Incentivizing Investment in the Internet Ecosystem and Net Neutrality Regulation: Taking it to the Edge

37 Pages Posted: 19 Mar 2018

See all articles by David Gabel

David Gabel

Department of Economics; CUNY Queens College

Joan Nix

Queens College

Bruce Mcnevin

Midway Group

Date Written: March 16, 2018

Abstract

Net neutrality regulation impacts both ISPs and Edge providers. Although Edge Providers are not directly regulated by the FCC, they have a stake in the enforcement or abandonment of Net Neutrality regulation. Our analysis evaluates policy changes based on whether the modified rules serve to incentivize investments in the larger Internet ecosystem. In our analysis, an increase in investment is associated with an increase in investor wealth, while a decrease is associated with a decrease in investor wealth. The firms in our sample include Internet Service Providers(ISPs) and Edge Providers, grouped into old and new media companies. We employ an event study and examine investors' reaction to five news events relating to Net Neutrality regulation. We find that each event had a statistically significant effect on at least one group of shareholders. The event that had the largest effect on daily returns was the election of President Trump. Our main conclusion is that the FCC's and courts' Net Neutrality decisions have had a larger financial impact on the edge, rather than the ISPs. This is a striking finding in light of the FCC's focus on incentivizing ISPs, and spending comparatively little effort in determining how its policy effects edge providers.

Keywords: Net-Neutrality, broadband

JEL Classification: L13

Suggested Citation

Gabel, David and Nix, Joan and Mcnevin, Bruce, Incentivizing Investment in the Internet Ecosystem and Net Neutrality Regulation: Taking it to the Edge (March 16, 2018). TPRC 46: The 46th Research Conference on Communication, Information and Internet Policy 2018. Available at SSRN: https://ssrn.com/abstract=3142385

David Gabel (Contact Author)

Department of Economics ( email )

Flushing, NY 11367
United States
718 997 5452 (Phone)

CUNY Queens College ( email )

Flushing, NY 11367
United States
718 997 5452 (Phone)

Joan Nix

Queens College ( email )

65-30 Kissena Blvd
Flushing, NY 11367-1597
United States

Bruce Mcnevin

Midway Group ( email )

33 Whitehall Street, 22nd Floor
New York, NY 10004
United States

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