over half a million active apps, which were uploaded by over 100,000 publishers.
• California, New York, and Washington State lead the charge in the App Economy, but more states are joining the part every day.
Yesterday, Apple released its quarterly earnings, and in yet another example of the power of technology — not to mention the importance of mobile broadband for America’s economy — the iPhone maker shattered expectations, announcing quarterly revenue of $46.33 billion and net profits of $13.06 billion.
As David Goldman of CNN Money points out, Apple is now worth over $400 billion, making it worth more than Greece. Wow.
The effect mobile broadband investment and deployment has had on innovation is easy to see. All you need to do is flip through the apps on a smartphone, or fire up Netflix on an iPad.
Less apparent has been the effect on the U.S. economy, specifically when it comes to job creation. Now a study from NDN and the New Policy Institute, “The Employment Effects of Advances in Internet and Wireless Technology,” for the first time provides some startling new numbers. Authored by Robert J. Shapiro and Kevin A. Hassett, the study examines the positive effects network advancements have on the economy.
Case in point: the move from 2G to the current widespread 3G, which the authors find offered a major boost the economy. As they write:
New econometric analysis set forth in this study shows that the investments and innovation entailed in the transition from 2G to 3G wireless technologies and Internet infrastructure spurred the creation of some 1,585,000 new jobs from April 2007 to June 2011.
That’s more than 1.5 million jobs during a time, the authors point out, that the U.S. economy lost close to 5.3 million jobs in the private sector. And with providers in a highly competitive market currently building out the next-generation of networks, another major boost could be on the horizon:
The rapid transition from 3G to 4G mobile broadband networks should continue to stimulate new jobs creation in a short time frame, generating more than 231,000 jobs for every 10 percentage point gain in penetration rates within a year.
In other words, the more 4G is built out, the more jobs there will be for Americans. While this may seem like a no-brainer — doesn’t investment and construction almost always create jobs? — Shapiro and Hassett make the argument that the government must do more to encourage a speedier build-out by an industry leading the way to economic recovery. As they write:
These results suggest that a national job creation strategy should include or encourage appropriate measures to accelerate the deployment of 4G infrastructure.
The study goes on to explore some particular areas, including health care and public safety, that will benefit greatly from accelerated 4G deployment. On the proposed nationwide wireless communication network dedicated to public safety, the authors write:
This 4G-based network could be especially valuable when major terrorism or natural disasters strike. The original impetus came from the 9/11 Commission’s criticism of the lack of inter-operable communications systems among the diverse first-responders at the World Trade Center, and the resulting vulnerabilities for homeland security. The benefits from more routine use of the system also would be considerable. The begin, the initial proposed funding of $10.7 billion would create nearly 100,000 new jobs for network planners, laborers to lay and install cable, and technicians to build and install network devices, wireless access points, video surveillance cameras, gunshot detectors, and environmental sensors. As the network is established, it would create more jobs for network administrators and managers, technical support staff, network analysts, project managers, and IT analysts.
100,000 jobs — and that’s just from public safety build-out. To get the full picture on how speeding up the deployment of 4G technology can transform our economy, check out Shapiro and Hassett’s full study. You’ll not only come away encouraged about the future, you’ll learn stuff like this:
Mobile providers rolled out the first generation of cellular wireless networks in the United States in the early-1980s, before the commercial emergence of the Internet. Until that time, mobile phones relied on tall, high-power transmitters and receivers which used a limited number of radio frequencies to cover entire cities. These conditions sharply limited the network capacity and these mobile phones. For example, the first mobile phone network for New York City could support a total of 700 mobile customers and no more than 12 conversation at any time.
Shapiro and Hassett’s full study, “The Employment Effects of Advances in Internet and Wireless Infrastructure: Evaluating the Transitions from 2G to 3G and from 3G to 4G,” is available here in a PDF. Check it out.
In an op-ed for The Hill, Jonathan Spalter, Chairman of the organization Mobile Future, urges President Obama to take a bigger leadership role when it comes to technology:
Chairman Genachowski rightly warned of a “looming spectrum crisis.” U.S. demand for mobile Internet could outstrip capacity in as little as two years. If President Obama delivers on his call to shift 500 Mhz of spectrum to expand the mobile web, it could help win the hearts of the 91% of Americans who are so connected to our mobile devices that we sleep with them within arm’s reach. The move also would enable the private sector to create 500,000 jobs throughout our economy and add $400 billion to our GDP.
What does it take? Technology-savvy leadership. A consistent policy vision that continually pulls in a constructive direction. And, a clear-eyed choice of humility over hubris when it comes to the role of government in our innovation policy.
Via Anthony James of TechFlash, online sales this holiday season continue to be brisk:
Seven of the 10 best online shopping days have occurred this year, including four days last week: Monday ($1.178 billion), Tuesday ($1.107 billion), Thursday ($1.024 billion) and Friday ($917 million). About $15.5 billion has been spent online this year between Thanksgiving and Dec. 9.
The numbers are in on this year’s “Cyber Monday” online holiday shopping blitz, and as The Hill‘s Gautham Nagesh reports, they’re big:
While big business was expected on Cyber Monday, Tuesday and Wednesday were also two of the four heaviest online spending days in history, at $1.12 billion and $1.03 billion, respectively. Combined with the bump in traditional retails sales, the figures show increased confidence from consumers ahead of the end of the year.
All told, e-commerce generated nearly $6 billion in sales last week.
In response to the Department of Justice’s move to block the merger of AT&T and T-Mobile, the Communications Workers of America has released a new report on the effect blocking the merger will have. Titled, rather bluntly, “Blocking the AT&T/T-Mobile Merger will Harm Consumers, Communities & the Economy,” the report covers everything from AT&T’s commitment to expand 4G LTE, to the effect the merger will have on much-needed job creation.
The entire report is a must-read, but there are a few points made that are worth highlighting, beginning with the argument that blocking the merger will be good for preserving competition. As CWA states:
“[T]here is no long-term future for a stand-alone T-Mobile as an effective competitor: it has neither the spectrum nor the capital to create a competitive network utilizing the latest wireless technology (called 4G LTE). In January 2011 the CEO of T-Mobile’s parent company, Deutsche Telekom (DT), stated that DT would not provide the capital for T-Mobile’s 4G LTE deployment. T-Mobile also is on a downward trajectory suffering from declining revenue, eroding profit margins and increasing customers defections.”
With Verizon, AT&T, and now Sprint making the shift to 4G LTE technology, the fact that T-Mobile will soon be left behind regardless of the merger continues to be overlooked. And given that only AT&T and T-Mobile are compatible when it comes to network technology, the idea that T-Mobile could simply merge with someone else simply isn’t realistic. From the report:
There are two separate technological family trees that are not easily compatible. GSM based systems have evolved through UMTS, HSPA+, LTE and, the next step, LTE Advanced. CDMA based systems have evolved to EVDO.
• The merger between AT&T and T-Mobile creates technological synergies because each of these companies utilizes GSM and HSPA based networks.
• A merger between Sprint and T-Mobile (these companies were in merger discussions) would have experienced significant technological challenges because the two companies utilize different and incompatible technologies. T-Mobile’s systems are GSM based while Sprint’s systems are CDMA based.
As for AT&T’s ability to expand its 4G LTE network to cover nearly every corner of America — a key point, as it dovetails with President Obama’s State of the Union pledge to bring advanced mobile broadband to everyone — CWA points out such an expansion wouldn’t be feasible without the merger due to capacity and spectrum constraints:
AT&T’s other options could not remotely approach the merger in terms of increasing capacity, utilizing spectrum more efficiently, improving service and expanding 4G LTE deployment… [I]t would take AT&T eight years to obtain and activate the number of cell sites it will obtain from T-Mobile. AT&T also could not depend on a possible federal auction to reallocate spectrum because it is a multi-year process that needs Congressional approval, a FCC rule making, the actual auction and then a period for relocation of incumbent licenses and integration of existing network and equipment with the spectrum — if the bid is successful.
These are just a few of the salient points CWA makes about the merger. There’s much more to be found in the full report, including the effects blocking the merger will have on job creation and efforts to close the digital divide. You should definitely dig in.
Our Honorary Chairman Rick Boucher recently appeared on Fox News to talk about how broadband is today’s light bulb, and how it’s in America’s best interests to ensure everyone has access to the digital economy. Here’s video of the appearance:
Earlier this week, WisBusiness.com organized a luncheon in Madison, Wisconsin on the topic of broadband expansion and economic development. IIA co-sponsored the event with the Wisconsin Technology Council, and our Senior Advisor Broderick Johnson was a featured guest.
For a good rundown of the lively discussion — which ranged from the importance of private investment in broadband to reforming USF — head over to WisBusiness.com.
To coincide with this week’s CTIA Enterprise and Applications Convention in San Diego, we updated our “Top 10 Ways Being Online Saves You Money” study. Sources and methodology are available here. You can also compare this year’s study to last year’s.
Recently, our Honorary Chairman Rick Boucher appeared on the podcast The Flint Report for an in-depth discussion about rural broadband expansion, job creation, and the proposed merger of AT&T and T-Mobile. You can download Part 1 of the podcast here, and Part 2here.
We’re starting a new series here on the blog where we hand the reigns over to one of our members to write about broadband and technology. In this first installment, Jason A. Llorenz, Executive Director of the Hispanic Technology and Telecommunications Partnership (or HTTP) writes about Hispanic Heritage Month and the need to ensure everyone in America has access to the power of broadband. You can follow HTTP on Twitter @hispanicttp. — IIA.
In celebrating Hispanic Heritage Month, we are reminded of the progress made, and the struggles ahead for America’s fastest-growing community. This month, we celebrate the accomplishments of Latinos in politics, business, and every American sphere. Latinos have progressed, and continue to grow in buying power, educational attainment and number. The work of ensuring Latino participation in all aspects of American life must also include ensuring full digital inclusion – the advancement of digitally literate communities who are online and ready to leverage digital tools across their lives.
As the executive director of the Hispanic Technology and Telecommunications Partnership (HTTP), I am proud to represent a coalition of national and regional Hispanic organizations working to increase awareness of the impact of technology and telecommunications policy on the U.S. Hispanic community. As a coalition, HTTP’s members support policies that promote universal access to, and adoption of technology, including broadband Internet. As members of the Internet Innovation Alliance, we support the policies, partnerships and private-sector opportunities to ensure investment leading to expanded broadband access and innovation that makes the Internet more useful to this community.
We care about these policy and business matters for important reasons. According to the Pew Research Center’s Internet and American Life Project, 51 percent of Hispanics access the Internet via a mobile device, while only 33 percent of whites do. The mobile platform has proven to be an accessible “on-ramp” to the Internet while many Latinos continue to lag in adoption of home broadband. Ensuring that Latinos are online, and using the Internet in their daily lives to access education, healthcare and other opportunities is a key to ensuring the future prosperity for the community.
Latinos continue to lead in entrepreneurship — establishing a record number of new businesses. With broadband Internet, small businesses can reduce operating costs while increasing their competitive edge. Broadband access allows business owners, even home-based businesses, to take full advantage of the global digital economy by having real time access to market data, paying bills online, conducting market research through social media, and improving the efficiency of their business operations. It also allows businesses to connect to new markets a few towns or a continent away. These efficiencies can lead to growth and job creation.
The benefits of broadband are not just tied to business. A digital connection also produces significant benefits for individuals and families. For example, broadband access can reduce the cost of delivering high-quality healthcare, especially in rural areas where the closest hospital maybe more than 100 miles away. With broadband Internet, doctors can provide timely diagnoses through remote consultations, saving patients the time and expense of traveling to the doctor’s office (10 Benefits of Health IT). Emerging mobile health and distance healthcare technology offer a significant opportunity to address the health disparities facing the most vulnerable, rural and mobile Latino communities.
For Hispanics, broadband Internet access is no longer a luxury but a competitive necessity. Without reliable access, businesses and individuals will miss out on opportunities and information, putting them at a disadvantage in today’s digital economy. That is why the Hispanic Technology and Telecommunications Partnership is proud to add its voice to the call for the deployment of broadband Internet throughout our country, and national attention to realizing universal digital literacy. It is, in fact, the quickly emerging American communities who will benefit most from the rapid deployment of technology in the digital age.
Earlier this week, the Robert H. Smith School of Business at the University of Maryland released a study, “The Facebook App Economy,” which estimated the app ecosystem of the popular social networking is now directly responsible for over 182,000 jobs. And that’s just a drop in the job creation bucket. The study also estimates the entire Facebook app economy has produced over 235,000 jobs and contributed some $15 billion to the U.S. economy.
While the current app craze may not last — at least not at its current fever pitch — there’s no denying that right now the ecosystem is thriving. And producing. And it’s not just Facebook that is growing in the app environment. Amazon, Microsoft, and the Android mobile platforms each boast healthy app stores of their own, thereby creating additional jobs, encouraging investment, and adding value to the entire economy.
Then there’s Apple’s App Store, which this past July hit two impressive milestones: over 500,000 apps available, and over 15 billion — that’s right, billion — app downloads. Think that’s impressive? Think about the number of people working on mobile apps for Apple’s service right now. Then think about the fact the company’s App Store didn’t even exist four years ago.
Just five years ago, the online economy mainly brought to mind services or advertising. But the unprecedented adoption of mobile broadband has launched a new platform where everything from a 99¢ game to an entire online book store can create careers and inspire businesses.
The mobile broadband platform has the power to drive innovation and investment for decades to come. Three short years ago, the second iPhone helped ignite the mobile broadband explosion when it made “3G” a household term. Now mobile broadband is moving into the next generation.
The LTE era is right around the corner. We should all be excited for what it will bring.
Last July, 10 attorneys general sent a letter to the Department Justice and Federal Communications Commission in support of AT&T’s merger with T-Mobile. Today, those same attorneys general reenforced their support. From their new letter to the DOJ and FCC:
Within the last two weeks, AT&T announced that in connection with the merger it would bring 5,000 jobs back to the U.S. and it committed to no job losses for wireless call center workers at AT&T and T-Mobile on the payroll at the closing of the merger. We again urge both DOJ and the FCC to focus on ways to resolve specific competitive concerns so this merger can proceed and deliver the significant benefits not only for wireless consumers, but also for investment and jobs that will support economic growth.
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