It’s no mystery why the Democratic Party lost big in this year’s election: “The party of economic despair will always lose.” President Obama has presided over six years of lackluster economic growth. “Progressive Democratic policies on Keystone, power-plant closures and oils exports crushed younger, unionized job seekers.”
This week, the President doubled down on his bad economic policies when he announced his plan to impose net neutrality through ‘Title II’ price regulation of Internet broadband providers — a plan that will discourage investment in new communications infrastructure and threaten our economic recovery.
Over the last three years, America’s broadband providers have been the brightest source of economic hope during a particularly gloomy recession.
The Progressive Policy Institute (PPI) ranks AT&T, Verizon, and Comcast among the top ten U.S. “investment heroes” — the companies who are investing the most capital in the United States. These three companies alone have invested nearly $125 billion in the U.S. over the last three years, with AT&T and Verizon topping the list on an annual basis.
Obama’s response to their investments in America’s long-term future? A government plan that would take the value of their investments and gift it to his allies in Silicon Valley — companies that haven’t been willing to make the same level of investment on American soil.
Imposing Title II on broadband providers would reverse the bi-partisan, market-based approach to Internet regulation that was pioneered during the Clinton Administration. Clinton’s first principle for government action for the Internet was to “promote private sector investment through tax and regulatory policies that encourage innovation and promote long-term investment.” This principle has resulted in unprecedented levels of investment and innovation in new infrastructure and services for twenty years.
The mere announcement of Obama’s first principle for government action for the Internet — “you didn’t build that” — is already giving pause to companies who are investing in ultra-fast fiber broadband networks. As analyst Craig Moffett asked rhetorically, “How can you commit to capital spending with this level of uncertainty around regulation?”
Cities that stand to lose out on ultra-fast broadband under the President’s plan would also lose blue collar jobs. AT&T (267,000), Verizon (195,000), and Comcast (126,000) employ more than half a million people. On any given day, Comcast has two thousand positions open across the company (nearly as many as the total number of Netflix’s actual employees). These jobs aren’t concentrated among the technological elite who live large in Silicon Valley. They employ Americans throughout the country who work in local offices and drive the trucks that provide service in your neighborhood.
There is no reason to believe that redistributing the value of broadband providers’ infrastructure investments to Silicon Valley companies will yield similar benefits for average Americans. No Internet “edge” provider has ever cracked the top ten on PPI’s list of U.S. investment heroes. While broadband providers were investing hundreds of billions in new infrastructure during the Great Recession — when most average Americans were hurting — Silicon Valley companies were stashing hundreds of billions of dollars in offshore accounts to avoid paying U.S. taxes (Apple, Microsoft, Google, and Cisco have $250 billion in cash abroad). Unlike AT&T, Verizon, and Comcast, who focus their businesses on the United States, the largest Silicon Valley companies are international giants who have expended enormous energy building their empires in China and Europe.
Before the Title II debate gained steam, net neutrality was described as a “solution in search of a problem.” If the Federal Communications Commission follows the President’s lead and imposes Title II on broadband providers, net neutrality will be the problem — a problem the President’s party will own.