Fox News cites CSMG commentary on the FCC's planned reclassification of Internet Service Providers

Memo to the FCC -- Stop Trying to Regulate the Net and Get to Work Helping to Create More Jobs
By Hal J. Singer
FoxNews.com

According to polls and pundits jobs and the economy were the number one issue on the mind of voters in the November midterm elections. And for good reason: The latest jobs report shows that the U.S. unemployment rate remains stubbornly high at 9.6 percent. To restore jobs, the economy needs more private-sector investment. But firms are sitting on cash, and as result, job creation is lethargic.

Formerly dependable sectors of the economy, such as technology and telecommunications, have been stuck in a storm of uncertainty. For the past two years, regulators in Washington have been peddling investment-discouraging proposals, such as "net neutrality," which would impose new rules over the Internet by reclassifying Internet services under outdated Title II regulation dating back to the Telecommunications Act of 1934.

So what is the fate of net neutrality in the wake of a new political landscape in Congress? As previously envisioned by the Federal Communications Commission majority, net neutrality would contain the poison pill of price regulation, which zaps investment and kills jobs. In this respect, there is no way to reconcile the election results with net neutrality – despite news this week that the FCC is likely to take a vote on net neutrality as soon as December 1.

Consider these impressive election outcomes: All 95 challengers and open seat candidates who signed the campaign pledge in favor of net neutrality last week lost.

In contrast, Democrats who opposed Title II reclassification -- which would invite price regulation of broadband carriers -- fared much better: nearly 70 percent of those survived. Although it is a stretch to say that net neutrality moved voters, the candidates who embraced net neutrality likely embraced other extreme interventionist policies, and for that, they were punished.

To the extent there is a problem that needs fixing, Congress should move first on the issue of net neutrality. Any bill that shuns the poison pill of price regulation in favor of a case-by-case approach to detecting and punishing discrimination on the Internet is an obvious starting place for compromise. If the FCC moves on its Title II proposal before Congress finds that compromise, Republicans have made it abundantly clear they will step in to ensure these job-killing proposals do not move forward.

At least three independent analysts have found that Title II is not the correct path to create jobs. First, The Phoenix Center for Advanced Economic Studies estimates that the May 6, 2010 announcement of the FCC's plans to reclassify Internet service shaved ten percent from the value of stocks of cable companies.

Second, Cambridge Strategic Management Group projects that the FCC's planned reclassification of Internet Service Providers would cause 47 percent fewer households to financially justify fiber-to-the-home investment.

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