The FCC’s $100 million gamble

Earlier this week, a broad cross section of cable, telecom and wireless interests filed lawsuits to overturn the government’s unprecedented attempt to regulate our Internet economy. The wireless industry has always supported an open Internet. However, the decision by the Federal Communications Commission to adopt Title II net neutrality rules ignored the fierce competition and remarkable innovation in the wireless industry, departing from the bipartisan, mobile-specific framework that helped the U.S. become the global leader in 4G services. 

In seeking judicial review of the FCC’s order, CTIA aims to preserve the regulatory approach that helped bring high-speed mobile broadband options to all consumers across the country — an approach that was designed for, and that has helped promote, the unique technical and competitive conditions of the mobile industry.  

{mosads}Many voices have already criticized the FCC’s decision, and for a number of good reasons: less investment, less innovation and more uncertainty for companies throughout the Internet ecosystem. The FCC recently provided yet another reason: in a report to Congress last week, the agency claimed their rules will “likely” grow the economy by $100 million “or more” every year. 

Putting to the side the validity of that calculation, with communications technologies representing almost one-sixth of our country’s economy to the tune of nearly $3 trillion, the FCC wagered our world-leading broadband and mobile networks for a paltry sum of $100 million. The FCC is betting tens of billions, if not trillions, of commercial investment dollars for the opportunity of government-induced millions.

This is a losing bet. 

While D.C. regulators are touting $100 million “or more” in annual economic benefits, wireless companies alone invest over six times that amount every week in new networks and towers. In the spectrum auction that ended in January, carriers invested over $40 billion in our wireless future. The government is now willing to undercut that commitment for the “likely” return of $100 million, which is less than one percentof that single auction’s outlay.  

To further illustrate how the FCC rolled the dice for this comparatively paltry sum, the sale of a single television station in the Flint, Michigan area could fetch $100 million in the broadcast incentive auction according to the FCC’s own figures. Netflix spent $100 million just to produce the first two seasons of House of Cards. Fast and Furious 7 brought in that amount on its opening weekend earlier this month, and Grumpy Cat – yes, that social media sensation – earned her owner the same amount over the past two years. 

For only $100 million of perceived benefit, why would a regulator radically change how the U.S. government interacts with such a vibrant and growing part of our economy? Particularly here, where there was no pressing need to gamble because wireless users across the United States have – and will always have – access to an open mobile Internet out of competitive necessity. 

Thanks to a wireless-specific regulatory approach, the U.S. now leads the world in wireless broadband deployment and adoption. More than eight out of ten Americans can choose from 4 or more mobile broadband providers. Speeds are increasing, prices are declining and usage is skyrocketing.

Consumers can choose from nearly 700 smartphone plans and over 800 handsets to find the right experience. Wireless innovators are launching new features like Music Freedom and sponsored data that provide additional services to end user customers at no additional cost. And if you have a long-term contract with one carrier, you’ve probably also seen the ads from a competing carrier willing to buy out that contract to get you to switch – such is the intensity of competition in wireless broadband.

As our connected life is taking off, with wireless driving tremendous advancements in verticals from health care and education to transportation and energy, we cannot afford to suppress mobile investment and innovation. The investment inhibited, delayed or lost in these sectors will far exceed $100 million; funding for the digital health ecosystem alone topped $4 billion last year.

Because of the government’s unprecedented intrusion into the management of broadband networks and the slippery slope into the broader Internet economy – the only winning hand in the FCC’s gamble is held by lawyers. Perhaps that’s who the FCC had in mind when it predicted a $100 million economic impact. 

The losers? Mobile innovators, who have to seek regulators’ permission before rolling out products and services, and consumers, who are no longer empowered to decide the success (or failure) of new offerings under this Washington knows best mentality. 

And, if we look at the European experience, where wireless carriers were once 3G frontrunners but lost their leadership under heavy-handed, utility-style regulations, it’s clear that the cost of the FCC’s overreach could be significant.

Indeed, America’s role as the global leader in wireless is at stake. As leaders across the globe are trying to replicate our mobile success and embrace 5G, this is the wrong time to inject such uncertainty into our nation’s wireless industry. 

While we are quite confident that the legal challenges to the FCC’s action will succeed on the merits, that entire process will take years. We urge Congress to end the uncertainty. It is they – our nation’s lawmakers – who have the clear policymaking authority to preserve an open Internet while ensuring that America’s wireless industry remains the world’s leader. America’s consumers and our economy deserve no less.

Baker is president and CEO of CTIA-The Wireless Association.