For Immediate Release
April 9, 2013
Contact Debra DeShong Reed - media@thebroadbandcoalition.com
Independent Research Shows Competition Creates Jobs and Drives Investment in Business Broadband Marketplace
New study details impact on sector if FCC fails to act
(Washington, DC)— Hundreds of thousands of American jobs would be lost and billions of dollars in telecom industry investments will remain on the sidelines unless the Federal Communications Commission (FCC) updates competitive policy in the business broadband marketplace. This is one of the key findings of a new study by respected telecommunications research expert Susan Gately, called, “The Benefits of a Competitive Business Broadband Market,” released by The Broadband Coalition today.
“The findings in this report confirm in stark terms the true impact we will see in this country if the FCC does not take action to update competitive policy in the wireline broadband market for businesses,” said former Congressman Chip Pickering, spokesman for the Broadband Coalition. “We know competitive providers drive innovation and this report details the incredible job growth and investments that are spurred as well. It is not only businesses who will suffer without competition in the market, it’s the economy as a whole.”
Job Impacts
According to Gately’s research, if the FCC were to address competitive policy issues, we could expect to see “the hiring of as many as 650,000 new employees into the ranks of the telecom sector over the next five years.” However, if the FCC does not act, instead of adding new jobs, the wireline sector could be expected to lose as many as 300,000 of its current jobs.
Gately found that in the period of robust competition (1996-2000), the wireline telecom sector saw a 30 percent increase in employment. During a period when wireline competitors were weakened, employment in that same sector dropped by 24.7 percent.
“Competitors build networks, buy equipment, and employ workers that would not be needed in a telecom market that included only the incumbent wireline providers,” Gately writes. “In response to the enhanced offerings of their competitors, to protect their existing customer base and meet the challenge of new competitive technology and services, incumbents invest substantially in networks and equipment upgrades and in the growth and quality of their workforce. The result is a greater level of investment and jobs in this sector than would exist if the legacy providers were the only operators in the market.”
Investment Dollars
Competitive business broadband providers continue to drive innovation in this sector. They offer services which are on the cutting edge and beyond in technology. Voice over Internet Protocol (VoIP), dedicated Ethernet access and “’cloud’- based services were all developed and introduced to the business market by competitors striving to differentiate their products and meet customer needs that remained unfilled by the incumbents.”
In order to achieve these innovations, competitors invest in the industry and in the telecom sector. According to Gately’s research, with support for robust competition, over five years the industry will invest an additional $184 billion in private funds into US telecommunications networks. Failure to act could result in a reduction of investment by an additional $30 billion per year.
Gately writes, competitive providers “have become a driving force in the delivery of innovative and efficient services to all segments of the enterprise market, and have invested heavily in their own facilities- including intelligent switches, metropolitan fiber rings, intercity fiber transport, and of course, human capital- in order to produce these competitive offerings.”
Effective Ways to Bolster Competition
Supporting competition doesn’t require a heavy lift by the FCC. “Simply by restoring and updating policy frameworks originally adopted by the FCC to implement the pro-competitive mandates of the 1996 Act,” Gately writes, broadband competition would thrive. Those issues include ensuring competitors have access to last mile facilities and addressing IP interconnection issues.
Dangers of Inaction
“Not only are we in danger of losing all of the benefits of a competitive business marketplace, but the legacy providers are advocating policies that would take us completely in the wrong direction,” said Pickering. “The impacts on employment, on investment and on the health of the sector are consequences we cannot afford. The FCC needs to seriously look at this data and take swift action to strengthen broadband competition.”
Biography, Susan Gately
Susan M. Gately is an economic and policy expert specializing in the telecom arena with more than thirty years of consulting experience in the areas of telecom industry and market structure, regulatory regimes, cost accounting, cost development, access charges, pricing and rate structure, competitive conditions and telecom service and network management practices. Susan founded SMGately Consulting, LLC (SMGC) in January, 2011. Prior to founding SMGC Susan was an equity partner in and the Senior Vice President at Economics and Technology, Inc (ETI) providing strategic advising, litigation support, expert testimony, white papers, and in-house training and education to ETI’s myriad carrier, governmental agency and large business clients Susan is among the nation's foremost experts in access charge rate structure, cost development, and policy. Much of Ms. Gately’s work over the last several years has involved research and analysis of conditions extent in the wireline and wireless telecommunications markets in the US, conditions that have led to the current market structures and implications for users of those networks.
Read Full Report - The Benefits of a Competitive Business Broadband Market - April 2013
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TBC Editor