Anna Maria-Kovacs Assesses the Impact of Changing FCC Regulation on Internet Providers’ Investments

A key feature of the regulation of broadband Internet access service is whether it is regulated lightly as an “information service” under Title I of the Telecommunications Act of 1996 (Act) or more heavily as a “telecommunications service” under Title II of the Act. One of the key considerations in the FCC’s decision to classify broadband access under Title I or Title II has been the impact that regulation might have on investment throughout the Internet ecosystem.

While considerable efforts have gone into assessing the impacts of Title I versus Title II regulation on investment by ISPs, the impacts of regulation on edge providers have received little attention. This is important as a key argument by advocates of Title II regulation has been that it is necessary to protect the incentive for edge providers to invest and innovate. In this policy paper, Anna Maria-Kovacs examines the impact of Title II regulation on investment by edge providers. Sher finds that edge firm investments slowed in the Title II period, then have re-accelerated with the return to light-touch (Title I) regulation in 2017.