Title II Regulation Wont Affect Verizons Immediate Plans, But U.S. Investments Might Fall

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Fran Shammo, Verizon’s chief financial officer, said on Tuesday that the potential for regulators to subject the Internet to Title II regulation wouldn’t have an impact on his company’s wireless and wireline investments, perhaps undermining the contention of naysayers who claim utility-style regulation would stymie investments in broadband networks.

In a blog Thursday, Shammo clarified that although Title II regulation won’t affect Verizon’s short-term view on investment, “experience in other countries shows that over-regulation decreases network investment.”

“If the U.S. ends up with permanent regulations inflicting Title II’s 1930s-era rules on broadband Internet access, the same thing will happen in the U.S. and investment in broadband networks will go down,” Shammo wrote.

The Net neutrality debate over Title II regulation – subjecting the Internet to regulations that were adopted in an era of monopolies – has largely centered on how such regulations would affect future broadband investments.

In a letter Wednesday to regulators and leaders of the House and Senate, 60 technology companies claimed Title II regulation could hamper investment in the broadband sector, including network equipment. The letter cited one economic study that projected wireline and wireless capital investment could plunge by between $28.1 billion and $45.4 billion if the FCC subjects the Internet to Title II regulation.

Last month, AT&T Chief Executive Randall Stephenson said AT&T had decided to put on hold planned fiber network expansions due to the uncertainty over the Net neutrality regulations, but the company later appeared to backtrack on its position after questioning from the Federal Communications Commission.

During an investor conference Tuesday, Verizon’s Shammo told UBS analyst John Hodulik that Title II wouldn’t influence its investments in its networks. Over the last year, Verizon has spent about $17 billion on capital expenditures.

“If you think about it, we were born out of a highly regulated company so we know how this operates,” Shammo said, according to a transcript provided by Verizon.

But Shammo said Title II regulation is unnecessary because the FCC has authority to regulate the Internet under Section 706 of the Telecommunications Act of 1996.

“And why would you go to a 1930 piece of literature to try to regulate something that is a 21st-century technology?” Shammo asked. “And I also think that if you look at other countries who have done this, it kind of leads you down a path of total failure because it really, really slows down investment and slows down innovation.”

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