Scare Tactics? Another Study Says Job Cuts if Net Neutrality Is Law

As the FCC prepares to vote on Thursday whether to explore reclassifying broadband, a New York Law School study says such regulation could mean the loss of hundreds of thousands of jobs.

On Wednesday, Charles Davidson, director of The Advanced Communications Law & Policy Institute at New York Law School, and Bret Swanson, president of tech research firm Entropy Economics, released their new findings. Swanson is no stranger to such reports. His background includes stints with think tanks Discovery Institute and Progress & Freedom Foundation and, earlier this year, he published a separate analysis predicting the negative impact of Net neutrality rules on employment numbers.

In that research, Swanson gauged up to tens of thousands of job cuts. This time, Swanson and Davidson forecast up to 500,000 jobs eradicated and $80 billion per year in lost gross domestic product (GDP) if the FCC acts on its proposed third way” oversight of broadband networks. Agency Chairman Julius Genachowski wants to apply some parts not all of telephone regulation to broadband to keep operators from discriminating against users Internet traffic, such as streaming and downloading. Commissioners on Thursday will decide whether to issue a notice of inquiry the first in a series of steps toward more strict oversight on the matter.

Genachowskis idea has its share of detractors. Telcos, of course, despise the proposal and AT&T this week went so far as to threaten that investment in its U-verse IPTV product will suffer if the FCC reclassifies broadband.

If this Title II regulation looks imminent, we have to re-evaluate whether we put shovels in the ground, AT&T CEO Randall Stephenson told the Wall Street Journal.

Even some long-vocal Net neutrality supporters agree with such assessments. At the end of May, Rep. Olympia Snowe, R-Maine, told Genachowski in a letter the third way would hamper or delay broadband network expansion.

And now Davidson and Swanson are adding to the dire chorus. At a minimum, they said, if Net neutrality became law and wireline and wireless broadband service providers slashed investment by 10 percent, 502,000 jobs would disappear. If investment saw a 30 percent drop, 604,000 jobs could get the axe between now and 2015. And at the 10-percent level, GDP losses would come to $62 billion, Swanson and Davidson said; and, at the 30-percent threshold, GDP would fall by $80 billion.

With the U.S. economy still in a fragile state, imposing restrictive regulation on one of the countrys most dynamic sectors is misguided, Davidson said in a press release. At a time when policymakers should be doing everything they can to spur job creation, these rules just do not make sense.

Some venture capitalists, however, disagree. Last week, several financiers said at an Open Internet Coalition event that Net neutrality rules encourage Web investment. For example, sites such as Twitter would never have seen the light of day without Net neutrality principles in place, said Brad Burnham, a partner with Union Square Ventures, according to IDG News. And operators cannot be allowed to control Web content and applications, added Brad Feld, managing director of Foundry Group. That, he said, is a fundamentally bad idea.

The FCC will hold its June meeting on Thursday at its complex on 12th Street, S.W. The proceedings are scheduled to begin at 10:30 a.m. Eastern; Net neutrality is the only agenda item.