Empowering Telecom Job Creators

As is happening in many other states, New Jersey businesses are looking to the legislature to loosen red tape that restricts companies from growing and creating jobs. New Jersey’s telecommunications industry has become the focal point of the debate: one proposed bill (S.2664) would eliminate restrictive regulations, while another (S.3062) would increase regulatory obligations for growing businesses.

New Jersey employers are discouraged. According to the New Jersey Business and Industry Association, employers in the state have less confidence in the national economy now than at any point in the last two decades. Over 40 percent of New Jersey business owners believe the U.S. economy will get even worse the first six months of 2012, while just 14 percent said the economy would improve. To compare, 33 percent of New Jersey employers expected economic deterioration in 2011, while 23 percent had a positive outlook.

Employers feel slightly better about New Jersey’s economy, but not much -- only 20 percent expect the economy to improve. Moreover, just 15 percent of New Jersey businesses plan to increase hiring next year, while 13 percent expect to make cuts, signaling the state’s job market will ultimately remain stagnant over the next year.

S.3062 (“the Smith bill”) would put the brakes on economic activity. It imposes onerous regulations on some New Jersey job creators, distorting the market and choking off the investments and innovations consumers benefit from when businesses compete freely in the marketplace.

Additionally, the legislation gives every advantage to old communication devices, while creating hurdles for 21st century technologies. Says Maxine Ballen, president and CEO of the New Jersey Technology Council:

Fighting to hold on to rotary phone technology is like fighting to preserve the horse and buggy. ... It makes little sense to divert resources away from bringing innovative products and services … to the market just to preserve an archaic system that more and more people are hanging up on. … If the Federal Communications Commission can embrace these new technologies, so should New Jersey.

Especially as the state’s economy struggles to recover, New Jersey needs forward-thinking legislation that encourages job creation, investment, and innovation and creates a better economy for this generation and the next.  The Smith bill is a backwards-thinking proposal. If enacted, it will stifle economic activity, discourage 21st century products from coming to market, and make New Jersey a less competitive place to do business. Moreover, it adds regulations where there are none and finds new ways to tie the hands of New Jersey’s job creators.

There is an alternative to the Smith bill. The Market Competition and Consumer Choice Act (S.2664) reduces unnecessary regulatory obligations to telecommunication and cable providers, further promoting competition for the benefit of consumers.

Similar comprehensive legislation was enacted in Indiana in 2006. In the year following the bill’s passage, telecommunications companies invested an additional $400 million in the state, creating thousands of jobs. A recent analysis predicted the impact on New Jersey if telecommunications companies invested just 25 percent of the total put into Indiana: the additional $100 million in new investments could generate $275.2 million in new economic activity, prompting the creation of 1,447 more jobs and $55.3 million in additional wages.

Moreover, according to a recent study, in 2003 and 2004 investments in telecommunications and IT led to 80 percent of U.S. productivity growth. By lifting regulations through S.2664, the industry would respond by increasing such investments. In turn, New Jersey’s productivity would also rise, strengthening the state’s economy, broadening the tax base and leading to as much as $13.7 million in new tax revenues without raising taxes.

S.2664 would increase productivity in the state, strengthen New Jersey’s economy, and broaden the tax base. New Jersey needs more jobs, not more government bureaucracy. For Garden State businesses, it is critically important for lawmakers to cut the red tape and eliminate senseless regulations, which is exactly what the Market Competition and Consumer Choice Act will do.

It is time to empower job creators in New Jersey, not regulators.