IIA: EU-Style Title II Is Wrong Model

Says U.S. Broadband Better, Faster Under Light-Touch Regs
Title II IIA Study Infographic_RESIZED.jpg

If the U.S. adopts European Union-style Title II-based net-neutrality regulations, it will hurt investment in next-generation broadband networks.

That is according to a paper released Thursday (Feb. 12) by the Internet Innovation Alliance, whose members include broadband network operators/builders/suppliers AT&T, Alcatel-Lucent and Corning.

The paper argues that fixed broadband operators in the U.S., under lighter-touch regulation, have invested four times more capital in networks compared with their European counterparts under the EU Title II approach adopted in 2002, and mobile operators twice as much. And that investment came while EU operators were generally producing more revenue than their U.S. counterparts, according to the paper.

If the Title II regs are meant to promote competition, the report suggests, the reality does not match the aspiration.

"In 2012, competitors held a larger share of the local telephone market (59%) in the U.S. than incumbents (41%), and 92% of U.S. households are in zip codes with access to 10 or more non-incumbent telephone service providers," the report states. "In contrast, EU incumbents retained a presumptively dominant 65% share of the local telephone market with competitors holding only 35%."

The report asserts that the lower levels of investment and competition, and coverage in the EU, are a direct result of Title II, and that the EU has said as much, quoting from an EU document saying "investments in high-speed broadband are taking place more quickly in parts of Asia and in the United States.”

The report concludes that Title II is "anathema to investment" in new networks, an argument cable operators have been making and Federal Communications Commission chairman Tom Wheeler has rejected, pointing to the fact that cable stocks have not suffered with the news of Title II and citing comments by telecom execs to the effect that they will continue to invest.

“Rhetoric and partisanship have derailed the net-neutrality debate,” said IAA honorary chairman Rick Boucher of the report. Boucher is the former chair of the House Energy and Commerce Communications and the Internet subcommittee. “Rather than basing regulatory choices on philosophical principles and hypothetical concerns, policymakers should rely on real numbers that tell the success story of broadband in the U.S..”

The report was authored by Fred Campbell Jr., executive director, Center for Boundless Innovation in Technology, and adjunct professor at the University of Nebraska; Campbell has been a vigorous critic of the FCC's proposed Title II approach to a new Open Internet order.

"An independent research study released this morning by the Internet Innovation Alliance shows that the bipartisan, light-touch American regulatory model embraced since the Clinton Administration has been far more successful than the Title II-style approach imposed in Europe," said FCC Commissioner Ajit Pai in response to the report. Pai has long argued that Title II callsification of Internet access is an innovation and investment killer, as well as a path to rate regulation and potenial last-mile unbundling (http://www.multichannel.com/news/technology/pai-title-ii-order-will-mean...).