WASHINGTON, DC - The House Communications and Technology Subcommittee, chaired by Rep. Greg Walden (R-OR), today discussed the impact of the Federal Communications Commission’s implementation of utility style regulation of the Internet on consumers, jobs, and investment. The hearing continued the subcommittee’s work to promote an Internet ecosystem where consumers have strong protections online without harming their access to innovative new products and services.
“In the end consumers and the American people are the ones who will ultimately bear the greatest loss from these rules. Whether it’s because the increased burden drives small providers out of the market, or because there is less incentive for any company to invest in new and innovative service offerings, or because additional infrastructure investment is no longer as attractive to industry and investors, Title II regulations don’t inspire innovation or investment confidence," said Walden. “In the long term, it means uncertainty, reduced investment, and a future of “what might have been" for our vibrant and thriving Internet ecosystem. We can do better."
“We need certainty, so companies can continue to plan their business models for the years ahead. We need investment, so consumers can continue to receive the high-quality, innovative broadband services we have come to rely on in our everyday lives. We need a return to the light-touch regulatory world that has served the industry and consumers so well over the years," added Full Committee Chairman Fred Upton (R-MI).
Frank Louthan, Managing Director of Equity Research at Raymond James Financial, explained, “Title II is restricting overall investment and returns, is beginning to slow down and over complicate an industry in unnecessary ways, and has yet to see the full effect while the court case is pending. The full impact is unlikely to be known for some time, but we do not believe it will make the industry as attractive to capital as it had been in the past. This will result in less investment. Less investment will, eventually, result in a degrading customer experience, and fewer choices in the market."
Michael Mandel, Chief Economic Strategist of the Progressive Policy Institute, added, “Under the previous light-touch regulatory regime, the telecom/cable/broadband industry has been characterized by strong investment and a roughly constant share of consumer spending, despite a vast increase in data usage. To the degree that common carrier regulation reduces investment, we may see the same slow productivity growth and rising costs to consumers that have characterized health care for decades. For these reasons, I suggest that Title II regulation may-in the interest of protecting consumers-have the perverse effect of reducing investment and increasing consumer costs."
Finally, Robert Shapiro, Chairman and Co-Founder of Sonecon, LLC, explained, “Title II regulation of ISPs will increase costs and reduce investment. Reviewing the available evidence, we estimate that the scale of this effect could range from 5.5 percent to 20.8 percent per-year; and the ratio of investment to capital stock would be expected to decline by roughly that extent as well."
Upton concluded, “We can have protections for Internet consumers and a vibrant investment environment - just not under Title II. While net neutrality was supposed to protect consumers, Title II may be having the opposite effect, and that means nobody wins."
