Title II is hurting investment. How will – and should – the FCC respond?

[Commentary] How should a regulator respond when their regulations turn out to have unexpected negative side effects or, worse still, when their effects are totally the opposite of what was intended? One would hope that they – levelheaded adults as they are – would acknowledge the imperfections of their rules and reassess their original decisions. However, experience suggests that regulators are less than eager to display such rational behavior. Given the recent evidence regarding the impact of Title II on broadband investment, this character flaw on behalf of regulators might very well end up costing Americans dearly.

The question of how to deal with regulations gone awry is more than moot in the current United States context, given the emerging evidence that, following the FCC’s implementation of the Open Internet Order in February, the US telecommunications industry has seen a marked decrease in capital expenditure by most of the major players. It matters little that the FCC offered assurances at the time that Internet firms would invest regardless of the regulatory climate. The record shows many submissions warning of the very events that have now come to pass.

[Bronwyn Howell is general manager for the New Zealand Institute for the Study of Competition and Regulation]