One Step Forward, Two Steps Back

The FCC’s apparent about-face on Net Neutrality is really perplexing.

Over the past few weeks it looked like the Administration had acknowledged economic reality (and bipartisan Capitol Hill criticism) and turned its focus to investment and jobs. Outgoing NEC Director Larry Summers and Commerce Secretary Gary Locke announced a vast expansion of available wireless spectrum, and FCC chairman Julius Genachowski used his speech to the NARUC state regulators to encourage innovation and employment. Gone were mentions of the old priorities — intrusive new regulations such as Net Neutrality and Title II reclassification of modern broadband as an old telecom service. Finally, it appeared, an already healthy and vibrant Internet sector could stop worrying about these big new government impositions — and years of likely litigation — and get on with building the 21st century digital infrastructure.

But then came word at the end of last week that the FCC would indeed go ahead with its new Net Neutrality regs. Perhaps even issuing them on December 22, just as Congress and the nation take off for Christmas vacation [the FCC now says it will hold its meeting on December 15]. When even a rare  economic sunbeam is quickly clouded by yet more heavy-handedness from Washington, is it any wonder unemployment remains so high and growth so low?

Any number of people sympathetic to the economy’s and the Administration’s plight are trying to help. Last week David Leonhardt of the New York Times pointed the way, at least in a broad strategic sense: “One Way to Trim the Deficit: Cultivate Growth.” Yes, economic growth! Remember that old concept? Economist and innovation expert Michael Mandel has suggested a new concept of “countercyclical regulatory policy.” The idea is to lighten regulatory burdens to boost growth in slow times and then, later, when the economy is moving full-steam ahead, apply more oversight to curb excesses. Right now, we should be lightening burdens, Mandel says, not imposing new ones:

it’s really a dumb move to monkey with the vibrant and growing communications sector when the rest of the economy is so weak. It’s as if you have two cars — one running, one in the repair shop — and you decide it’s a good time to rebuild the transmission of the car that actually works because you hear a few squeaks.

Apparently, FCC honchos met with interested parties this morning to discuss what comes next. Unfortunately, at a time when we need real growth, strong growth, exuberant growth! (as Mandel would say), the Administration appears to be saddling an economy-lifting reform (wireless spectrum expansion) with leaden regulation. What’s the point of new wireless spectrum if you massively devalue it with Net Neutrality, open access, and/or Title II?

One step forward, two steps back (ten steps back?) is not an exuberant growth and jobs strategy.

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