Study: Telecom Deregulation Has Not Increased Investment

WASHINGTON, February 12, 2010 – The FCC should do everything it can in the upcoming national broadband plan to restore competition in the communications market, shows a new study spearheaded by Economics and Technology and lauded by Public Knowledge.

The study, “Regulation, Investment and Jobs: How regulation of wholesale markets can stimulate private sector broadband investment and create jobs,” found that employment and investment in the telecom sector rose in the five years following the passage of the 1996 Telecommunications Act.

But between 2001 and 2007, wireless was the only segment of the telecommunications industry where employment increased — and in that sector there were four or more competitors in virtually every geographic market, according to the study.

The study concludes that on the basis of the available evidence deregulation has not yielded increased investment by large, incumbent telecom carriers like Verizon and AT&T or smaller exchange carriers.

Additionally, the report found that the Bell companies “today are only investing about half as much in their networks as they were at the start of this decade.”

Gigi Sohn, president and co-founder of Public Knowledge, said the study(pdf) is correct to point out that ‘competition, not complacency, is the key driver of new capital investment.’”