In an era of unprecedented congressional gridlock, the best way for the Trumpadministration to keep its promise to build new infrastructure and create new jobs is to find new ways to boost private sector investment.
That requires an all-hands-on-deck effort, across all departments of government – not just at the big “hard-hat” agencies like the Department of Transportation.
Fortunately, one of the most important efforts to drive private sector infrastructure growth is already under consideration at the Federal Communications Commission.
During President Obama’s second term, his FCC unwisely imposed a strict, all-encompassing “helicopter parent” regulatory framework for the internet that vastly increased the cost and complexity of virtually any new broadband project or development. That utility-style regulation, known as Title II, preposterously treats broadband internet like an old telephone monopoly, and opened the door to government supervision of prices, traffic movement, business models and more.
Apologists for Title II regulation typically argue the Obama FCC’s burdensome regulatory framework is necessary to protect so-called “net neutrality,” which refers to restrictions prohibiting the blocking or throttling of websites.
Not only is Title II not necessary to protect net neutrality, it has had the consequence of jeopardizing private internet infrastructure investment.
Experts estimate that Obama-era Title II regulation drives down investment in broadband projects by as much as $35 billion a year. Applying economists’ rule of thumb that every $90,000 invested creates a potential job, that’s nearly 400,000 jobs lost annually due to overbearing regulation.
The fact that imposing suffocating and unnecessary regulatory oversight upon the internet sector costs American jobs should come as no surprise. After all, telecom providers routinely rank among the most active “investment heroes” pushing the U.S. economy forward – investing over $1.5 trillion in recent years to build the basic infrastructure of our internet. Although today’s overall economy allows for progressively greater outsourcing of work, telecom buildout jobs are by definition “made in America.”
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Apologists for the Obama-era FCC regulation further argue that, because telecom companies continue to invest and build under the “internet as public utility” regime, rolling back those rules won’t increase investment. Nonsense. The fact that companies have made some investments under the rules doesn’t mean they wouldn’t be investing more if freed from the current Title II stranglehold. Economic analysis makes clear that, but for these rules, hundreds of thousands more Americans would be on the job.
That’s precisely why organizations traditionally aligned with liberal policy positions, such as the NAACP and Communications Workers of America, have urged the FCC to recognize the job-producing power of broadband investment.
According to a study those groups filed with the FCC in 2014, 84 percent of all investment in the internet ecosystem has come from network providers, which employ almost 900,000 people, and have some of the most diverse workforces of any American companies. By way of comparison, big software companies and social media giants typically maintain smaller workforces and outsource many operations, account for just 16 percent of internet-related investment.
That explains why supporters of Obama-era Title II internet regulation can’t sustain their claim that their regulatory approach hasn’t undercut broadband investment. They’ve even resorted to embarrassing distortions like counting foreign overseas investment to advance the argument that burdensome FCC rules haven’t deterred new projects or undercut investment in non-broadband projects like satellite TV.
That’s because burdensome and unnecessary FCC regulations increase market risk, drive up legal and regulatory costs and make it less possible to evaluate future returns on investment, which thereby deter new projects and spending.
Finally, advocates of greater government regulation argue that Title II is needed as a legal foundation for net neutrality rules.
That’s simply incorrect. Congress at any time can enact legislation codifying the principles of net neutrality. Indeed, a bipartisan desire already exists for balanced legislation to ensure no company can block, throttle or harmfully discriminate against any data or traffic online. Internet service providers that would be subject to such rules not only support such a legislative effort, but also they have pledged to abide by the core principles of net neutrality absent any federal law or rule.
Other federal agencies must also rescind obsolete or ill-fitting regulations that stifle growth and inhibit creation of new American jobs. But few possess the type of opportunity the FCC has to drive new investment on as large a scale as broadband. That’s why every American should support the FCC’s effort under Chairman Ajit Pai to rescind the suffocating Title II regulation imposed at the end of the last administration, which will encourage greater investment and job creation in the internet sector.
Jeffrey Mazzella is president of the Center for Individual Freedom.
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