Regulatory Uncertainty Is a Job Killer, Pai Warns
"Regulatory uncertainty” from the FCC appears to be having a negative effect on the economy, hampering job growth, Commissioner Ajit Pai said in a speech in Pittsburgh Wednesday. His comments contrast sharply with those by Chairman Julius Genachowski, who has repeatedly linked broadband expansion, and a new apps economy, to jobs (CD June 4 p1). Job growth is expected to be a key focus of the coming presidential election. “To the extent that the commission leaves things uncertain as to the rules of the road ... that’s something that would impede job growth,” Pai told us. “The question is how can the commission work a little more quickly.”
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Pai called for the creation of a new Office of Entrepreneurial Innovation, which would enforce what he said is a neglected part of the Communications Act, Section 7. The section mandates that: “The Commission shall determine whether any new technology or service proposed in a petition or application is in the public interest within one year after such petition or application is filed."
"Certainly my goal is not to point fingers or assign blame but to try to understand where the communications marketplace is,” Pai said in an interview after the speech. “The question is, in my mind, what can the FCC do to create a regulatory framework that will give the private sector a stronger incentive to create jobs and then facilitate economic growth.” In the “bigger picture,” he said, “We need to view everything we're doing within the prism of economic growth, investment and job creation.” The FCC could take a number of steps to move more quickly on pending decisions, he said.
"How can we improve the commission’s processes even further?” Pai asked. “In my view, such things as giving deadlines for handling petitions for reconsideration or applications for review, adopting something like a Supreme Court cert process to help us speed the disposal of [applications for review], or just establishing a six-month deadline for acting on waiver requests ... don’t redound to the benefit of any particular political party or company, but they're internal reforms that would help the FCC operate more quickly to the benefits of the marketplace.”
In the Pittsburgh speech, Pai pointed to new numbers from the Labor Department that found there are now fewer jobs in the information sector of the U.S. economy than at any point since November 1989, with 165,000 telecom jobs disappearing in the last 42 months (http://xrl.us/bnhcbf). “I've met with those in the private sector who decide whether to make investments and to create jobs and have asked what’s holding them back,” he said. “The principal answer that I have received has been remarkably consistent, and it can be summed up in two words: regulatory uncertainty.”
The FCC has to take some of the blame, Pai suggested. “The FCC must act with the same alacrity as the industry we oversee,” Pai said. “That’s not to say we should rush to regulate, but delays at the commission have substantial real-world consequences: new technologies remain on the shelves; capital lies fallow; and entrepreneurs stop hiring or, even worse, reduce their workforce as they wait for regulatory uncertainty to work itself out.” The FCC has had a reputation as a slow moving agency, though some improvements have been made under Genachowski, he said.
"If a company wants to market a new mobile device, it needs the FCC’s approval,” Pai pointed out. “If a company wants to purchase another firm’s spectrum licenses, it needs the FCC’s approval. If a company wants to provide a new wireless service, it needs the FCC’s approval. And if a company finds that there isn’t any spectrum available and proposes the reallocation of inefficiently used spectrum, it needs the FCC’s approval."
Uncertainty also comes from a lack of clarity “over where the commission is headed on the big issues,” Pai said. The aging Communications Act doesn’t help, he said. “Today, the FCC operates under a Communications Act that was last substantially revised in 1996 -- an act that divides the communications marketplace into silos of technologies and services,” he said. “But convergence and competition have rendered this approach hopelessly outdated."
Fred Campbell, director of the Communications Liberty & Innovation Project at the free-market Competitive Enterprise Institute, welcomed Pai’s comments. “To date, this FCC’s path toward our broadband future has been stalled by inaction and a failure to adjust to the rapid changes affecting the wireless industry and the Internet economy,” he said. “Pai recognizes that the current course will not promote continued investment in IP-networks or the wireless ecosystem, and that America’s global competitiveness hinges on how fast we can move to an all IP world.”