^{Democracy & Technology Blog} Big labor cautions FCC

The Communications Workers of America have shared some advice with the FCC regarding proposed network neutrality regulation expected to be unveiled next week.

We cannot afford a repeat of the near-freeze on capital investment by telecom compannies that took place in the early part of this decade in response to a regulatory framework that ignored market realities. We are still paying for that decline as we play catch up to other nations in high-speed broadband deployment.

This is a reference to the debacle FCC Chairman Julius Genachowski’s former boss concocted when implementing the 1996 Telecommunications Act.
Robert W. Crandall of the Brookings Institution has said

… much of the new policy of assisting small-scale entrants was a failure, inducing investors to squander billions of dollars while producing little in the way of new services or innovation. In fact, the new entrants substantially depressed productivity growth in the sector.
* * * *Regulators may not have created it, but they did contribute to the [telecom] bubble [of 1998-2000] by encouraging entrants having little hope of survival.

(See: Competition and Chaos: U.S. Telecommunications Since the 1996 Telecom Act (Brookings, 2005) at vii and 156.
CWA recommends that a fifth principle protecting competitors should include a

robust carve-out[] for managed networks and reasonable network management. Consumers will benefit from telemedicine, education, energy conservation, entertainment, and other applications and services that will require considerable network management. In addition, revenues from managed services are an essential component of the business case for broadband investment. Higher capacity networks in turn produce a robust public Internet alongside managed networks.

CWA also points out that network operators’ capital expenditures were $151 billion over the past 2.5 years versus slightly over $7 billion for net neutrality supporters Google, Yahoo and Amazon.