Estimating the True Cost of FCC Regulation


Justin Vélez-Hagan

Ever since the FCC began kicking around the idea of new Internet regulations (a.k.a. “net neutrality” regulation), economists, attorneys, and politicos have been arguing what, if any, cost will be incurred by Internet Service Providers (ISPs) as well as the general public.  Although the exactitude and underlying assumptions of some estimates have been disputed, few have considered the real, total economic cost of the new policy.


One way to estimate regulatory costs is to use the Office of Information and Regulatory Affairs’ (OIRA) good faith estimate of the number of hours of paperwork that a new regulation will require.  A recent figure by OIRA suggests that federal government regulations result in more than 10 billion hours of time spent on paperwork each year.  The one flaw with OIRA’s estimate of the total cost of these 10 billion hours, however, is that it is created using an hourly wage rate of $7.45 an hour, below the minimum wage rate in at least 27 states.  No one working on compliance in this country will earn so little.

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