Credibility gap could stall investment if FCC's 'third way' implemented

Financial markets won't put money into a heavily regulated broadband market, and Title I needs to remain in place, says a new report focusing on the FCC's "third way" proposal put forward by chairman Julius Genachowski.

The Phoenix Center's (no, not the Phoenix Foundation, MacGyver junkies) report, titled "The Broadband Credibility Gap," examines the financial effects of the third way proposal using games theory analysis--a fascinating research method in itself--to look at the underlying issue surrounding regulatory classification. Its conclusion? The FCC just can't handle a "light touch" approach to broadband regulation, and investors won't go near broadband if it applies "strong" regulation (meaning, reclassification).

"Reclassification is the policy choice of the litigator in that it provides legal certainty, assuming it is successful defended on appeal," says study co-author and Phoenix Center Chief Economist Dr. George S. Ford. "Unfortunately, the cost of legal certainty is increased financial uncertainty in that reclassification greases the wheels of the regulatory machine. As Chairman Genachowski observes, reduced private investment is the inevitable and natural consequence of reclassification."

Another observation worth noting is that the Phoenix Center's says the Comcast decision "is not a threat to ancillary authority for broadband."

For more:
- see the news release

Related articles:
FCC chairman describes narrowly tailored 'third way' for broadband providers
Congress tells FCC to rethink its 'third way' net neutrality proposal
FCC to discuss net neutrality at June 17 meeting

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