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Author

Patrick Brogan

Counterpoint: Study Fails to Show Utility Regulation Does Not Affect Broadband Investment

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A recent study by Christopher A. Hooton of the George Washington University Institute of Public Policy (September 2019) (“Hooton study”) attempts, but fails, to make the case that certain “net neutrality” regulations have no impact on broadband internet service provider (ISP) capital investment decisions. The study contains multiple flaws that are fatal to its validity. Most fundamentally, while the study claims to assess the effects of net neutrality regulations on capital investment, the data the study employs do not measure capital investment. In addition, the source data for the dependent variable have not been validated or cleaned; therefore, the data are incomplete, inconsistently reported, and contain errors. Furthermore, the study employs an inappropriate statistical model and improperly considers the formation of regulatory expectations and the timing of capital budgeting decisions. In all, this study contains a number of fundamental flaws and it should hold no weight in the debate about the impact of regulation on investment.

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