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Regulation and the Data-Driven Boom

  • September 2, 2014
  • Michael Mandel

The FCC has a full plate: It is dealing a wide variety of regulatory policy decisions in the coming months, including net neutrality, IP transition, spectrum auctions, the Comcast-Time Warner merger, and the AT&T-Direct TV merger.

Even as the FCC engages with these different issues, the U.S. economy is experiencing an unprecedented data-driven boom that is the envy of the world. A new PPI analysis shows that Americans consume 58 gigabytes of data per month per capita, on average, compared to only 23 and 19 gigabytes of data per month per capita, for France and Germany respectively.* In other words, Americans use 3 times as much data as Germans, per capita. The only major European country that even comes close to the U.S. is Sweden.

The combined innovative and investment efforts of the telecom/cable providers, such as AT&T, Verizon and Comcast, and the edge Internet companies, such as Google, Amazon, and Apple, helped propel economic growth above 4% in the second quarter. The number of computer and mathematical workers is up more than 400,000, or 11%, over the past year alone. The tech/info sector—including telecom/cable providers, edge companies, and content creators—is proving to be the most dynamic part of the economy. And as our upcoming “Investment Heroes” report will show, the tech/info sector also includes some of the companies investing the most in the domestic economy.

So how can the FCC keep this data-driven boom going? As the old saying goes, if it ain’t broke, don’t fix it. In recent years, with some large exceptions, the FCC has more or less followed the principle of moderate regulation when it comes to broadband and wireless policy. That means only intervening when there is clear and compelling reasons to do so, in order to give maximum scope for innovation and investment.

This advice is, of course, very different than the more aggressive regulatory approach advocated by some critics who point to Europe as a better example. But if we compare apples to apples—the data consumed per person in the U.S. versus the data consumer per person in most European countries—we see that the U.S. comes out way ahead.

Given the good results so far, we suggest that the FCC should stay on its same moderate course, balancing out the important goal of consumer protection against the long-term benefits of emphasizing innovation and investment. The same principle applies to other regulators, such as the FTC, as they deal with issues such as privacy. Only in that way can we ensure the continued gains from the data-driven economy.

*These figures update our earlier paper “Bridging the Data Gap.”

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