The Economics of Net Neutrality, Gag

Ok lets get something straight. We here at ThirdPipe are FOR a Net Neutrality requirement for carriers. But the current ‘Net Neutrality’ option winding its way thru the halls of the FCC is NOT Net Neutrality. Its nothing but a power grab by the Beltway Bandits to squelch dissent.

Oh but it gets worse. The economics of its do not bode well either —

The study, authored by Charles Davidson and Bret Swanson, forecasts that the nation would hemorrhage 500,000 jobs in a best-case scenario were broadband reclassified as a Title II telecommunications service. That just so happens to be an objective currently under pursuit by members of the Federal Communications Commission (FCC) with support from backers of “net neutrality” policy.

The forecasted job losses are likely to make for unpleasant headlines for the FCC at a time when jobs and the economy remain paramount in the minds of most voters and legislators.

“Especially at time when the national economy is attempting to recover from a major and enduring downturn and private sector job creation remains a concern, the destabilizing impacts of the FCC’s proposals place the nation’s economy at even greater risk,” the study reads.

Telecommunications companies have for months now warned that a formal adoption of the FCC’s reclassification proposal could hamper innovation and infrastructure investment, and observers say this study could provide them with fresh ammunition in the fight against reclassification and net neutrality.

“If this Title II regulation looks imminent, we have to re-evaluate whether we put shovels int he ground,” AT&T chief executive Randall Stephenson said earlier this month in an interview with the Wall Street Journal.

From 2003 to 2009, broadband service providers invested, on average, an annual $30 billion for deployment, which created or sustained some 431,000 jobs. Were that level of investment to dip by a conservative 10 percent in the wake of reclassification, 502,000 jobs would disappear and the nation’s GDP would shrink $62 billion. At 30 percent, the study projects the U.S. GDP would drop by $80 billion, for a loss of 602,000 jobs.

Following suit of their Republican colleagues, a growing chorus of senior Democrats have in recent weeks expressed opposition to the FCC’s regulatory rewrite, asking they instead pursue a legislative solution. Cross-chamber whip counts reveal at least 285 legislators disapprove of the measure.

Flush 500k jobs? Sure could. Do the major Telcos have that many jobs? No. But what is not known by many in the beltway crowd is that a large percentage of the Outside Plant work is today done by contract firms. They would be the first to be laid off on the street if the current proposals are adopted. But even at the Telcos there would be follow on layoffs in the management ranks. Why keep an outside plant manager or a facility supervisor if nobody is laying any FIOS cable? They too would be on the street.

The Net Neutrality move is as bad as the DISCLOCE Act in many ways. But to lose a half a million jobs to boot? Somebody get a broom. The FCC needs sweeping out.

The white paper is located here.