FCC Chairman Touts Broadband As Key to Economic Recovery, Job Growth

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By Paul Barbagallo  

Expanding high-speed internet access is critical to America's near-term economic recovery and long-term prosperity, Federal Communications Commission Chairman Julius Genachowski said Sept. 27 in a speech at the Washington, D.C. offices of LivingSocial, an online daily deal site.

Genachowski, in a wide-ranging speech, appealed for support for President Obama's $447 billion jobs plan, which retained two previous administration proposals to nearly double the wireless spectrum available for mobile broadband and to create, for the first time, a nationwide, interoperable, public safety broadband network that would tie fire, police, and emergency first-responders together in the event of a national emergency, such as the terrorist attacks of Sept. 11, 2001.

Genachowski also made a point to tout the FCC's accomplishments during his tenure, such as producing the country's first National Broadband Plan and adopting the first set of rules governing internet access.

The unifying theme of his speech, however, was that a robust broadband infrastructure—both wired and wireless—means more jobs and better economic health.

“Infrastructure, innovation and economic success have always been tied together in the United States,” Genachowski said. “Railroads and highways connected people to each other, facilitating commerce, unleashing ingenuity, and fueling economic growth. Telephones did the same. We didn't get where we are by chance. We got here by choice.”

He added: “In their time, those elements of infrastructure formed the connective tissue of a modernizing economy. Today it's broadband internet. Our broadband infrastructure consists of the fiber, cables, cell towers, and airwaves that enable digital internet traffic to travel anywhere in the world in a fraction of a second. $8 trillion are exchanged over these wired and wireless networks each year. If you shut down the internet, you'd shut down the economy.”

Spectrum Shortage Looms.

From 1995 to 2009, the internet accounted for 8 percent of America's gross domestic product growth; since 2004, it has accounted for 15 percent of GDP growth, according to the FCC.

In the last three years, LivingSocial, Groupon, and other online daily deal sites have created more than 3,000 street-level sales jobs in the United States in more than 200 different local markets, Genachowski noted.

By comparison, Facebook employs 2,600 people, and counting the developers building applications for Facebook's platform, the company has been responsible for the creation of 182,000 total jobs. eBay and Amazon, meanwhile, employ nearly 50,000 people directly.

But threatening job growth and technological innovation, Genachowski says, is a shortage of spectrum for mobile broadband uses.

“Compared to the standard phones we upgraded from, the demand smartphones place on spectrum isn't double; it's not triple; it's 24 times more. For tablets, it's 120 times as much,” Genachowski said. “The ‘spectrum crunch' is the single biggest threat to one of the most promising parts of our economy.”

He cited a Deloitte study that estimates that the rollout of 4G networks will result in 771,000 new jobs, but that “insufficient spectrum could cause the U.S. to go from leader to laggard in the global competition to claim the benefits of 4G technology.”

Incentive Auctions Critical.

Under Obama's jobs plan, Congress would authorize the FCC to hold voluntary “incentive auctions,” in which television broadcasters, who license spectrum through the agency, could release some of it back to the government in exchange for a share of the auction proceeds.

The FCC first proposed the idea of incentive auctions in its National Broadband Plan, released last March.

Sen. John D. Rockefeller IV (D-W.Va.) also has moved a bill (S. 911) through his committee that would allocate a coveted 10 megahertz block of spectrum in the 700 MHz band—known as the “D Block”—for the building of a nationwide emergency communications network and authorize the FCC to hold incentive auctions.

Genachowski said incentive auctions would free up large blocks of “beachfront” spectrum for mobile broadband while at the same time preserving a “strong and healthy TV business.”

But the president's and the FCC's proposals, while embraced by both Democrats and Republicans, have faced stiff opposition from two powerful GOP members: House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and the committee's Communications Subcommittee Chairman, Greg Walden (R-Ore.).

Both Upton and Walden oppose allocating the D Block for the building of a public safety network. And though both Upton and Walden have supported the general concept of incentive auctions, both disagree with the administration and the FCC on how to execute it. They have also lent a more receptive ear to the arguments of the broadcasting industry, which has been lobbying aggressively against incentive auctions.

Still, Genachowski noted: A “spectrum crunch looms, and the costs of delay are significant and grow every day.”

Expanding Wired Broadband.

During his speech, the FCC chairman underscored not only the importance to the economy of wireless broadband, but also of wired broadband. He pointed out that currently about 20 million Americans cannot access broadband internet service at their homes.

“Broadband infrastructure simply isn't available in their communities,” Genachowski said. “We can't afford to have tens of millions of Americans left out of the broadband economy.”

Heeding this call, the FCC is moving forward with proposals to reform and modernize the Universal Service Fund, which currently only subsidizes the cost of providing telephone service.

“Last century, our country made a bold commitment to achieve universal access to the predominant communications technology of the time—analog telephone service,” Genachowski said. “But now, subsidizing the past is standing in the way of advancing the future.”

Genachowski said the agency is in the “homestretch” of the process now, with a “commitment to get reform done (see related report in this section).”

By Paul Barbagallo