What is the Effect of Regulation on Broadband Investment? Regulatory Certainty and the Expectation of Returns

11 Pages Posted: 24 May 2013

See all articles by George S. Ford

George S. Ford

Phoenix Center for Advanced Legal & Economic Public Policy Studies

Lawrence J. Spiwak

Phoenix Center for Advanced Legal & Economic Public Policy Studies

Date Written: September 19, 2012

Abstract

Since broadband distribution networks, both wireless and wireline, require large levels of capital expenditures on long-lived assets, a Broadband Service Provider’s incentive to invest in modern broadband infrastructure is influenced not only by current regulation but also by expectations regarding future regulatory interventions. The effective stimulus of broadband investment requires regulators not only to make prudent decisions today, but also to signal to investors that the future is a favorable investment climate and, if possible, to make inter-temporal commitments to particular regulatory paradigms. Using an economic model of “regulatory certainty,” we demonstrate that investment levels are determined not so much by the level of certainty and uncertainty, but rather by what broadband providers are certain about. If providers become more certain that regulation will reduce the returns on investment in the future, then this signal of “strong” regulation curbs investment.

Keywords: Broadband, Internet, Uncertainty, Regulatory Uncertainty, Regulation, Investment

JEL Classification: L96

Suggested Citation

Ford, George S. and Spiwak, Lawrence J., What is the Effect of Regulation on Broadband Investment? Regulatory Certainty and the Expectation of Returns (September 19, 2012). Available at SSRN: https://ssrn.com/abstract=2209859 or http://dx.doi.org/10.2139/ssrn.2209859

George S. Ford (Contact Author)

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States

Lawrence J. Spiwak

Phoenix Center for Advanced Legal & Economic Public Policy Studies ( email )

5335 Wisconsin Avenue, NW
Suite 440
Washington, DC 20015
United States
202-274-0235 (Phone)
202-318-4909 (Fax)

HOME PAGE: http://www.phoenix-center.org

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
49
Abstract Views
431
PlumX Metrics