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The Voice of Business,
Industry & the Professions Since 1942
North Carolina's largest
business group proudly serves as the state chamber of commerce
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January 2005
Executive Voices
Want 5,000 Jobs?
Deregulating telecommunications will spur
innovation and boost our economy
By Krista Tillman
North
Carolina has an opportunity to gain 5,000 new jobs and hundreds of
millions in additional revenue — all without spending a penny. That’s the
assessment of a study by the U.S. Chamber of Commerce, NCCBI’s national
counterpart.
Written by a team of nationally-known economists, the study examines the
potential impact of updating telecommunications policy in light of ongoing
technological changes. It concludes that just as telecom was responsible
for a sizeable amount of economic growth in the late 1990s, it could do so
again.
Telecommunications is one of the country’s most powerful economic engines.
In North Carolina, telecommunications service providers employ more than
20,000 people. Each dollar of the industry’s $12 billion infrastructure
investment yields nearly $3 in economic output. North Carolina also is
home to many major equipment suppliers, including Cisco, Corning, Nortel,
and IBM.
Over the years, this growth engine has provided much of the horsepower for
North Carolina’s drive to economic prosperity. According to a 2004 report
by Georgia State University, a state’s communications infrastructure is
one of the top three factors a company examines in choosing where to build
facilities – and North Carolina’s communications infrastructure has long
been first-rate.
Yet, at both the federal and state level, the engine needs a tune up.
National investment in telecommunications networks has fallen 67 percent
since 2000. That’s $760 billion in fiber optics, switches and equipment
not being created, bought and placed in service. As a result, some 500,000
jobs have been lost in the telecommunications sector nationally, including
15,000 in North Carolina.
The economic downturn bears only a small part of the blame. The primary
culprit is that state and federal regulations have been unable to keep
pace with technology. Ten years ago North Carolina legislators recognized
the building convergence of technologies. Understanding the implications
and potential consumer benefit, they changed state law to permit local
competition. Congress followed suit in 1996. Today, nearly 100 new
competing companies serve North Carolina, with another 100 authorized to
begin.
Technologies that barely existed in 1984 are now an integral part of daily
life. Nearly half of all telecommunications “lines” are wireless. DSL,
cable modems and satellite reach both rural and urban areas with
high-speed Internet service. Voice over Internet Protocol (VoIP)
technology, which transmits calls via the Internet, is the fastest-growing
segment of the industry.
Through new products and consumer lifestyles, technology reshaped the
communications industry virtually overnight, outstripping the ability of
regulation to keep pace. Consequently, traditional companies remain
saddled with a historical legacy of regulation while new competitors and
technologies have little government oversight.
As the U.S. Chamber study puts it “regulators are regulating for a world
that no longer exists, one of limited telecommunications technologies and
limited competition in the field.”
When government finally decided to step aside in the wireless industry and
let the markets work, innovative products emerged, competition flourished,
consumers benefited and the economy prospered. It can happen again.
The study presents six recommendations, some requiring legislative action.
If adopted, these recommendations “will generate economically productive
investment, produce efficient, price-lowering competition, and stimulate
innovation in advanced services.”
The authors conclude that overhauling telecom regulations would create
212,000 new U.S. jobs, including 4,714 in North Carolina alone. They
project these changes would stimulate $58 billion in new capital
investment nationally over five years, generating some $634 billion of
additional goods and services and leading to even more new jobs.
Regulators’ decisions ripple through the economy. Changes in regulation
impact companies’ investment decisions that impact buying decisions that
impact jobs. North Carolina saw this first-hand last fall when the Federal
Communications Commission ruled that local telephone companies, such as
BellSouth and Verizon, don’t have to resell to competitors at cost the new
fiber optic investments the established companies make in their networks.
The FCC’s ruling removed uncertainty that had been hanging over the
industry. Within days, BellSouth, SBC and Verizon announced billion-dollar
plans to install more fiber in their local networks. Those announcements
translated into increased demand for fiber optic production at Corning
facilities in Hickory and Wilmington.
North Carolina legislators have long used forward-looking solutions to
encourage business to locate and remain here. The chamber’s study offers a
way to continue that tradition and stimulate thousands of new North
Carolina jobs – without costing taxpayers a cent.
As the U.S. Chamber study concludes: “In the final analysis policymakers
will have to choose between two completely opposite approaches.
“Simply put, either this nation can continue to live with a regulatory
system that regulators are comfortable with – but which has created such
great uncertainty that investment in telecommunications has literally
dried up and cost hundreds of thousands of jobs – or this nation can take
a risk by abandoning the existing system for one that allows consumers,
investors, and innovators to determine the path forward.”
North Carolinians deserve the opportunity to enjoy healthy, vibrant
economic growth. Let’s let a market-based economy and new technologies
lead the way.
Krista Tillman of Charlotte is president of North Carolina operations
for BellSouth
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