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FCC takes baby step towards net neutrality

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The US Federal Communications Commission announced on Wednesday that it would open up the topic of broadband regulation to public commentary — and from some of reactions to that mild step, you'd think that by doing so they were destroying America's economic future.

The vote to open chairman Julius Genachowski's compromise "Third Way" to public discussion was three ayes to two nays, resulting in a 64-page Notice of Inquiry to be released, which begins an "open, public process to consider the adequacy of the current legal framework within which the Commission promotes investment and innovation in, and protects consumers of, broadband Internet service."

Genachowski's "Third Way" plan restores some of the regulatory powers that were stripped from it when a federal appeals court vacated its ruling that Comcast was out of line when it choked BitTorrent traffic. The FCC chairman wants some of that authority back — in an overly simplistic nutshell, he wants the Commission to have limited authority to regulate pipes, but not what goes through them.

As might be guessed in these days of high unemployment and voter anger at slow rates of rehiring, the magic-word el numero uno among the anti-Genachowski crowd is "jobs" (lowercase "j"), followed closely behind by "investment" — which, of course, is simply a code word for "jobs".

Dissenting commissioner Robert McDowell, for example, issued an opinion that cited Credit Suisse exec Jonathan Chaplin as saying that the uncertainty engendered by public discussion would stifle investment, "which would mean jobs."

McDowell also wrote: "In fact, one recent economist's study estimates that a net 1.5 million jobs could be put at risk by a Title II classification" — Title II being the subset of the Telecommunications Act that governs telephone service, of which Genachowski wants to apply select elements to broadband.

Specifically, the study to which McDowell is referring, ""The Employment and Economic Impact of Network Neutrality Regulation: An Empirical Analysis," says in its marketing materials that if Genachowski's plan were to be put into place: "Economy-wide, 65,404 jobs could be put in jeopardy in 2011, with the total economy-wide impact growing to 1,452,943 jobs lost by 2020."

To be frank, however, it's hard to see that study as unbiased: it was sponsored by the industry group Mobile Future, whose membership includes anti-Genachowski AT&T and T-Mobile, and whose chairman Jonathan Spalter responded to the FFC's move by saying: "We are disappointed with the Commission's decision to pursue a path that could deter rather than incent broadband deployment." He also urged the FCC to work to "...stimulate ingenuity, investment and American jobs."

McDowell also cited the dissenting letter from 74 Democrats in the House of Representative that The Reg reported on few weeks back, quoting the line that reads: "The uncertainty this proposal creates will jeopardize jobs and deter needed investment for years to come."

Commissioner Meridith Baker coupled uncertainty and investment in her dissent as well. After saying that she "generally support[s] building robust public records to bolster the Commission's work," in this case she was going to make an exception, because "this is the rare case where opening a proceeding creates so much regulatory uncertainty that it harms incentives for investment in broadband infrastructure and makes providers and investors alike think twice about moving forward with network investments under this dark regulatory cloud."

A Genachowski ally, commissioner Mignon Clyburn, was having none of it. In her supportive statement, she dismissed the argument that Baker's "dark regulatory cloud" was scaring off investors. "Notable telecommunications analysts at firms such as Bank of America Merrill Lynch, UBS, and Goldman Sachs," she wrote, "have each asserted that the public reaction by industry to the Chairman’s proposal is overblown. In fact, they believe the current landscape presents a tremendous buying opportunity."

She also cited that very "public reaction by industry" as part of the problem. "If you yell 'The sky is falling!' enough times, people will eventually take cover," she wrote.

"But I can understand why powerful companies balk at government oversight," Clyburn continued. "They view any government authority as a threat to their unbridled freedom. Indeed, if it were up to them, we would not enact rules; but rather, rely on 'voluntary organizations and forums' made up solely of industry personnel to give us advice on how to serve as a backstop for consumers."

Not that such an outcome would be thoroughly disturbing to Clyburn. "I suppose one benefit of this [anti-regulatory] model," she wrote, "is that I could significantly shorten my workday." ®

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