Listening to NPR this morning I heard an interesting interview with Congressman Paul Ryan (R-WI) who I usually don’t agree with. NPR billed the interview as “Rep. Ryan On Occupy Protests, Income Inequality”, but it went into more general issues of why corporate America is not investing and creating new jobs. Part of this was very applicable to FCC even though Cong. Ryan is not very popular among the majority of FCC commissioners and spectrum policy was not explicitly mentioned.

On the question of why wealth is not creating new jobs, Ryan stated the causes were

(U)ncertainty on taxes, uncertainty on regulation, uncertainty on debt, and therefore borrowing costs, interest rates and things like that. there is so much government induced uncertainty that it is putting a massive chilling effect on growth. I think that is something we can fix. That is something we can be focusing on as public policy leaders to fix one of the sources of instability, of uncertainty, of one of the depressors of economic growth. (0:50 - 1:26)

Businesses need to have to have some degree of certainty if they are going to plan and take a risk. We want to encourage risk taking. We want to encourage people to take their capital and put it to work, not put it in a bank, not put it in a bond, put it in a factory, put it in a business plan that increases employment. (1:50 - 2:10)

Similarly, the FCC’s longstanding de facto policy of indecision and delay on deliberations on new spectrum policy or whether new technology would cause ”harmful interference” on incumbent licensees results in huge regulatory uncertainty for capital formation in innovative wireless technology. Coupled to this is the Commission’s continual denial that Section 7 is part of the “law of the land”, a repeated topic on this blog. (Section 7 is not a perfect piece of legislation. But if the Commission feels it is unworkable as written, the proper procedure is to request repeal or modification -- not ignore it.)

Wireless R&D is not the only thing a tech savvy investor can invest in. There are less regulated fields like semiconductors, display technology, energy technology, and even biotech - many investors would prefer FDA-regulated technology over FCC-regulated wireless technology because FDA despite its many problems is more transparent that FCC Title III technical regulation! FCC uncertainty and delay adds to other investment risks and may make wireless technology R&D too risky for any rational investor.

While this discussion focuses on technological innovators and incumbents are sitting “fat and happy” with their ability to delay and tilt FCC new technology deliberations in their favor, they also face a risk that capital markets might someday realize that the huge value of their Title III licenses depends on the “metes and bounds” of these assets and in the present nontransparent system this raises regulatory uncertainty for the incumbents and hence increase investment risk. Increased transparency may be more credible to investors than K Street law firms on retainer to defend against innovators.

Tags: Spectrum policy, innovation