Study disputes claim net neutrality hurts investment

AT&T, as part of conditions it agreed to in its late-2006 merger with BellSouth, agreed to net neutrality rules for two years, and the telecom's investments increased significantly during that time period, the Free Press study said. AT&T's gross capital investment increased by nearly US$1.9 billion from 2006 to 2008, the largest increase among U.S. telecoms, Free Press said in the study, released Wednesday.

The percentage of capital investments to revenue at large telecom carriers has actually fallen since the FCC relaxed network-sharing regulations in 2005, Free Press said.

"The rhetoric about network neutrality discouraging investment is just a general reflection of the common but misguided belief that any and all regulation discourages investment," the study said. "According to this theory, regulation will perpetuate uncertainty and will reduce potential return on investment, thereby reducing the incentive to invest. But all regulation is not created equal."

Some regulation is heavy-handed, but other rules can be lighter, "providing basic rules of the road that ensure healthier competition in an otherwise concentrated market," the study said.

The study was released a day before the U.S. Federal Communications Commission is scheduled to decide whether to take a first step toward creating new net neutrality rules prohibiting broadband providers from selectively blocking or slowing some Web content and applications.