ACI Calls Policy Makers’ Attention to Facts about Investment

Washington, DC (November 11, 2009) – Emphasizing its agreement that the FCC “…must be guided by evidence, not rhetoric,” the American Consumer Institute today released a point-by-point report refuting the claims about investment and regulation made by Free Press. Given the close relationship between broadband network investment and consumer welfare, ACI found the Free Press contentions particularly hostile to current and potential network subscribers and misleading as a basis for emerging national broadband policy. In its critique — “The Informed Policy Maker’s Guide to Regulatory Impacts on Broadband Network Investment” — ACI called attention to fundamental errors by Free Press in logic, facts, financial accounting practice and long standing principles of real investment. ACI’s report concluded:

  • A basic principle of finance is that regulatory risk will tend to reduce investment;
  • It is nonsense to claim, as Free Press does, that network providers are “disinvesting” or that they “boost profits” by reducing investment; and
  • Returns on investment in applications and services are directly and critically dependent on the growth and quality of networks.

ACI Fellow Larry Darby noted: “I can find no basis in history, financial principles, commonsense, or in the Free Press’ paper for concluding that proposed net neutrality regulations will have no impact on broadband network investment.” A copy of the report is available here — fp-report1