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Economists Predict Net Neutrality Cost 700K Jobs and $35 Billion Annually 0

Economists Predict Net Neutrality Cost 700K Jobs and $35 Billion Annually

Obama-era net neutrality rules the Federal Communications Commission could repeal 1 may have cost the U.S. economy 700,000 jobs and $35 billion annually in broadband investment, according to economists at Stanford, Pepperdine, New York University, and elsewhere. The economists on Thursday discussed three separate studies commissioned by the broadband industry examining the FCC’s decision to reclassify broadband service as a public utility, subject to potentially tougher regulation.

Reclassification under Title II of the Communications Act, originally designed to regulate telephone monopolies in the 1930s, has cost the industry tens of billions in investment toward network expansion and hundreds of thousands of jobs since enacted in 2015, according to one study. “Estimates of $35 billion per year in lost investment and, cumulatively, lost jobs nationwide that may have reached 700,000 since the FCC’s reclassification of BIAS Broadband Internet Access Service providers are reasonable,” Christian Dippon of NERA Economic Consulting wrote. The FCC turned to Title II as a way to bring internet service providers (ISPs) under its jurisdiction after previously trying to enforce open internet rules against web traffic blocking, throttling, and paid prioritization that were struck down in court. Though the FCC forbore from many heavy handed Title II regulations like price capping in the 2015 Open Internet order, Dippon — in a study paid for by Comcast — said the FCC can “reverse itself” any time, and that threat is making investors wary. “There will be lower levels of investment and, relatedly, lower levels of innovation, which will lead to lower levels of Internet subscriptions, yielding lower levels of employment at the macroeconomic level,” he predicts.

Dippon arrived at his numbers via an approach used in a previous Title II economic study by Phoenix Center economist George Ford. Ford’s study 2 , cited in Dippon’s, estimates what jobs and investment would have looked like if the FCC never implemented Title II. Dippon further estimates and factors in how many potential new broadband customers could’ve been lost. “The Ford study predicts shortfalls in investment of roughly $35 billion per year,” Dippon says. “A paper by Sosa and Audenrode, using the Bureau of Economic Analysis RIMS II data and other industry data, estimated that each additional dollar of capital spending generated 20.4 jobs for every million dollars invested in capital equipment.” “Consequently, the shortfall of $35 billion per year translates to 714,000 jobs,” including in sectors like construction and others outside the telecom industry, the study estimates.

Separately, in an FCC filing earlier this week 3 , small manufacturers of broadband network products argued Title II was a threat to their businesses. Another study by Stanford economics professor Bruce Owen, paid for by the cable trade group NCTA, cited Ford and another study by Georgetown economics professor Hal Singer. According to Singer 4 , capital expenditures by the twelve largest internet service providers in the U.S.

have fallen by $3.6 billion, a 5.6 percent decline compared to 2014 levels. “Even setting aside the debate over how best to interpret investment data over the past two years, economic literature is replete with empirical examples of the effects of common-carrier-style regulation on the incentives of regulated firms to invest in infrastructure and new services,” Owen’s study reads. It goes on to say broadband investment prior to the rules “stands in stark contrast to the chronic underinvestment in heavily regulated public utility sectors in this country. Prominent examples include water utilities, electricity grids, and railroads.” A third analysis by former economics professors Andres Lerner of USC and Janusz Ordover of NYU made similar claims.

They argue portions of the net neutrality rules beyond Title II, like the “internet conduct standard,” let the FCC “regulate any practice that it considers “unreasonable.” ‘These risks are likely to have the effect of reducing investments and hampering innovation in the long term, in an industry where continual investments and innovation are key to providing services that benefit consumers,” their study reads. The economists say investments in network expansion, which typically require large “initial sunk and irreversible costs” and produce benefits only in the long-term are especially sensitive to those risks. So are new services and business models like zero-rating, targeted by the outgoing Obama administration 5 with the help of the internet conduct standard late last year.

Groups in favor of keeping the rules on the books, like the Internet Association, say investment has gone in the opposite direction. Using SEC and other data 6 directly from ISPs or used by ISP trade groups, the group shows investment going up 5.3 percent, or $7.3 billion, from 2015 to 2016. That’s higher than the period from 2014 to 2015 (5.1 percent or $4.7 billion), when the FCC was still debating the rules.

Follow Giuseppe on Twitter 7 Subscribe for the Latest From InsideSources Every Morning 8 References ^ could repeal (www.insidesources.com) ^ Ford’s study (www.insidesources.com) ^ FCC filing earlier this week (www.broadcastingcable.com) ^ According to Singer (haljsinger.wordpress.com) ^ targeted by the outgoing Obama administration (www.insidesources.com) ^ SEC and other data (internetassociation.org) ^ Follow Giuseppe on Twitter (twitter.com) ^ Subscribe for the Latest From InsideSources Every Morning (www.insidesources.com)

Arkansas ramps up data center consolidation, caps off K-12 broadband 0

Arkansas ramps up data center consolidation, caps off K-12 broadband

As a massive K-12 broadband project ends, state IT Director Yessica Jones prepares for another big project: data center consolidation. With the end of Arkansas’ K-12 broadband effort in sight 1 , state Chief Technology Officer and Director of the Department of Information Systems, Yessica Jones, is gearing up for the next big project: data center consolidation. “We are in phase one of our project,” Jones told StateScoop in April at the National Association of State Chief Information Officers midyear conference. “We’re going to be doing an assessment of the IT infrastructure across state agencies, and we’re hoping to gain some understanding of the cost analysis of our current infrastructure statewide.” In addition to gaining that understanding, Jones says the state is also looking to find a path to where it hopes to be in the future on IT infrastructure. Any effort like this, she says, includes effective planning and strategizing. “Any enterprise project requires effective planning on prioritizing the projects that we are pursuing based on the governor’s and our strategic vision,” Jones says. “I think that’s very key, and of course, initial and ongoing support from our partners as well as collaboration and cooperation from our stakeholders.” Data center consolidation — which Jones says will include input from several executive agencies in Arkansas state government — is not the CTO’s first foray into enterprise-wide collaboration.

Earlier this year, the state completed a risk assessment across agencies. “We required agencies to allow us to go onsite to check out their cybersecurity environment,” Jones says. “We ask the agencies to allow us to install an important security system, so that required a lot of trust and confidence in our agency.” References ^ in sight (statescoop.com)

Nobles County broadband project underway 0

Nobles County broadband project underway

From left: Finley Engineering Project Manager Dan Olsen, Finley Engineering Project Engineer Chris Konechne, Lismore Coop Telephone Treasurer Mark Loosbrock, Lismore Coop Telephone President Darwin Veld, Nobles County Administrator Tom Johnson, Lismore Coop Telephone General Manager Bill Loonan and Lismore Coop Telephone Vice President Gene Metz celebrate the start of the broadband project. The large shovels pictured were used to dig Lismore’s first phone lines in 1907. (Karl Evers-Hillstrom / The Globe) 1 / 2 From left: Nobles County Administrator Tom Johnson, Lismore Coop Telephone Treasurer Mark Loosbrock, Lismore Coop Telephone President Darwin Veld, Lismore Coop Telephone General Manager Bill Loonan, Lismore Coop Telephone Vice President Gene Metz, Finley Engineering Project Engineer Chris Konechne and Finley Engineering Project Manager Dan Olsen, celebrate the start of Lismore Telephone’s broadband project. (Karl Evers-Hillstrom / The Globe) 2 / 2 ADRIAN — Lismore Cooperative Telephone Co. on Wednesday officially broke ground on its ambitious project to deliver high-speed internet to much of Nobles County.

The project got legs when the Minnesota Department of Employment and Economic Development announced in January that the co-op had received a $2.94 million grant to create a hybrid fiber and wireless network. The co-op matched the $2.94 million grant one-to-one. Finley Engineering of Slayton will do the engineering and LaPointe Utilities of Forest Lake will serve as the contractor for the project, which looks to provide 500 square miles in new wireless coverage, distributed through five towers.

The company will build a fiber ring around the county as well — fiber to the home will be installed to homes in Leota and Wilmont, as well as any homes that happen to be along the fiber route. LaPointe will be building three new 200-foot towers, as well as a series of huts that will facilitate the fiber ring connections. It will need to lay around 135 miles of fiber to complete the route.

For more of this story, see Saturday’s print edition and dglobe.com.

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