The Internet Ecosystem: Employment Impacts of National Broadband Policy
This study addresses some unexplored investment and job impact implications of new Net Neutrality regulations recently proposed by the Federal Communications Commission. The rationale for doing so has consistently been cast in terms of maintaining open networks, preserving end-to-end principles, ensuring neutrality, and other equally vague and essentially irrebuttable objectives. In context of a weak economy and bleak jobs outlook, the widely recognized, but limited, ability of monetary and fiscal policies to create jobs, and the increasing economic and political costs of citizens without jobs, this study suggests a third path – regulatory forbearance toward broadband networks – as a means of stimulating investment and job creation. The study concludes:
• By eliminating business options successfully practiced by proponents of more regulation, the Commission’s proposals would dramatically increase market risk, lower expected growth, suppress network investment, and dampen opportunities for network providers to maintain and create jobs.
• The proposed change from Ex Post to Ex Ante regulation would create lengthy regulatory delays and increase regulatory risk for investors, while dampening prospects for new job creation in the Internet sector and in others it supports.
• These and other threats to investment incentives and job creation opportunities are out of line with both the emerging national broadband policy and the growing imperative to create more good, permanent jobs.
• Historical data suggest that for every $1 billion in revenue, “core” network companies provided 2,329 jobs, while non-network “edge” companies provided 1,199 (about half as many). This indicates that Net Neutrality rules that reduce revenues and growth for network companies, and transfer benefits (revenue or growth prospects) to non-network companies, are a barrier to job creation.
• In short, these regulations will shift risk, returns, growth and opportunity away from “core” network providers and in favor of “edge” applications and content providers. SEC data show that, historically, “core” companies earn at lower rates, invest more and create more jobs per dollar of value received in the market than do “edge” companies. Regulation that shifts value away from network providers to non-network providers will reduce investment in network infrastructure and citizen access to broadband while dampening creation and preservation of jobs. This conflicts with consensus requirements of a National Broadband Policy and with our macroeconomic policy goals.
In support of these conclusions, the study sets out financial and economic principles linking Net Neutrality style regulations, investment and jobs; it presents data (filed by firms with the Securities and Exchange Commission) depicting the record of broadband network providers and selected applications providers; and it projects those relationships into the future as guides to the potential responses of firms in the Internet Ecosystem to Net Neutrality type regulatory interventions.
Response to Notice of Proposed Rule Making
The Internet Innovation Alliance (IIA) offers this submission in response to your
Notice of Proposed Rule Making (NPRM) issued on October 22, 2009. IIA is a
broad-based coalition of businesses, non-profit organizations and trade
associations that aims to ensure every American benefits from broadband
Internet regardless of race, income or geography. IIA has long supported a
comprehensive national broadband strategy to complement market efforts to
achieve universal broadband availability and adoption.
In summary, the IIA believes this NPRM is an unnecessary distraction from the
more significant and needed policy initiatives at this crucial time in the
development of the National Broadband Plan mandated by Congress. Indeed,
the Commission’s recent request for an extension of time to deliver a final Plan
only underscores the need for the agency to devote more – not less – attention
and resources to completing a national broadband strategy.
See PDF file for full NPRM reply
The Economic Impacts of Declining Broadband Investments
Digital infrastructure, specifically broadband, supports jobs both within the broadband industry and throughout the economy. If capital expenditure falls, either through unfavorable market conditions or regulatory or other actions taken by government investment levels will decline and jobs will likely be lost, at least in the short term.
Broadband Internet Access and the Digital Divide: Federal Assistance Programs
The “digital divide” is a term that has been used to characterize a gap between “information haves
and have-nots,” or in other words, between those Americans who use or have access to
telecommunications technologies (e.g., telephones, computers, the Internet) and those who do
not. One important subset of the digital divide debate concerns high-speed Internet access and
advanced telecommunications services, also known as broadband. Broadband is provided by a
series of technologies (e.g., cable, telephone wire, fiber, satellite, wireless) that give users the
ability to send and receive data at volumes and speeds far greater than traditional “dial-up”
Internet access over telephone lines.
IIA’s NOI Reply to FCC
Dear Chairman Genachowski, Commissioners Copps and McDowell and Mr. Levin: The Internet Innovation Alliance (IIA) would like to thank you for considering our earlier comments regarding the development of a National Broadband Strategy, and for this opportunity to provide additional feedback. First and foremost, we wanted to direct your attention to a study recently released by Compass Lexecon economist Jon Orszag, Mark Dutz and Bobby Willig (Orszag Report) and commissioned by the IIA. A copy of their report will be submitted as an ex parte filing in Docket No. 09-51. The Orszag Report’s findings and several comments supplied by others compels us to offer these additional observations.
Read full reply
The Substantial Consumer Benefits of Broadband Connectivity for US Households
A new study from Jonathan Orszag, Mark Dutz and Robert Willig finds that American consumers receive more than $30 billion in benefits each year from using broadband at home.
Fighting the Next Good Fight
Sometime in June we’ll see the start of a nationwide mad dash for $7.2
billion that is the down payment on a U.S. national broadband strategy.
Expect this to be a highly competitive process.
IIA Broadband Stimulus Overview
Over $7 billion has been earmarked for broadband expansion in the federal economic stimulus. The top priority for stimulus investments should be deployment of broadband to unserved areas.
FCC NOI - A National Broadband Plan for Our Future
The FCC Notice of Inquiry seeks comment to inform the development of a national broadband plan for our country. Its focus is to enable the build-out and utilization of high-speed broadband infrastructure.
Transforming the Fight Against Poverty: The Internet & Anti-Poverty Strategies
Ever since the beginning of the Internet revolution, people have spoken of the “digital divide” between the Internet “haves” and “have-nots.” While access toinformation technology is still a compelling part of any anti-poverty strategy here in the U.S. and in much of the world, decreasing information technology costs have broadened access to previously underserved populations both here and in many…
National Leaders Must Tap Internet To Fight Poverty In The U.S.
Taking Government Run Programs Online Can Save Billions and Multiply Number Aided Shows New Paper from Harvard Professor Elaine C. Kamarck, PhD WASHINGTON, D.C. – November 11, 2008 – The Internet will be the catalyst for advancement of programs promoting social justice over the next decade, according to new research from Harvard Professor Elaine…
Home Broadband Adoption 2008
The Pew Internet Project released their latest study “Home Broadband Adoption 2008.” Among the key finding were:
In the spring of 2007, 47% of Americans had broadband at home.
In the past year, there has been no growth in home broadband adoption among low-income Americans.
Broadband users are starting to pay more if they want more speed; 29% of home broadband users say they pay extra for a premium service that offers more speed.
The full study is available at http://www.pewinternet.org.
The Broadband Efficiency Index: What Really Drives Broadband Adoption Across the OECD?
A new analysis by the Phoenix Center shows that the United States is adopting broadband technology at the same pace as most other industrialized countries, once demographic and economic differences are taken into account.
Telework In The Information Age
Building a More Flexible Workforce and a Cleaner Environment
By the American Electronics Association
Deployment of Broadband to Rural America
An Evaluation of Current Broadband Services To Rural Americans and The Impact of Internet Public Policy On Broadband Deployment.
Bruce P. Mehlman
David Sutphen
Larry Irving
Broadband Fact Book
Special Reports
National Broadband Strategy
Broadband Stimulus
Data Calculator
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IIA Broadband Symposium - Universal Broadband: Access for All Americans
IIA Internet Academy
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