Since the dawn of the Internet age, America has led the world in Internet speeds, innovation, and network connectivity.
The Federal Communications Commission’s recent decision to regulate the Internet under a Title II regime, however, places this global leadership at risk. Facing numerous challenges in court, the FCC’s Open Internet Order brings nothing but uncertainty to entrepreneurs and consumers alike.
This uncertainty is examined at length in a new study released by the Georgetown Center or Business and Public Policy (GCBPP), “Regulation and Investment: A Note on Policy Evaluation under Uncertainty, With an Application to FCC Title II Regulation of the Internet.”
Authored by economists Robert Shapiro and Kevin Hassett, the study reveals that prevailing economic theories refute FCC claims made that Title II will grow Internet investment. By highlighting the “clouds of doubt” surrounding the FCC’s new Title II rules, the authors compare the current broadband investment environment fostered by Title II to the atmosphere businesses and investors feel during an election year.
The economists determine that, in total, restrictive Title II regulations could reduce future wireline investments by between “17.8% and 31.7% per-year” and future total wireline and wireless investments by between “12.8% and 20.8% per-year.”
Additional Key Findings:
Lowered Network Efficiency: Title II would reduce the efficiency of most network arrangements that depend on Internet platforms, devalue the investments made in those platforms or based on them, and force many organizations to reorient their enterprises in ways that would minimize the costs of the regulation rather than – maximizing efficient operations.
Impacting Online Video Services and Small ISPs: Title II would affect online video services such as YouTube, Netflix, and Hulu that provide or lease transmission capacity, web search advertising services such as Yahoo and Google that transmit customers’ ads to end users, and cloud computing services, e-readers, and machine-to-machine service providers with transmission capabilities. These effects could be relatively more costly for small ISPs and content service companies with far fewer resources than the larger firms.
Disruption to Innovation: New regulatory hurdles to offering new services and innovations, such as the general conduct standard, introduce delay and uncertainty into the innovation cycles for Internet-related products and services.
The study also notes that by reversing the polices that have attributed over two decades of global leadership, Title II moves America one step closer to an ineffective European regulatory model practiced in the early 2000’s.
Shapiro and Hassett are not alone in their analysis of Title II. Diverse voices from around the country agree that changing the Internet into an outdated Title II telephone service is a momentous step backwards for the America’s Internet future.
The only solution rests with Congress codifying net neutrality into law while preventing the negative consequences of Title II. A legislative remedy on net neutrality has the added advantage of avoiding the legal uncertainty of an FCC ruling and preventing future FCC officials from abandoning net neutrality altogether. Let’s not risk the historic innovative, economic and consumer benefit gains we have enjoyed since the 1990s by adopting Title II. Congress should instead enshrine a permanent and open Internet solution through bipartisan legislation.