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A new study from the Internet Innovation Alliance (IIA) estimates the Internet economic impact in the U.S. at more than $1 trillion a year. The IIA attributes that hefty number, at least in part, to a light regulatory environment.

The Internet has spurred significant job creation as well as economic growth over the past decade, according to ¨The Impact of Broadband and Related Information and Communications Technologies on the American Economy¨ produced by Kevin A. Hassett and Robert J. Shapiro.

According to the study, the U.S. broadband/ICT sector produced $1,019.2 billion in value added for the American economy in 2014. That equates to 5.9% of U.S. GDP of $17,420.7 billion. “This substantial share of all U.S. economic value added has been roughly stable for the past decade and likely understates the sector’s full contribution by undervaluing technological improvements,” the study authors explain.

Internet Economic Impact
Other key findings from IIA’s study about the Internet economic impact include:

  • The use of U.S. broadband/ICT goods and services by U.S. private industries, and the information sector (and government), contributed an additional $692.0 billion in output in 2014, equal to 2.7 percent of their combined output and 4.0 percent of GDP.
  • Including the government sector, the use of U.S. broadband/ICT goods and services by other industries and sectors contributed $843.3 billion in output in 2014, equal to 2.9 percent of their combined output and 4.8 percent of GDP.
  • The companies that comprise the broadband/ICT sector employed 4,933,000 workers (full-time equivalents or FTE) in 2014, or 4.2 percent of all U.S. private employment and 3.5 percent of all non-farm employment.
  • Demand by the broadband/ICT sector for goods and services produced by other industries was responsible for an additional 2,784,683 jobs (FTE) in 2014. All told, the broadband/ICT sector was responsible for 7,717,683 jobs (FTE) in 2014, or 6.4 percent of all U.S. private employment and 5.5 percent of all non-farm employment.
  • The average compensation of broadband/ICT sector workers in 2014 was $104,390, 59.3 percent greater than the average compensation earned by other U.S. workers ($65,517).

The Risks and Costs of Title II Regulation
The report authors caution that the imposition of Title II regulation of broadband service providers by the FCC could ¨adversely affect broadband/ICT sector investment, with potentially significant secondary costs for the other industries that depend on it and the overall American economy.¨

“The large economic gains associated with the broadband and ICT sector have flourished in an environment of light federal regulation,” Hassett and Shapiro point out. “The FCC’s proposed regulation of broadband ISPs and their service offerings would stifle broadband/ICT sector investment, growth and employment, negatively impacting the American economy.”

“Today, high-speed Internet is the backbone for 21st century economic growth in the digital economy,” added Rick Boucher, a former Democratic congressman who chaired the Energy and Commerce Subcommittee on Communications and the Internet and now serves as honorary chairman of the IIA.

“Unnecessary price regulation in competitive broadband markets will have far-reaching negative impacts on U.S. economic growth and development. Without ample investment in modern networks, consumers and the entire broadband ecosystem – from Internet Service Providers (ISPs) to edge providers – will suffer from reduced innovation and fewer cutting edge broadband services, as well as reduced jobs and economic growth in the nation’s Internet economy.”

Five broadband service provider associations submitted two separate filings in May 2015 requesting the FCC to stay its decision to reclassify broadband service providers as a Title II telecommunications service. Lawsuits filed by other groups, as well as individual broadband service providers, also have challenged the FCC’s decision.