Study: Net Neutrality Won't Increase Jobs

Net neutrality supporters have long argued that institution of “open internet” rules is critical for job retention and creation. However, according to some opponents of the proposed policy, a study released on Friday by Entropy Economics undercuts that assertion–just as much discussion in the political world is re-centering on the topic of job creation and as the Federal Communications Commission (FCC) continues to move closer to a decision on controversial, proposed net neutrality rules.

The study, entitled “What Would Net Neutrality Mean for U.S. Jobs?” analyzes comments submitted by companies within the Internet industry to the FCC as of January 15, 2010. It excludes those submitted by trade associations, individuals, and academics, and breaks commenters down into two categories: Supporters and Skeptics. It also attempts to exclude “non-U.S. employees of foreign-based Skeptics” but includes “any foreign employees of Supporters.”

The results are bound to unsettle net neutrality advocates: Even with the filtering out that Entropy conducted, Skeptics–many of whom have expressed concern about the negative ramifications of net neutrality on their businesses– employ nearly ten times the number of employees that Supporters do. More specifically, Skeptics directly employ 1,440,021 workers, whereas Supporters directly employ just 148,936 workers.

More worryingly for net neutrality advocates, even when Entropy weeded out larger telecom and cable TV companies (defined by Entropy as AT&T, Bright House, Cablevision, Charter, Cincinnati Bell Wireless, Comcast, Covad, Cox, Cricket, Leap, MetroPCS, Qwest, Sprint-Nextel, T-Mobile, Time Warner Cable, and Verizon), Skeptics were shown to employ many more workers than Supporters. Says the study, “The remaining Skeptical companies, including many networking and wireless technology companies, still employed almost four times as many workers as all the Supportive companies, 570,316 versus 148,936.”

Entropy notes that its analysis “is, of course, not dispositive” and that “the efficacy of Net Neutrality regulation is not determined solely by who submits FCC comments nor only by its impact on near-term job creation.” However, the firm also notes that “This analysis does show that many U.S. companies employing large numbers of American workers oppose a major increase in regulation of perhaps the nation’s most important high-growth industry.”

Entropy further notes that Skeptics play a major role with regard to investing in the US economy. Per the study, “In 2008, U.S. info-tech capital investment totaled $455 billion, or 43% of all U.S. non-structure investment. The communications service providers alone invest $65 billion or more annually.” Furthermore, “Among companies filing FCC comments, the Net Neutrality Skeptics invested $189 billion over the last three years, compared to $18 billion for the Net Neutrality Supporters.”

The study concludes that “there is little chance Net Neutrality regulations could improve the near-term jobs picture. There is, on the other hand, a substantial possibility for harm” because “Net Neutrality could substantially reduce the willingness of service providers to invest in new wired and wireless networks.” In turn, the study notes that “Any capital expenditure reductions would directly affect tens of thousands of workers who build and maintain these networks.”

The prospect for immediate reductions in capital investment is one of the concerns regarding net neutrality that telecoms policy experts say underlies opposition to it that has emanated from groups like the Communications Workers of America union.

Entropy’s study comes amid a major jobs push being led by President Obama, a strong supporter of net neutrality, and congressional Democrats. In October, 72 House Democrats sent a letter to FCC Chairman Julius Genachowski that was interpreted in many quarters as voicing coded, but clear opposition to net neutrality.