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Originally published Sunday, May 2, 2010 at 4:01 PM

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Guest columnist

FCC should focus on spurring investment, not more regulation

Broadband investors might be less likely to invest in expanding capacity if they face more regulation from the Federal Communications Commission, write guest columnists Hance Haney and George Gilder. Better the FCC should focus on encouraging investment.

Special to The Times

AN open Internet where broadband providers do not block access to websites or discriminate between content or applications isn't a vision. It's a description of the unregulated Internet we already enjoy today. Those in Washington, D.C., who want to change it could stymie it instead and damage the economy.

The movement to shield innovative, computer-enhanced communications services from stifling legacy telephone regulation dates back to a key decision by the Federal Communications Commission (FCC) during the presidency of Jimmy Carter.

Progress continued under the administration of Bill Clinton, when the FCC concluded that there was no evidence that laws enacted by Congress had any intention of expanding traditional telephone regulation to new and advanced services and refused to regulate broadband services provided by cable operators.

During the Bush administration, the FCC made clear that broadband services provided by telecommunications carriers were entitled to equal treatment.

A federal appeals court ruled only a few weeks ago that the FCC had exceeded its authority when it tried to apply a so-called Network neutrality regulatory principle to a case involving Comcast and BitTorrent.

An FCC hearing in Seattle recently gathered public testimony in an effort to overturn this successful bipartisan policy favoring competition and private investment over regulation and public subsidies. It is a quixotic quest.

For one thing, FCC jurisdiction isn't necessary to protect consumers, because the Federal Trade Commission guards against deceptive business practices and applies the antitrust laws to protect competition. FCC jurisdiction could also negatively impact jobs and investment.

A recent study by the Brattle Group concluded that more than 65,000 jobs could be put in jeopardy economywide in 2011 as a result of Net-neutrality regulation, with the total economywide impact growing to almost 1.5 million jobs affected by 2020.

Already 95 percent of Washington state households have access to high-speed Internet access services at various speeds. A significant network upgrade capable of delivering 100 megabits per second could cost $350 billion nationwide, according to FCC staff. Much of that investment will have to come from private industry, officials have conceded. There are no federal dollars available for such programs.

Broadband providers invested almost $60 billion in 2009 alone in broadband networks.

Vigorous competition, rapidly changing technology and regulation are the principal risks for any investor in broadband. The prospect of pervasive regulation would make it nearly impossible for investors to assess the relative risks and rewards of further investment.

Therefore, the best way to nurture the Internet is to sustain current levels of private investment in expanded network capacity. Regulation cannot compel private investment, but it can discourage it by creating uncertainty and risk for investors.

Hance Haney is a senior fellow with the Discovery Institute.

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