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The Potential Economic and Employment Implications of Net Neutrality

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Today, we hear a lot of really smart people talking about how to put Americans back to work. President Obama has made this one of his Administration's top priorities and at the Federal Communications Commission Chairman Julius Genachowski also clearly shares this critical goal.

In the Commission's recently issued and widely-praised National Broadband Plan, the Commission set an ambitious agenda to help spur broadband deployment across the nation and emphasized the important role broadband plays in creating economic and employment opportunities.

While the Commission moves forward to start implementing parts of the National Broadband Plan, the FCC is also currently reviewing whether to impose new net neutrality regulations that could have a significant impact on investment and innovation in the broadband sector.

In dealing with the many complicated and challenging issues before the FCC, Chairman Genachowski has wisely called for a fact-based, data-driven approach and the discussion surrounding the controversial issue of net neutrality should be no exception.

This week, a new report, authored by economist Coleman Bazelon of The Brattle Group and sponsored by Mobile Future, seeks to offer just such an empirical framework to assess net neutrality's potential impact on employment in the broadband sector. The Employment and Economic Impacts of Network Neutrality Regulation: An Empirical Analysis forecasts several key findings including the fact that more than 14,000 jobs could be lost in 2011 if federal officials approve the proposed net neutrality rules. By 2020, that number grows to more than 340,000 lost jobs.

Economy-wide, the harm becomes even more apparent. More than 65,000 jobs could be immediately impacted if the FCC approves the current net neutrality proposals and that number could grow to nearly 1.5 million by 2020.

The paper reaches these conclusions by assuming that the FCC codifies not only its "Four Principles" that have protected Net users since 2005 but also two more rules that would for the first time involve the federal government in the inner workings of broadband technology.

Meanwhile, this debate continues amidst considerable uncertainty over the FCC's role in making rules for the Internet created by a recent ruling of the U.S. Court of Appeals for the D.C. Circuit. In Comcast v. FCC, the court rejected the Commission's authority to regulate Internet services.

Let's be clear: As I've said before, Net users — either on the desktop or on mobile — should be able to access whatever legal content they want. But if federal Internet regulation moves beyond its historic "light touch" to one that tries micromanaging the inner-workings of routers and fiber optics, there could be wrenching job losses as investment slows while legalities are hammered out.

Not surprisingly, the 700,000-strong Communications Workers of America has sounded concern about the impact on jobs and investment. Last fall, it filed a letter with the FCC stating, "We depend on private capital to invest in next-generation wireline and wireless networks, and create and maintain jobs in the industry."

That leads to another point and it's one of the most underappreciated jobs-related developments in recent years. Wireless has spurred tremendous job creation in areas far beyond laying backhaul cable or setting up radio nodes on cell towers. Take a look at the evolution of mobile handsets and the jobs impact in the U.S. A few years back, phone functionality was pretty standard and the most prominent companies in the field were all outside the U.S.: Nokia, SonyEricsson, Samsung, LG.

But today, the center of smartphone innovation has shifted from Scandinavia and Asia to the U.S. There's Apple's iPhone. The Android operating system. The Droid by Motorola. A new Windows mobile OS. All involve U.S. companies that have grown (and hired) in recent years because of a flood of wireless investment dollars.

These implications are especially troubling for wireless innovators since most of the broadband growth in the next ten years is expected to be in mobile broadband.

The FCC has a difficult job ahead: Protecting the open Internet while ensuring that job growth continues in one of the bright spots for the U.S. economy. And as they consider net neutrality, I hope the Commission will continue to take a close look at all of the relevant facts and data, Dr. Bazelon's important if sobering new report among them.

Jonathan Spalter, chairman of Mobile Future, has been founding CEO of leading technology, media, and research companies, including Public Insight, Snocap, and Atmedica Worldwide. He served as an advisor to and spokesperson for Vice President Al Gore during the Clinton administration.

Mobile Future is a 501(c)(4) coalition comprised of and supported by technology businesses, non-profit organizations and individuals dedicated to advocating for an environment in which innovations in wireless technology and services are enabled and encouraged. For a full list of members and sponsors and to learn more about the coalition, go to www.mobilefuture.org.

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