ORLANDO, Fla.--A top executive from the Telecommunications Industry Association (TIA) says that the regulatory system that governs the Internet does not need to be fixed and the FCC's net neutrality rules will put a damper on new investments.
Speaking during a morning panel session at Genband Perspectives 15, Scott Belcher, CEO of the TIA, said that after the FCC's previous attempt to regulate the Internet failed in 2010, service providers have made investments to improve speeds and the user experience.
"The current system isn't broken--it's working," Belcher said. "If you look at what's happened since 2010, which was the last time the FCC tried to regulate, the speeds have increased by 250 percent and that does not sound like a broken system to me."
Belcher cited how Verizon (NYSE: VZ) spent $24 billion to build out its FiOS fiber-to-the-home (FTTH), a move it could not have made in an uncertain regulatory environment.
"Verizon could not have done that if they were worried about the system and how they would be regulated," Belcher said, adding that "the FCC's order will result in a decrease in investment."
Randall Stephenson, CEO of AT&T (NYSE: T), which has been rolling out its 1 Gbps FTTH service in over 11 cities, said during this week's J.P. Morgan Global Technology, Media and Telecom Conference that the Title II classification could put a potential dampening on new FTTH investments.
Joining other telecom industry groups, including CTIA and the USTelecom Association, TIA has filed suit against the FCC on the net neutrality rules that will go into effect on June 12.
Belcher said that service providers are faced with three potential scenarios under the new net neutrality rules: lawmakers overturn the rules, telcos and industry groups win their legal challenges in courts, or a Republican president wins and overturns the rules. However, all of these elements are hypothetical and in the meantime carriers will face an uncertain regulatory environment.
"That is uncertainty and if you're a company trying to maximize your return on investment, deliver services to your shareholders and your customers, you're not going to make massive investments in your infrastructure if there's uncertainty," Belcher said.
Belcher added that Rob Shapiro, who was an economic advisor to the Clinton administration, has estimated that "there's a potential that almost half the $43 billion investment in infrastructure a year will not be made because of this uncertainty."
Belcher said that his members are concerned that anytime they put out a new product they will be challenged by competitors under concepts that are not specifically defined yet.
"One of my concerns is that new products and applications be fair and reasonable," Belcher said. "I don't know what fair and reasonable is and I think it's a subjective term and neither does the FCC, so the regulator will set up a new group of people that will determine if new business practices are fair and reasonable."
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