Proposed regulation of high-speed Internet service as a “common carrier” service could cost the U.S. economy at least $62 billion annually over the next five years–a total of $310 billion–and eliminate 502,000 jobs, according to a study released by the Advanced Communications Law & Policy Institute at New York University Law School.
The report estimates that broadband providers and related industries may cut their investments by 10 percent to 30 percent from 2010 to 2015 in response to additional regulation.
A 10 percent decrease in investment by wireline and wireless broadband service providers, coupled with likely spillover effects, could result in the loss of 502,000 jobs across the entire ecosystem and would have a negative impact on U.S. GDP on the order of approximately $62 billion per year.
A 20 percent decrease in investment by wireline and wireless broadband service providers, coupled with likely spillover effects, could result in the loss of 553,000 jobs across the entire ecosystem and nearly $72 billion in GDP losses per year.
A 30 percent decrease in investment by wireline and wireless broadband service providers, coupled with likely spillover effects, could result in the loss of 604,000 jobs across the entire ecosystem and over $80 billion in GDP losses per year, the study suggests.
In the absence of the FCC’s network neutrality proposals, U.S. broadband service providers would commit at least $30 billion annually in capital expenditures on broadband alone between 2010 and 2015, resulting in the creation or sustainment of 509,000 jobs.
At at 30 percent reduction in investment, the economy might sustain an $80 billion hit, according to Charles Davidson, director of the law school’s Advanced Communications Law & Policy Institute.
“There will be follow-on effects in the whole ecosystem,” said Bret Swanson, president of technology researcher Entropy Economics in Zionsville, Ind., who co-authored the study with Davidson. “A diminution of investment by the big infrastructure companies will reduce network capacity, new services, and investment by all the ecosystem companies.”
These investments would spur capital expenditures by others in the ecosystem. A five-percent incremental increase in capital expenditures by the rest of the ecosystem companies could boost investment by approximately $18 billion per year between 2010 and 2015–about $90 billion over five years–and yield an additional 450,000 jobs created or sustained.
On June 17, the Federal Communications Commission is set to vote on whether to open an inquiry on Title II reclassification of broadband. A majority of members of the U.S. Congress already have indicated they oppose the move, though the FCC does not have to heed their advice.
