Study Finds Unregulated Broadband Market is Key to Innovation

Net neutrality will hurt private investment, impede consumer friendly innovations

WASHINGTON, March 2 /PRNewswire-USNewswire/ -- The American Consumer Institute released today a study on innovation by companies in the Internet ecosystem.  The study, which surveyed available data and literature, found that broadband network providers are a leading source of both innovation and new investment in Internet infrastructures.  

The study found that new Internet regulations, including those now under consideration by the FCC, would restrict technology advances, innovation and job growth.  

"All indications are that these well intended regulations would dampen both incentives and opportunities for firms in the Internet ecosystem to continue to invest and to embed new technologies in core networks on which downstream applications and content providers depend," said Larry F. Darby, co-author of the study.

Other key findings include:

• By any reasonable assessment, core cable, wireline and wireless networks reflect enormous historical and ongoing innovation as marked by adoption of new technologies, investment in new equipment and software and the expansion and improvement of Internet services offerings;
• These core innovations among cable and wireline have enabled, encouraged and increased the value of important edge innovations that would otherwise have been impossible.  Without innovation in the core, there would be no innovation at the edge;
• There is no analysis or data in the enormous literatures on innovation and regulation to prove claims that the proposed net neutrality rules would on balance promote innovation in the Internet Ecosystem; and
• Imposing common carrier type regulation on network providers would diminish network providers incentives and opportunities to continue historic trends in innovation and investment.

The study concludes:  "Our review finds no market failure attributable to insufficient innovation in networks or superior innovation outside network infrastructures.  Concerning the need for new regulations, the public interest will be well served if the Commission heeds the wisdom of Hippocrates:  'First, do no harm!' By any reasonable assessment of the record of innovation in networks, the current regulatory regime is working."  

The study can be found at:  http://www.theamericanconsumer.org/.

The American Consumer Institute Center for Citizen Research is a 501(c)(3) nonprofit educational and research institute founded on the belief that consumers' interests are not satisfactorily represented by the wide variety of advocacy and consumer organizations that often represent small subsets of consumers and special interests; ignore distant, collateral and unintended consequences of importance to consumers; and too often mirror advocates' political views rather than an empirical analysis of consumers' economic welfare.

www.theamericanconsumer.org

SOURCE American Consumer Institute Center for Citizen Research