Research: Broadband Builds U.S. Jobs (Yet FCC Plays Odd Role as Jobs Cop)

by Mike Wendy on October 20, 2011

With the pending AT&T / T-Mobile merger occupying a lot of techpolicy ink, one aspect driving coverage is the potential effect of the acquisition on U.S. jobs.

But a game has ensued here.

Anti-private property groups opposed to the merger, like Public Knowledge, want to paint the smallest picture they can, arguing before the FCC that, as with many mergers, job redundancies, labor overlaps and gains in efficiencies that result mean that AT&T will shed large amounts of jobs post-merger. And, in fast and loose manner, that means, I guess, U.S. jobs on the whole will suffer.

US Chamber of Commerce display - JOBS!

Who knows what will happen at the new company?  AT&T has stated that most changes in employment, if they occur, will come via attrition.  Regardless, companies should be free to deal with their private property as they deem appropriate, meeting resource challenges, technological changes and market dynamics on their terms, not some unelected bureaucrat’s.  Stated differently, it seems outside of the FCC’s wheelhouse to be the employment police here.  If they did this when jobs changes occurred at any given company outside of the extortive merger process, they’d be clearly out of bounds.  The DoL looks at jobs.  Not the FCC.

‘Nuff said.

Let’s dispense with the opposing groups’ concerns here.  As the following excerpts from studies and fact sheets reveal, the greater the diffusion of broadband/ IT throughout America – such as with wireless broadband – the more direct, indirect, induced and productivity-related jobs get produced by American companies.  Period.

Sure, each study or fact sheet has its warts, caveats and conditions.  But the main idea that one can glean from them is this: the broad deployment of broadband / IT produces broader economic benefits that go well beyond the individual workforce circumstances of any specific company.   Moreover, in none of these reports does increased broadband / IT diffusion mean fewer jobs for the economy.

Study / Fact Sheet Excerpts

The Information Technology and Innovation Foundation: The Digital Road to Recovery: A Stimulus Plan to Create Jobs, Boost Productivity and Revitalize America

A stimulus package that spurs or supports $10 billion of investment in 1 year in broadband networks will support an estimated 498,000 new or retained U.S. jobs for a year…Investing in IT infrastructure [including broadband] offers superior job creation benefits because it creates what economists call a ‘network effect.’ This network effect leads to an additional employment growth multiplier, herein referred to as the ‘network multiplier,’ which arises from the new consumer and business behaviors, functionalities, and downstream industries enabled by the IT infrastructure.”

McKinsey Global Institute: Internet matters: The Net’s sweeping Impact on growth, jobs and prosperity

“The Internet’s impact on global growth is rising rapidly. The Internet accounted for 21 percent of GDP growth over the last five years among the developed countries MGI studied, a sharp acceleration from the 10 percent contribution over 15 years. Most of the economic value created by the Internet falls outside of the technology sector, with 75 percent of the benefits captured by companies in more traditional industries. The Internet is also a catalyst for job creation. Among 4,800 small and medium sized enterprises surveyed, the Internet created 2.6 jobs for each lost to technology related efficiencies.”

Deloitte: The impact of 4G technology on commercial interactions, economic growth, and U.S. competitiveness

“U.S. investment in 4G networks could fall in the range of $25-$53 billion during 2012-2016; conservatively, these investments could account for $73-$151 billion in GDP growth and 371,000-771,000 new jobs.”

Economic Policy Institute: The jobs impact of telecom investment

“…[A] $1 billion investment could create an additional 12,000 job-years of employment, which includes direct jobs in primary industries, jobs in supplier industries, and jobs from re-spending by newly hired workers.  Based on press reports that AT&T will invest an additional $8 billion in wireless network development over the next seven years, the report projects that AT&T’s proposed purchase of T-Mobile could plausibly create an additional 55,000 to 96,000 job-years of work.”

Rural Cellular Association: ECONOMIC IMPACT OF WIRELESS BROADBAND IN RURAL AMERICA

“This study, utilizing federal and state level statistics and relying on econometric analysis, estimates the economic impact that full deployment of rural wireless broadband would have on rural America. It is based on the premise that requiring interoperability among all carriers operating in the 700 MHz band and data roaming, the fundamental building blocks for rural and regional broadband deployment, will enable investment and, consequently, rapid deployment of wireless broadband infrastructure in unserved and underserved geographies. This investment will result in the creation and/or retention of 117,000 jobs in the nineteen states that have the lowest broadband availability and penetration in the United States.1 Jobs will be primarily concentrated in the wholesale trade, health and financial services sectors. Of the total 117,000 jobs, approximately 38,500 will be new jobs created as a result of the economic boost provided by wireless broadband in rural areas. The remaining 78,500 jobs will be saved as a result of the combination of economic growth and increased capabilities resulting from the ability to gain access to broadband services.”

Media Access Project, Consumer Federation of America, Free Press: Connecting the Public: The Truth About Municipal Broadband

“…There may be no single thing more important in a community’s efforts to achieve economic well-being than to grasp the role that telecommunications plays in creating meaningful jobs, enhanced education and world class healthcare. Now, more than ever, the direct link is evident between advanced communications and productivity and economic development.”

FCC FAQ: BROADBAND: Creating Jobs & Creating Economic Growth

“A 7% increase in broadband penetration could create an additional 2.4 million new jobs…Over the past 15 years, the Internet has enabled as much economic growth as the Industrial Revolution generated in its first 50 years…In the U.S., the Internet accounted for 8% of America’s GDP growth from 1995-2009. Since 2004, it’s accounted for 15% of U.S. GDP growth.”

FCC FAQ / Graphic: Spec it out!

The consumer / economic benefits of voluntary incentive auctions, which will free up spectrum occupied by broadcasters for mobile smartphone and other wireless broadband uses, are estimated to be $300 billion, from just $30 billion in projected auction proceeds.

The bottom line – with AT&T’s acquisition, it plans to spread powerful 4G broadband services to 55 million more Americans than have it now.  And that’s going to grow U.S. jobs.  Lots.  Importantly, that growth will dwarf any company-specific workforce changes that may occur from the proposed acquisition.

 

{ 4 comments… read them below or add one }

Brett Glass October 20, 2011 at 5:10 pm

I guess we’ll have to agree to disagree on this one. The huge increase in market concentration that this merger would create — along with the tremendous exodus of US jobs for AT&T’s offshore call centers (which earn it the worst possible ratings in customer service) — would surely be detrimental. I, personally, switched away from Alltel when it was acquired by AT&T to avoid being “slammed” to a carrier with poor coverage and abysmal customer service. The merger would also pave the way for a Verizon acquisition of Sprint, leaving the nation with a duopoly.

Just as bad as these things would be the precedent set by the merger if it were allowed to happen. If this supremely anticompetitive merger were allowed, would there ever be ANY that could be blocked thereafter if this one were to be used as precedent?

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Mike Wendy October 20, 2011 at 5:22 pm

I just think we’ve got a lot of choice, and it’s getting better through technology, etc. Moreover, communications markets aren’t de jure monopolies anymore. There isn’t just one provider of “communications” services (whatever those may be now). So, yes, I guess we’ll have to agree to disagree on this one.

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Melanie October 21, 2011 at 11:43 pm

“Stated differently, it seems outside of the FCC’s wheelhouse to be the employment police here.  If they did this when jobs changes occurred at any given company outside of the extortive merger process, they’d be clearly out of bounds.  The DoL looks at jobs.  Not the FCC.” <– last I checked, AT&T was the one making this about jobs by essentially dangling a jobs carrot in front of the FCC in an attempt to counterbalance all the anti-public interest aspects of this merger. So the FCC is not being jobs police. It is responding to arguments made by AT&T to support a merger that was already questionable on other grounds.

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Mike Wendy October 22, 2011 at 12:28 am

Melanie, let me respond with this quote from once-Commissioner Baker (and Abernathy): “…[W]e should retire the notion that these conditions or commitments are voluntary. Commissioner Kathleen Abernathy was correct that conditions ‘are the quid pro quo that merger applicants must accept in order to get timely approval.’ Using the leverage of a merger denial or merger delay to extract concessions from the applicants cannot fairly be characterized as a voluntary process. They should simply be called conditions…”

It’s a big company. But the agencies (DoJ, too) have them by the short hairs. They’re throwing in the kitchen sink to get it through because that’s the cost of doing business with the agencies. Tat said, it’s not appropriate. The FCC’s not the DoL.

If it were OK for the FCC, they should have issued NPRM on Sprint’s job “losses” after NexTel. Do we want that? No.

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