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Review of Industrial Organization
Published in: Review of Industrial Organization 4/2017

21-12-2016

The Effect of Regulation on Broadband Markets: Evaluating the Empirical Evidence in the FCC’s 2015 “Open Internet” Order

Authors: Thomas W. Hazlett, Joshua D. Wright

Published in: Review of Industrial Organization | Issue 4/2017

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Abstract

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.
previous article The Post-Internet Order Broadband Sector: Lessons from the Pre-Open Internet Order Experience
next article Avoiding the Pitfalls of Net Uniformity: Zero Rating and Nondiscrimination

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Footnotes
1
“The air in Washington is alive with contending voices that are taking sides on these issues” (Owen 2011, p. 381).
 
2
Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) [quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168 (1962)]. See also, FCC (2015a, b, p. 387).
 
3
The term, used in a Comment filed at the FCC by Netflix, is used in FCC (2015a, par. 200, fn. 505).
 
4
The papers are Katz (1983, 1984, 1987), Brock (1986), Yoshida (2000).
 
5
The source of the data is the same as that utilized in the FCC's analysis. U.S. Broadband Provider Capex, U.S. Telecom: The Broadband Association;  https://​www.​ustelecom.​org/​sites/​default/​files/​images/​Historical-Broadband-Provider-Capex-072015.​png.​ Adjusting by the Consumer Price Index (All Urban Consumers) makes the 2011–2013 level the third-lowest capex for the sample period.
 
6
Gartner Consulting, One Gigabit or Bust Roundtable Presentation (Nov. 15, 2004); http://​www.​cenic.​org/​events/​archives/​1gob/​112004/​mgilbertpres.​pdf.
 
7
The FCC identified 547 MHz as available to mobile carriers in 2010. In May 2015, some 645 MHz were available (Bazelon and McHenry 2015, p. 8).
 
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Metadata
Title
The Effect of Regulation on Broadband Markets: Evaluating the Empirical Evidence in the FCC’s 2015 “Open Internet” Order
Authors
Thomas W. Hazlett
Joshua D. Wright
Publication date
21-12-2016
Publisher
Springer US
Published in
Review of Industrial Organization / Issue 4/2017
Print ISSN: 0889-938X
Electronic ISSN: 1573-7160
DOI
https://doi.org/10.1007/s11151-016-9556-6

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