The FCC’s “Open Internet” order was just released today. Plenty of people are hashing it over, including PPI (see statement here).

However, what’s less appreciated is how the FCC’s action puts the spotlight squarely on states and municipalities. No longer constrained by federal “light-touch” policies, state and local politicians and regulators must decide: Will they act in a way to encourage private investment in broadband networks? Or, instead, will they choose to discourage private investment in their region by regulating broadband prices and excessively taxing broadband providers?

Here’s the simple fact: States and municipalities that choose to place excess regulations and taxes on broadband providers will find themselves losing out on private investment in new networks, with negative long-term economic consequences.

One state struggling with this decision is Oregon. The Oregon situation is both complicated and illuminating, because it brings together so many different strands. Oregon currently has a set of rules for property tax called “central assessment.” As applied in Oregon, these rules mean that broadband providers such as Comcast pay property taxes based not just on the value of their facilities in Oregon, but on a tax base including intellectual property and other intangibles worldwide. This rule had the effect of driving up Comcast’s tax payments in Oregon by a factor of six, according to the company. The state legislature is considering a bill that allows the central assessment rule to be partly but not fully rolled back, leaving providers such as Comcast still exposed to substantially higher taxes.

The same high-tax rule would also apply to Google, if and when the company follows through on potential plans to build a gigabit fiber network in Portland, Oregon. The bill does offer potential relief for Google and other potential builders of gigabit broadband networks, with a tough caveat: They would have to meet certain build-out, price and performance characteristics in order to qualify for deeper tax reductions. In particular, the provider would have to

 …. offer communication services at or above a speed of 1 gigabit per second symmetrical service and at a price to customers that does not exceed 150 percent of the United States average price for the same speed of symmetrical service. The Public Utility Commission shall determine the maximum price of service and may update the standards for speed, type and price of service as the commission considers appropriate. The commission shall recertify each qualified project under this subparagraph every five years

In effect, the bill gives the PUC a mandate to set rates for gigabit networks–a return to the old-style top-down utility regulation that once helped throttle innovation. Rate regulation would make it much more difficult for providers to put together packages that would work for consumers and support investment. What’s more, because the regulators can change the price and speed standard at will, companies who build gigabit networks and qualify under this clause have no assurance that their tax bill won’t suddenly skyrocket, even if they have met their original promise. Indeed, regulators will be under political pressure to raise speed standards and lower maximum prices.

Now, the partial tax rollback, combined with the conditional tax reduction for gigabit providers, is better than the original tax rules. But if Oregon state legislators really want to attract private broadband investment and spur innovation and growth, they shouldn’t boost taxes on broadband providers and encourage regulators to micromanage prices and services. After the FCC’s open internet decision, that’s a lesson that all states and municipalities are going to have to learn.

This morning’s employment report shows that tech jobs continues to grow at an accelerating pace. As of February 2015, the number of people working in computer and mathematical occupations–such as software developers and information security specialists–is up by 8% over a year earlier (based on 12-month moving averages).  By comparison, in February 2014, the comparable tech job growth rate was only  4.6%.

This acceleration in tech job growth is not being driven by a comparable acceleration in employment of educated workers. As the chart below shows, the number of employed workers with a bachelor’s degree or better is growing at a fairly steady pace.

Combined with our latest analysis of PPP’s tech/info job index, these numbers suggest that tech is still playing a critical role in driving state and local job markets.

In October 2013 PPI released the first PPI Tech/info Job Ranking. In that report, we ranked counties by the strength of their tech/information sector. We found that “places with strong tech/information growth had survived the recession much better than their counterparts.”

This blog item updates that earlier report, and provides our latest Tech/Info Job Ranking (these are the figures cited in the 3/5/2015 New York Times article entitled “What Is the Next ‘Next Silicon Valley’?”) In particular now we focus on the recovery years, from 2009 to 2013. In order to quantify the link between the tech/information sector and overall growth, we construct a new version of the PPI Tech/Info Job Index. For each of 214 large and medium-size counties, the Index measures the number of new tech/information jobs between 2009 and 2013, as a share of 2009 total private sector employment in that county. For example, an index of 1 means that new tech/info jobs created between 2009 and 2013 equal 1% of total 2009 private employment.

On average, the top 25 counties, as measured by the Index, showed an average private sector job gain of 9.1% between 2009 and 2013. That’s compared with a 5.5% gain for the remaining counties. Equally interesting, the top 25 counties, as measured by the index, produced an average non-tech/info job gain of 8.1% between 2009 and 2013, compared to 5.7% for the other counties.

The implication: counties with vibrant tech/info sectors have enjoyed stronger recoveries than other regions of the country, including faster growth of non-tech/info jobs.   

We use the term ‘tech/info’ to emphasizes the convergence of tech firms such as software developers and information and content companies such as newspapers and movie producers. Tech firms and information companies used to live in completely different worlds. Now the walls have come down.

For the purposes of this ranking, the tech/info sector consists of the following industries spanning NAICS 51 and NAICS 5415: Broadcasting (Internet, cable and over-the-air); Custom computer programming (including app developers and web developers); Data processing and hosting (including cloud computing); Film, video, and sound recording (conventional and digital distribution); News services (i.e. Reuters, Bloomberg, Associated Press); Publishing (print and digital); Software; Web search portals and social media; Wired and wireless telecom; Other computer-related services.

The table below gives the top 15 counties, as measured by the tech/info job index. If there’s interest, we will publish a longer list.