Title II's Economic Impact Could Cut ISP Investment by 21%, Academics Contend

The FCC's decision to impose Title II regulation on Internet operations will increase costs for cable operators and other Internet Service Providers and reduce investment, according to an analysis issued by the Georgetown Center for Business and Public Policy.

"The scale of the negative effect [on investment could] be quite large: from about 5.5 percent to as much as 20.8 percent," according to the report's authors Robert J. Shapiro and Kevin A. Hassett. They characterize as a "red herring" the FCC’s assertion that forbearing from some of Title II will allay negative investment impact.

They also single out "the ambiguity around what Title II rules will apply to which companies, services and under what circumstances."  Such uncertainty will prompt ISPs to reduce some planned capital investments, at least until the FCC establishes "how, to what extent and toward whom the new regulations will be applied, and the legal challenges to those decisions have been resolved."  In addition to the line-up of legal challenges that could thwart the FCC Title II decision, the authors point out the ruling's impact on "end users, content and applications." They conclude that its negative effects include "increased costs, prohibited practices, and delayed innovation."

The 30-page report, entitled InRegulation and Investment: A Note on Policy Evaluation under Uncertainty, With an Application to FCC Title II Regulation of the Internet is available here.

Gary Arlen

Contributor Gary Arlen is known for his insights into the convergence of media, telecom, content and technology. Gary was founder/editor/publisher of Interactivity Report, TeleServices Report and other influential newsletters; he was the longtime “curmudgeon” columnist for Multichannel News as well as a regular contributor to AdMap, Washington Technology and Telecommunications Reports. He writes regularly about trends and media/marketing for the Consumer Technology Association's i3 magazine plus several blogs. Gary has taught media-focused courses on the adjunct faculties at George Mason University and American University and has guest-lectured at MIT, Harvard, UCLA, University of Southern California and Northwestern University and at countless media, marketing and technology industry events. As President of Arlen Communications LLC, he has provided analyses about the development of applications and services for entertainment, marketing and e-commerce.