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.