New Phoenix Center Study Shows That Net Neutrality Rules Would Raise Barriers to Rural Broadband Deployment

Additional costs imposed by proposed Net Neutrality regulations would have a disproportionate impact on high-cost markets and would raise new barriers to deployment of advanced communications services in rural America, the Phoenix Center says in a new study released today. The impact of new regulation could be at least six times as great in high-cost areas as in areas where costs are lower.

According to the study, "While network neutrality regulation would materially impact broadband deployment generally, such regulation could disproportionately and negatively impact broadband deployment by a sizeable amount in areas that are, on average, high-cost areas (such as rural markets) -- at a magnitude of at least six times the impact relative to areas with lower costs."

The paper notes that net neutrality mandates could undermine efforts to expand broadband deployment and adoption by raising costs to network providers and/or limiting their ability to generate revenues by restricting certain types of payment arrangements with content providers. Impact is greater in high-cost areas because rising costs make broadband too expensive for a greater number of consumers. As such, the study concludes that, "In a very real way, the burden that a network neutrality mandate would create would be disproportionately (but not exclusively) borne on the back of rural America." Net Neutrality Mandates at Odds with Desire to Expand Broadband Availability

"In considering various net neutrality proposals, policymakers should consider whether they make it more likely or less likely of achieving the goal of universal and affordable broadband," study co-author and Phoenix Center President Lawrence Spiwak said. "Our analysis shows that net neutrality would likely slow the spread of broadband deployment to rural America and other high cost areas."

Phoenix Center Resident Scholar Tom Koutsky, a co-author of the study, says net neutrality advocates should consider the real-life implications such regulation would have on broadband deployment.

"Both Democrats and Republicans have long made universal broadband service a national priority. If you want more Americans to enjoy broadband services, you should not adopt policies that make it more costly to expand communications networks," Koutsky said. "Moreover, our study shows that those cost increases would have a large adverse impact on rural America."

Added Phoenix Center Chief Economist George Ford and the third co-author of the study, "It is regrettable that the enormous and unquestionable consumer benefits of cable franchise reform are being held up by network neutrality which, as we show in this paper and others, may easily do more harm than good to an industry many believe is key to economic growth in this country."

A copy of the full PHOENIX CENTER POLICY PAPER NO. 25, The Burden of Network Neutrality Mandates on Rural Broadband Deployment, may be downloaded free from the Phoenix Center.

The Phoenix Center is an international, non-profit 501(c)(3) organization that studies broad public-policy issues related to governance, social and economic conditions, with a particular emphasis on the law and economics of regulated industries.