Reforming Telecommunications Regulations Key to Unlocking Greater Economic Success, Says ACI Report

Broadband Regulations Are Discouraging Investment and Job Creation

(Washington, D.C.)—A new report released today by the American Consumer Institute finds broadband network companies create 4,200 more jobs than large web-based providers for every billion dollars in revenue, but this added job creation is being threatened by onerous regulations.

“We’re witnessing a crippling wave of overregulation in the U.S. telecommunications industry that is resulting in economic consequences that impede private investments and job creation, and at the end of the day the only losers are American consumers,” said Steve Pociask, president of the American Consumer Institute. “Under this new administration, policymakers and regulators must put aside partisan agendas and work together to deliver practical broadband policies that level the competitive playing field and support our nation’s economy and encourages innovation.”

Key findings of the analysis include:

  • New federal regulations dramatically increase operating costs for Internet Service Providers (referred to in the study as core providers), as well as increase market risk, lower expected growth, suppress network investment, and dampen opportunities for network providers to maintain and create jobs.
  • These regulations overlook large web-based applications providers (referred to in the study as edge providers), who often call for the imposition of these rules on their would-be network rivals – namely, core providers.
  • Based on historical data, this study finds that for every billion dollars in revenue, core providers create 812 more direct jobs or about twice as many, when compared to edge providers or 4,200 jobs when including industry multiplier effects.
  • Compared to edge providers, core providers earn profits at lower rates and invest more back into the economy per dollar of value received in the market.
  • Finally, regulatory rules that reduce revenue and growth for core companies serve to transfer these benefits (revenue or growth prospects) to edge companies, which leads to less investment and produces a net loss of jobs in the economy.

“The time has come to reform and, in some cases, altogether eliminate onerous broadband regulations that stifle our nation’s economic potential,” added Pociask. “We hope the incoming administration and 115th Congress recognize the urgency of this situation and focus on the economy and consumers, because doing so will ensure our future success as a nation for decades.”

The December 2016 report, “Establishing a New Policy Paradigm That Encourages Broadband Deployment and Job Creation,” can be downloaded here:

http://www.theamericanconsumer.org/wp-content/uploads/2016/12/ACI-Internet-Regulations-Final-Study.pdf.

About the American Consumer Institute

The American Consumer Institute Center for Citizen Research is a 501(c)(3) nonprofit educational and research institute.  For more information on the Institute, visit www.theamericanconsumer.org.

 

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