The Effect of Regulation on Broadband Markets: Evaluating the Empirical Evidence in the FCC’s 2015 “Open Internet” Order
- 588 Downloads
In 2015, the Federal Communications Commission (FCC) imposed common carriage regulation—so-called Title II requirements—on previously unregulated broadband Internet service providers. The regime shift was premised on the FCC’s findings that such rules had demonstrably yielded economic gains. This paper evaluates the FCC’s empirical arguments and finds them uncompelling. Adjustments for inflation or general economic trends eliminate the effects cited by the FCC. Moreover, contrary to the Commission’s assessment, mobile services and broadband markets have shown notable growth in response to deregulatory events that reduce Title II requirements.
KeywordsNetwork neutrality Vertical foreclosure Broadband regulation
The authors thank Scott Wallsten and Lawrence J. White for alert suggestions and helpful comments. Ben Schwall and Bernard Archbold provided excellent research assistance.
- Bazelon, C., & McHenry, G. (2015). Mobile broadband spectrum: A vital resource for the American economy. White Paper for CTIA, May 11.Google Scholar
- Bennett, R. (2012). The 700 MHz device subsidy plan. High Tech Forum, March 30. http://hightechforum.org/the-700-mhz-device-subsidy-plan/.
- Berg, A. (2015). Update: Wheeler goes nuclear with Title II announcement. Wireless Week (February 4); https://www.wirelessweek.com/news/2015/02/update-wheeler-goes-nuclear-title-ii-announcement.
- Boliek, B. E. L. (2009). Wireless net neutrality regulation and the problem with pricing: An empirical, cautionary tale. Michigan Telecommunications & Technology Law Review, 16(1), 1–52.Google Scholar
- Brand X. (2005). National cable and telecommunications Assn. v. Brand X internet services. 545 U.S. 967.Google Scholar
- Brock, G. W. (1986). Telephone pricing to promote universal service and economic freedom. OPP Working Paper Series No. 18, January.Google Scholar
- Comcast. (2010). Comcast corp. v. FCC. 600 F.3d 642 (D.C. Cir.).Google Scholar
- Comstock, E. W., & Butler, J. W. (2000). Access denied: The FCC’s failure to implement open access to cable as required by the communications act. CommLaw Conspectus, 8(1), 5–22.Google Scholar
- DOJ. (2010). United States Department of Justice, Antitrust Division, Ex Parte Submission to the Federal Communications Commission. Docket No. 09-51, January 4.Google Scholar
- Effros, S. (2016). Now what? CableFaxDaily 4, November 17.Google Scholar
- Esbin, B. (1998). Internet over cable: Defining the future in terms of the past. Federal Communications Commission, OPP Working Paper No. 30, August.Google Scholar
- Faulhaber, G. R. (2015). What Hath the FCC Wrought? Regulation, 38(2), 50–55.Google Scholar
- FCC. (1999). Broadband today. Staff Report to William E. Kennard, Chairman of the Federal Communications Commission, October.Google Scholar
- FCC. (2002). Federal Communications Commission, In the matter of inquiring concerning high-speed access to the internet over cable and other facilities, declaratory ruling and notice of proposed rulemaking. GN Docket No. 00-185, March 15.Google Scholar
- FCC. (2004). Federal Communications Commission, FCC removes more roadblocks to broadband deployment in residential neighborhoods. News Release, October 14.Google Scholar
- FCC. (2010). Federal Communications Commission, national broadband plan, chapter five: Spectrum, March.Google Scholar
- FCC. (2011). Federal Communications Commission, In the matter of connect America fund: Report and order and further notice of proposed rulemaking. WC Docket No. 10-90, November 18.Google Scholar
- FCC. (2015a). Federal Communications Commission, In the matter of protecting and promoting the open internet: Report and order on remand, declaratory ruling, and order. GN Docket No. 14-28, March 12.Google Scholar
- FCC. (2015b). Federal Communications Commission, In the matter of protecting and promoting the open internet: Report and order on remand, declaratory ruling, and order. GN Docket No. 14-28 (Title II Order) (Dissenting Statement of Commissioner Ajit Pai), March 12.Google Scholar
- Ferrar, T. (2012). Verizon is selling spectrum, but is anyone buying? GigaOm. https://gigaom.com/2012/05/05/verizon-is-selling-its-spectrum-but-is-anyone-buying/, May 5, 2012.
- Ford, G. S., Koutsky, T. S., & Spiwak, L. J. (2008). Using auction results to forecast the impact of Wireless Carterfone regulation on wireless networks. Phoenix Center Policy Bulletin No. 20, March.Google Scholar
- Frieden, R. (2008). Wireless carterfone: A long overdue policy promoting consumer choice and competition. New America Foundation Wireless Future Program, Working Paper #20, January.Google Scholar
- GAO. (2012). Government Accountability Office, Report to congressional requester, FCC has reformed the high-cost program, but oversight and management could be improved, July.Google Scholar
- Goolsbee, A. (2007). Vertical integration and the market for broadcast and cable television programming. Media Study for the Federal Communications Commission. https://apps.fcc.gov/edocs_public/attachmatch/DA-07-3470A10.pdf, April.
- Hausman, J. (2002). Mobile telephone. In M. Cave, S. Majumdar, & I. Vogelsang (Eds.), Handbook of telecommunications economics (pp. 564–604). Amsterdam: Elsevier Science.Google Scholar
- Hazlett, T. W. (2003). Is federal preemption efficient in cellular phone regulation? Federal Communications Law Journal, 56(1), 155–238.Google Scholar
- Hazlett, T. W., & Wright, J. D. (2012). The law and economics of network neutrality. Indiana Law Review, 45(3), 767–840.Google Scholar
- Hundt, R. (1999). You say you want a revolution. New Haven: Yale University Press.Google Scholar
- Kagan. (2015). Can the FCC attract a full house for the 2016 broadcast incentive auction? Kagan Media Appraisals, February 11.Google Scholar
- Katz, M. L. (1987). The welfare effects of third-degree price discrimination in intermediate good markets. American Economic Review, 77(1), 154–167.Google Scholar
- Katz, M. L. (2016). Wither the open internet order? Working Paper.Google Scholar
- Kellogg, M. K., Huber, P. W., & Thorne, J. (1999). Federal telecommunications law gaithersburg. Gaithersburg, MD: Aspen Law & Business.Google Scholar
- Oxman, J. (1999). The FCC and the unregulation of the internet, federal communications commission. OPP Working Paper No. 31, July.Google Scholar
- Pai, A. (2016). Remarks of FCC Commissioner Ajit Pai before the Heritage Foundation. The FCC and internet regulation: A first-year report card, February 26.Google Scholar
- Rosston, G. L., & Wallsten, S. J. (2014). The broadband stimulus: A rural boondoggle and missed opportunity. Information Society Journal of Law & Policy, 9(3), 453–470.Google Scholar
- Shew, W. (1994). Regulation, competition, and prices in the U.S. cellular telephone industry. In ENSAW-CREST conference on the economics of radio-based communications, 41, June 23–24.Google Scholar
- United States Telecom Ass’n. (2016). United States Telecom Ass’n v. FCC, 825 F.3d 674 (D.C. Cir.).Google Scholar
- United States Telecom Ass’n (Williams, J., dissenting). (2016). United States Telecom Ass’n v. FCC, 825 F.3d 744 (D.C. Cir.) (Williams, J., dissenting).Google Scholar
- Verizon. (2014). Verizon v. FCC, 740 F.3d 623 (D.C. Cir.).Google Scholar
- Wheeler, T. (2015). This is how we will insure net neutrality. Wired, https://www.wired.com/2015/02/fcc-chairman-wheeler-net-neutrality/. February 4.
- Wright, J. D. (2015). Remarks of FTC Commissioner Joshua D. Wright before the federalist society media and telecommunications practice group event: The future of media—Is government regulation in today’s media landscape “over-the-top”? Net Neutrality Meets Regulatory Economics, 101, February 25.Google Scholar
- Wu, T. (2007). Wireless carterfone. International Journal of Communication, 1, 389–426.Google Scholar
- Wu, T., & Yoo, C. (2007). Keeping the internet neutral? Tim Wu and Christopher Yoo Debate. Federal Communications Law Journal, 59(3), 575–592.Google Scholar