Impact of “Title II” Regulation on Communications Investment
Updated as of 3/6/15
By every relevant measure of broadband capability, the US is ahead of Europe, with greater levels of broadband deployment, competition and access to the fastest wireless and next-generation wired facilities.
A light-touch regulatory approach to broadband leads to greater deployment, competition and coverage than Title II-style regulation, according to our new 36-page report comparing the state of broadband in the United States to Europe.
Authored by Fred Campbell, executive director of the Center for Boundless Innovation in Technology and former Wireless Bureau Chief at the Federal Communications Commission (FCC), “Impact of Title II Regulation on Communications Investment” sheds light on the different outcomes resulting from Title II-style Internet policy adopted by the European Union (EU) in 2002 and the deregulatory approach to broadband that the United States (US) adopted that same year.
The study reveals the European Commission’s acknowledgement that:
• High-speed broadband investment is taking place more quickly in the United States;
• Title II-style regulations are the reason European broadband networks have fallen behind the United States; and
• Europe must adopt investment-friendly broadband policies in order to maintain its global competitiveness.
“It is ironic that, as the EU embarks on relaxing its Title II-style approach to broadband regulation to mimic US success, the FCC is now about to reverse course and embrace failed public utility regulation for the Internet. Instead, as the data in the study reveals and the EU experience demonstrates, the US has had it right all along. We should maintain a bi-partisan light-touch regulatory approach to ensure continued innovation, investment and rapid deployment of 21st century broadband networks.”
— Fred B. Campbell, Jr.
According to the study, the EU’s wholesale access regulations have posed major barriers to network investment, to the introduction of facilities-based competition and to the availability of the fastest wireless services and next-generation networks.
It notes that even though the EU is smaller in geographic size, has greater population density and surpasses the United States in gross domestic product, US wireline broadband providers have invested nearly three times more capital in their networks than their European counterparts. Our nation’s broadband investment greatly overshadowed European investment despite the fact that total European service provider revenues exceeded those of US providers by $15 to 20 billion annually.
“Rhetoric and partisanship have derailed the net neutrality debate. Rather than basing regulatory choices on philosophical principles and hypothetical concerns, policymakers should rely on real numbers that tell the success story of broadband in the US.
“The EU has acknowledged that its Title II-style regulatory approach is the reason European broadband networks have fallen behind those in our nation. The FCC has ample authority to assure Internet openness without imposing utility-style regulation on broadband. We should learn from the European example and avoid gambling on the future of the world’s most innovative Internet economy.”
— IIA Honorary Chairman Rick Boucher
The study highlights how US mobile operators have invested twice as much capital in their networks as EU mobile operators, and have reinvested a significantly greater percentage of their revenues (15-16%) in their wireless network infrastructure versus their EU mobile operator counterparts (7-8%).
Data from the study demonstrate how these higher levels of capital investment in the US correlate with high levels of facilities-based competition and next-generation coverage:
• US competitors have a larger share of the telephone market (US 65% vs. EU 41%); competitors also hold a larger percentage of the US broadband market.
• The vast majority of US households have access to multiple facilities-based fixed broadband operators while a majority of Europeans lack access to any alternative fixed facilities-based broadband alternative;
• US has 5 or more facilities-based mobile operators in most markets, while EU averages fewer than 4 facilities-based mobile operators per market (typically 3-4);
• 82% of Americans are covered by next-generation broadband at 50 Mbps download speeds vs. 63% of Europeans covered by broadband networks offering at the most 30 Mbps speed; and
• As late as 2012, high-speed wireless broadband (LTE) coverage in the US was more than double that in the EU (79% of US population had LTE coverage vs. 30% of EU households).