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News Release
January 29, 2003
CONTACT: David Fish
(202) 289-8928

The FCC's $101.7B
Economic Stimulus Package

New Study Quantifies GDP/Job Benefits of Potential Deregulation

WASHINGTON, D.C. - Deregulatory action by the Federal Communications Commission – something experts say is likely in the coming weeks – could add between $14 and $34 billion to this year’s GDP. In the longer run, FCC action could create 94,000 to 223,000 jobs in each of the next three years and add as much as $101.7 billion to GDP by 2005.

Those are among the findings of a new study by two noted economists who conclude the telecom/IT sector can help lead the economy back up, just as it helped pull it down. In fact, they say, the economic impact of decisive regulatory reform by the FCC would rival that of the proposed Bush Administration tax plan, which the White House estimates would increase GDP by $40 billion this year, and create a total of 2.1 million jobs over three years.

The key, according to the study: Reform of the FCC’s so-called ‘UNE’ regulations that require major phone companies to lease their facilities to competitors at below-market prices. The FCC “should recognize its actions could have a significant positive impact on macroeconomic performance over the next several years,” conclude Jeffrey A. Eisenach and Thomas M. Lenard of The Progress & Freedom Foundation. “Conversely, indecision and delay will measurably harm the economy: A one-year delay would cost as many as 223,000 jobs in 2003; delaying for two years would reduce employment by up to 450,000 jobs in 2004; and so forth.”

The study compiles results of existing empirical studies to estimate the annual impact of the FCC’s UNE rules on capital expenditures, finding that the rules “reduce telecommunications investment by as much as $12.74 billion each year.” It then applies a Department of Commerce methodology to estimate the positive impact on the overall economy.

“Reviving capital spending in the telecom and IT sectors is central to a robust and lasting economic recovery,” write Eisenach and Lenard. “…it may be the single most important thing policymakers could do to get economic growth on track.” Eisenach is the Foundation’s president, while Lenard is vice president for research. Both are Ph.D. economists who have published extensively on regulatory issues, including telecommunications.

The Progress & Freedom Foundation is a market-oriented think tank that studies the impact of the digital revolution and its implications for public policy. The Foundation is a 501(c)(3) nonprofit organization founded in 1993.



The Progress & Freedom Foundation