Unlike EU, U.S. Moving in the Wrong Direction on Telecom Regulation, Says Top Verizon Lobbyist
European regulators seem to be moving toward lighter-handed regulation and net neutrality rules, while the U.S. has moved in the opposite direction, said Peter Davidson, Verizon senior vice president-federal government relations, at a symposium Tuesday. The session was sponsored by USTelecom and the European Telecommunications Network Operators' Association (ETNO). “American leadership in this sector is at stake,” Davidson said.
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“We seem to have gone backwards,” Davidson said. “The lessons that we should have learned from our own success, we have now decided that was the wrong approach. We’re going to now adopt the European policies of the last 20 years that resulted in less investment.” Regulators have to balance various interests, he said: “Another important part of their job is to not get in the way of investment in infrastructure.” Davidson warned that the economic effects of the FCC's net neutrality order may not be clear for five or 10 years. “It is hard to measure,” he said.
The FCC “has taken a wrong turn” on net neutrality and on possibly slowing the IP transition, said Heather Gold, president of the Fiber to the Home Council. “We have to move forward in order to encourage investment.”
“The most important and key factor to continue driving the success of the Internet is to continue investment in the network,” said Jeffrey Campbell, Cisco vice president-Americas. “The reason we are where we are today is because of the huge investments that have been made.” The FCC order on net neutrality doesn’t address network functioning and how carriers need to manage traffic, he said: “All of that was brushed aside.”
Robert Shapiro, an economist and former undersecretary of Commerce, estimated the FCC’s reclassification of broadband as a common carrier service will reduce investment by $35 billion to $42 billion over the next five years. “Regulation will involve higher costs for providers,” he said. Some of the costs are “subtle,” he said: “Economists have always found that new regulation diverts resources and strategic attention by those subject to them.” The effect is likely to be felt well beyond just the big ISPs, he said.
Forbearance is supposed to “protect” many Internet companies from the new rules, Shapiro said. “That claim only confirms that there are adverse effects” from the new regulations, he said. “The idea that we’re going to have significant restrictions on what carriers can do in this space and it’s not going to affect how they invest … is almost laughable,” Campbell said.
The net neutrality order “will impact the entire hub of Internet economic activity, is out of step with today’s competitive marketplace and has already prompted numerous legal challenges, including our own,” said USTelecom President Walter McCormick. USTelecom members support net neutrality rules, but not regulatory reclassification, he said: “We believe it will be harmful to consumers, for investment, for innovation and for competition.”
ETNO Chair Steven Tas said the companies his group represents are the “enablers” of the digital industry. “They are building the broadband networks that are really the digital spine of our nations,” he said. ISPs were subject to “high levels” regulation, he said, but regulators have gradually liberalized markets. “We think that whenever the justification for regulation is lacking in a new competitive scenario it should be eliminated,” he said.