A great deal of ink has been spilled over the recent Federal Communications Commission (FCC) decision to roll back the clock and impose public-utility styled (Title II) regulation on broadband Internet services. Two weeks after its 3-2 vote on February 26, 2015, the FCC published its “net neutrality” decision, including the final rules for this new regulatory regime for fixed-wire and wireless broadband. Unfortunately, given the complexity of the constantly-changing Internet, this 313-page document provides only the vaguest of hints of how the FCC will proceed, and this uncertainty has likely created concern about the return to formal telecom regulation that many thought had been confined to the dustbin of history.
This paper looks back on the FCC’s journey to establishing this new regulatory policy on broadband communications and attempts to assay its expected impacts. Given that little more than one year has passed since the February 2015 decision and that no new regulations implementing the policy have been promulgated, it is impossible at this date to estimate its effects – favorable or unfavorable – directly. It is possible, however, to determine how investors in the common equities of companies affected by the ruling responded to discrete events along the way to the imposition of Title II. These market responses could provide an early indication of how the new policy will affect the various players in broadband communications, or at least of how the equity markets estimated such effects at the time. The results, or lack thereof, may be surprising – particularly, given the strong reactions that the new rules provoked.
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Robert W. Crandall is an adjunct senior fellow at the Technology Policy Institute. His current research focuses on antitrust and regulatory issues in the telecommunications sector. He is the author or coauthor of numerous articles and books on communications policy, including Competition and Chaos: U.S. Telecommunications since 1996; Broadband: Should We Regulate High-Speed Internet Access? (with James H. Alleman); Who Pays for Universal Service? When Telephone Subsidies Become Transparent (with Leonard Waverman); and Talk is Cheap: The Promise of Regulatory Reform in North American Telecommunications (with Leonard Waverman). Crandall is also a nonresident senior fellow in the Economic Studies program at the Brookings Institution. He was acting director, deputy director and assistant director of the Council on Wage and Price Stability. Crandall has also served as a consultant to the Antitrust Division, the Federal Trade Commission and the Treasury Department. He has taught economics at Northwestern University, MIT, the University of Maryland, George Washington University, and the Stanford in Washington program. Crandall holds an M.S. and a Ph.D. from Northwestern University.
