Getting Aggressive with Broadband Regulation

The Federal Communications Commission recently voted to subject the Internet, once again, to legacy public utility telecommunications regulation originally designed for the old Ma Bell monopoly. While the FCC’s new rules do not push so far as to regulate retail rates (though they do regulate wholesale termination rates), the FCC’s rules open the door to potential retail rate regulation of broadband services by the states. Some special interest groups have called for rate regulation, while others desire the outright government takeover of broadband networks. A sensible question to ask is what should consumers expect from a broadband market subject to these more aggressive sorts of public utility regulation or complete government ownership of broadband networks? Analysis reveals (at least) two policy-relevant insights. First, despite the highest inflation the nation has seen in decades, broadband prices are falling. Second, the regulation and nationalization of broadband service is no cure for allegations of high broadband prices, which are, in fact, falling over time unlike the prices of rate-regulated and nationalized services. Broadband services should be left to competitive market forces, a policy which has served consumers well during the recent economic turmoil.