Teleconference on affordability of Title II examines issues with FCC analysis, suggests order faces legal uncertainty

The Georgetown Center for Business and Public Policy’s Project on the Evolution of Regulation and Innovation hosted a teleconference September 18th at 9:00 am ET to discuss the Center’ (new window)s Economic Policy Vignette (new window) based on an Amicus Brief filed with the DC Circuit on August 6th 2015 in support of Petitioners appealing the FCC’s Open Internet Order, and to offer reactions to the FCC’s economic analysis in its Brief filed on September 14th.

Carolyn Brandon, an Industry and Innovation Fellow at the Georgetown Center, moderated the discussion among experts Larry Downes, Director of the Center’s Project on the Evolution of Regulation and Innovation, John Mayo, Professor of Economics, Business and Public Policy, McDonough School of Business and Executive Director of the Georgetown Center and economist Hal Singer of the Progressive Policy Institute.

Professor Mayo explained that the FCC failed to perform even a rudimentary analysis of the costs or benefits of its public utility “reclassification” of broadband Internet and introduced fundamental economic errors in its analysis supporting the imposition of its rules. The decision to regulate ISPs as public utilities, he said, would have only made sense in an alternate universe with significant market failures not visible here. The FCC’s order, Mayo said, is “out of touch with market realities.”

Hal Singer focused on whether the new rules would impact investment and highlighted results from the beginning of 2015 that suggest a significant decline in investment momentum by ISPs, an unintended consequence of uncertainty over the FCC’s disproportionate and far-reaching order that far outweighs any “prophylactic” benefits of the decision to treat ISPs as public utilities.

Larry Downes explained that the economic failings of the order are not only likely to do more harm than good to both consumers and the Internet ecosystem, but also create a threshold legal hurdle for the FCC in the courts. Under long-established Supreme Court precedent, recently underscored in a case involving the EPA, even independent regulatory agencies such as the FCC are required to identify and weigh the economics of their proposed regulations, and to ensure that costs are not wildly in excess of potential benefits.

Though predicting how the court will rule is not possible, the D.C. Circuit could reject the order on that basis alone.

A replay of the discussion is available (new window). For more on the Georgetown Center’s brief, see Larry Downes’s article for Forbes, “Judgment Day for the FCC’s Latest Net Neutrality Folly (new window).”