New FCC Regs Will Stifle Business Broadband & Kill Jobs

Thursday, April 14th, 2016

Report Projects Loss of 43,560 Jobs, $3.4 Billion Drop in Economic Output

WASHINGTON, DC –A Federal Communications Commission (FCC) decision to take over pricing of business broadband services could eliminate up to 43,560 jobs, cut economic output by $3.4 billion over a five-year period and prevent 67,000 buildings from getting access to fiber, according to a study by Hal Singer, principal of Economists, Inc. and adjunct professor with Georgetown University’s McDonough School of Business.

The study comes as some companies competing to provide business broadband services are asking the FCC to set prices in the market and give them special discounts. Other providers want to compete on a level playing field. Singer’s study found no evidence of lack of competition. On the contrary, monthly prices for some business broadband services declined between 7 and 17 percent from 2013 to 2015.

Singer created an economic model to assess the impact of how potential FCC price fixing might affect competition. He used Charlotte, N.C. as a test bed because it has a population and supply of office buildings considered representative of an average U.S. city. Singer extrapolated the results to assess the impact of regulatory change nationwide. Projecting over a five-year period,  the study found:

•    If there is no regulation of fiber-based networks – providers would be able to light up nearly 122,000 buildings nationwide, representing $9.9 billion in capital expenditures and 4,900 new fiber route miles.

•    New regulations would cut projected investment in half to an estimated $4.4 billion, providing fiber to only 55,100 buildings with 2,200 new fiber route miles.

•    New regulations would eliminate 43,560 jobs and reduce economic output by $3.4 billion, while preventing 67,300 buildings from getting new fiber investment.

•    Investment by multiple providers is ongoing and robust. Nearly 30 competitive broadband providers service over 267,000 buildings with fiber across the country, laying over 650,000 route miles of fiber, or 2.42 route miles per building.

•    From 2010 to 2015, four major fiber service providers – Zayo, Level 3, Lightower and TW Telecom – invested about $6 billion in infrastructure in over 40,000 buildings, creating about 60,000 miles of metro fiber.

•    The aggregate capital expenditure needed to wire all unlit buildings in the United States would be between $52 to $75 billion, based on costs per building in Charlotte. USTelecom commissioned the study to examine the impact of policies that could alter the competitive dynamics that have been increasing choice and lowering costs for business broadband customers.

“It is unfortunate that some are calling on the FCC to adopt policies that meddle with the competitive dynamics that have been increasing choice and lowering costs for business broadband customers,” said USTelecom President Walter McCormick. “As this paper illustrates, a competitive business broadband marketplace has emerged in the United States just as Congress envisioned when it passed the 1996 Telecommunications Act. We hope the FCC will choose a path that will build upon these successes, so we can build new broadband infrastructure to better serve American businesses and consumers.”