Report Touts Positive Impact of Fiber Broadband on Local Economy

On February 7, the Fiber Broadband Association published a case study report, "Fiber Anchors Sustained Economic Development, Charlottesville, Virginia." The report examined the impact of fiber broadband network deployment on the greater Charlottesville area, focusing on three economic indicators: private sector job growth, housing value, and digital microbusiness density. According to the report: "Availability of high-speed, low-latency broadband accounted for roughly 35% of Charlottesville's private sector job growth during 2015-2019." The report also credits fiber deployment with increased housing values in the area. And it emphasized the benefits of fiber for "microbusinesses" that have 10 or fewer employees, a domain, and an active website. The findings of the report are based, at least in part, on a comparison of the economic activity of Charlottesville compared with similar-sized cities in Virginia.  

The economic benefits, including job creation, of next-generation broadband networks is also the subject of previous studies. For instance, other analysts have observed the positive economic impact from deployment of 4G and 5G wireless networks and 5G networks. 

 

Local communities hoping to timely realize the full potential of fiber networks for creating jobs and economic opportunities for their residents – similar to how Charlottesville, Virginia, appears to have benefitted – should have in place wireline infrastructure siting policies, including for access to public rights-of-way, that enable timely permit application processing, with permit fees that limited to covering review and processing costs. 

Commissioner Carr's 5G Policy Roadmap Prioritizes More Spectrum, Modernized Infrastructure Rules

Earlier today, in an address hosted by the American Enterprise Institute, FCC Commissioner Brendan Carr detailed his vision for continued American leadership in the race to 5G.

Mark your calendars: Commissioner Carr will participate in a fireside chat with Free State Foundation President Randolph J. May next Tuesday at 11 am EDT as part of FSF's Thirteenth Annual Telecom Policy Conference.

Characterizing the FCC's extensive efforts to accelerate the deployment of 5G under then-Chairman Ajit Pai as "one of the great success stories of the past four years," Commissioner Carr explained that that progress came to pass because the agency "bet on America's free enterprise system" and "went with a tried and true playbook – freeing up more spectrum and modernizing our infrastructure rules."

Looking ahead, Commissioner Carr identified a number of actions the agency can take in these two areas to ensure that the U.S. continues to reap the benefits of a first-mover advantage in 5G.

With regard to spectrum, he recommended a number of additional steps in 2021, including:

• Auctioning 100 MHz in the 3.45 GHz – 3.55 GHz band and adopting rules that allow licensees to operate at sufficient power levels for 5G;
• Auctioning 100+ MHz of mid-band spectrum in the 2.5 GHz band;
• In the 6 GHz band, authorizing (1) very low power (VLP) devices, and (2) device-to-device communications;
• Increasing permissible power levels in the 3.5 GHz (CBRS) band;
• Updating the rules for the 5470-5725 MHz (U-NII-2C) band; and
• Working with Congress to reauthorize the Commission's auction authority.

In 2022 and beyond, he suggested that still more spectrum might be made available between 1300 MHz and 1350 MHz, in the 42 GHz band, below 3.45 GHz, in the 4.8 GHz band, between 7.125 and 8.4 GHz, and above 95 GHz.

In terms of infrastructure reform, Commissioner Carr has led efforts to eliminate bureaucratic red tape; update rules, including those relating to environmental and historic preservation concerns; expedite small-cell deployments; and streamline local approval processes. He highlighted that, as a consequence, the number of new cell sites built annually has increased dramatically, from just over 700 in 2016 to more than 46,000 in 2019.

Moving forward, he urged the FCC to:

• Make updated broadband maps available later this year, which would allow it to begin the 5G Fund for Rural America auction in early 2022;
• Create a Federal Lands Desk at the Commission to facilitate 5G infrastructure construction on federal lands;
• Revise its cost-sharing rules for replacing utility poles;
• Expand his 5G jobs initiative to double the number of tower techs and telecom crew members; and
• Reject regulatory proposals, including calls to subsidize private network overbuilds and reclassify broadband under Title II, that discourage private sector investment.

A copy of Commissioner Carr's prepared remarks is available on the FCC's website.

Expect to hear more on 5G, among other timely topics, during Commissioner Carr's fireside chat, which will take place virtually, via Zoom, on Tuesday, March 23, 2021, at 11:00 am EDT.

Please click here to register.

New Report Highlights the Economic Impact of the "4G Decade"

If you're old enough to remember a time before cellphones, you likely have a general appreciation of the transformative role that mobile connectivity has played in American life. But have you ever tried to express that impact in economic terms? A July 29 study, prepared by CTIA — The Wireless Association and Recon Analytics, does just that. And the takeaways are impressive.

"The 4G Decade: Quantifying the Benefits," as its name suggests, details the impact of 4G wireless technology on investment, Gross Domestic Product (GDP), jobs, and consumer welfare during the ten-year period that began in 2010. One data point, in particular, drives home the overarching theme: based upon contributions to GDP ($690.5 billion in 2019 alone), were the U.S. wireless industry its own country, it would rank as the 21st largest economy in the world.

Some additional conclusions worth noting:

• Wireless providers invested $261 billion in 4G networks over the last ten years;
• During that same timeframe, wireless GDP grew by 253 percent — and was responsible for nearly 10 percent of the total increase in U.S. GDP;
• 4G networks support 20 million American jobs — one out of every six — making wireless the top industry in terms of job contribution; and
• Prices have dropped significantly, saving consumers $130 billion annually. The same unlimited plan that cost on average $114 in 2010 today can be purchased for just $65 — while speeds, coverage, and device capabilities all have improved substantially.

As noted by Roger Entner, Analyst and Founder of Recon Analytics, "[t]he trajectory of U.S. 4G development should serve as a guide to consider — and to enable — the full transformational power of the coming 5G decade."

On the topic of 5G's potential economic impact, James E. Prieger, Professor of Economics and Public Policy at the Pepperdine University School of Public Policy and a Member of the Free State Foundation's Board of Academic Advisors, recently weighed in. In a June 1 Perspectives from FSF Scholars, "An Economic Analysis of 5G Wireless Deployment: Impact on the U.S. and Local Economies," he concluded that:

8.5 million jobs will be created over 2019-2025 compared to a counterfactual 4G-only world, with an average of 1.2 million new jobs each year. The workers filling these new jobs will earn more than $560 billion during that time, create $1.7 trillion in additional output, and add over $900 billion to U.S. GDP.

IP-Intensive Industries Make Significant Contribution to European Economies

A new joint study by the European Union Intellectual Property (IP) Office and the European Patent Office entitled “Intellectual Property Rights Intensive Industries and Economic Performance in the European Union” finds that IP-intensive sectors make a significant contribution to European economies.

Here are some of the key findings regarding IP-intensive industries in Europe:

• IP-intensive industries generated 27.8% of all jobs in the EU during the period 2011-2013. On average over this period, 60 million Europeans were employed by IP-intensive industries. In addition, another 22 million jobs were generated in industries that supply goods and services to the IP-intensive industries. Taking indirect jobs into account, the total number of IP dependent jobs rises to 82.2 million (38.1%).

• Over the same period, IP-intensive industries generated more than 42% of total economic activity (GDP) in the EU, worth €5.7 trillion. IP-intensive industries account for approximately 90% of the EU’s trade with the rest of the world.

• IP-intensive industries pay significantly higher wages than other industries, with a wage premium of 46% over other industries. This is consistent with the fact that the value added per worker is higher in IP-intensive industries than elsewhere in the economy.

• IP-intensive industries have proved most resilient to the economic crisis. Comparing the results of this study with those of the 2013 study reveals that the relative contribution of these industries to the EU economy slightly increased between the two periods 2008-2010 (2013 study) and 2011-2013 (2016 study).

• The detailed analysis of the economic weight of industries engaged in the development of climate change mitigation technologies (CCMTs) shows that they account for 1.2% of employment and 2.1% of economic output in the EU. They generated a substantial trade surplus for the EU and, despite a small drop in employment, were able to increase their GDP contribution between the two periods 2008-2010 and 2011-2013.

This study supports what FSF scholars have stated for many years: strong IP rights protections encourage increased economic activity because they enable and promote creativity, innovation, and investment from artists and entrepreneurs throughout the entire economy. And, importantly, as the new European study shows, securing IP rights grows jobs and wages. 

Title II Regulations Would Negatively Impact Jobs

Last week, Will Rinehart released a report entitled “Title II Reclassification Negatively Impacts Jobs and Investment.” This report provides additional evidence regarding the impact of Title II regulations on employment to a Perspectives from FSF Scholars that I wrote in December 2014 entitled “Title II Would Not Just Harm Consumers, It Would Harm Workers Too.”

Rinehart used investment data from a paper by Kevin Hassett and Robert Shapiro entitled “The Impact of Title II Regulation of Internet Providers On Their Capital Investments,” which I blogged about here. Among many of the Hassett and Shapiro’s findings, one was that Title II regulations would decrease investment by $11.8 billion in 2019, the final year of their estimation. Using a multiplier provided by the Bureau of Economic Analysis, Rinehart calculated that an investment decline of $11.8 billion in 2019 would result in 174,233 fewer jobs than what would exist if Title II regulations were not adopted. Rinehart also made the following clarification:

           Since the US has an extremely dynamic labor market and due to the very nature of multipliers, investment could shift toward other industries, so this number applies only to broadband employment. However, the forgone investment would also come at the expense of highly technical careers, which would ultimately limit positive spillovers like new companies in these evolving markets.

As I mentioned in a blog in early January, the increased fees that would be required from Title II regulations should depress investment by more than the amount Hassett and Shapiro projected, because as the price of broadband increases, the amount consumers demand decreases. This would disincentivize Internet Service Providers from investing and could ultimately lead to even more jobs lost, and/or jobs displaced into other areas of the economy.

The following quote from “Title II Would Not Just Harm Consumers, It Would Harm Workers Too” sums up how the FCC regulators and elected officials should approach Title II:

If a regulation (that does not correct for a market failure) affects employment and wage levels in the market (whether up or down), the impact should be seen as a negative effect on the economy. If these shifts in the labor market were a positive market outcome, they would have occurred absent the regulation.

“Jobs!” should not be a mere political slogan. Public officials, including regulators, should focus on the impact of regulations on employment. Any public official who says he or she wants a healthy labor market should be against Title II reclassification because such regulations likely would have serious negative impacts on many workers.

Job reallocation is not a positive impact of regulations and this report by Will Rinehart provides further evidence to the negative impacts of Title II regulations on investment and employment.