While enormous attention has been paid recently to net neutrality, net equality –which is a far more immediate problem--has received less focus.   The Internet must be both available to and affordable by all.  As the Federal Communications Commission (FCC) explores approaches to net neutrality, it must not endanger investment in and affordability of broadband Internet access by reclassifying it as common carriage under Title II of the Telecommunications Act of 1996. 

Ensuring that minorities have access to the Internet is crucial to the economy.  The minority population of this country is large and rapidly growing, constituting over 40 percent of all Americans today.  According to the Selig Center, minority buying power was $3.2 trillion in 2013, and it is expected to grow to $4.3 trillion by 2018.  That is an enormous market for online vendors of goods and services to tap. 

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But while the collective purchasing power of minority communities is a significant driver of our economy, many individuals lag behind.  According to the U.S. Census, while 14.5 percent of all Americans were in households with income below the poverty level, 27.2 percent of Black Americans and 23.5 percent of Hispanic Americans were in households with income below the poverty level.  For those households, the Internet is particularly important, because it brings access to healthcare, education, and jobs.  

Mobile broadband is vital to net equality.  According to Pew, in 2013 smartphones increased broadband access for Black Americans by 15 percentage points and for Hispanic Americans by 22 percentage points, so that 79 percent and 75 percent, respectively, of adults in those groups had access to broadband, either fixed or mobile.  That still leaves far too many, especially the poorest in each group, on the sidelines, so this country must focus on increasing investment in broadband, especially mobile broadband.  

To its credit, the FCC is working hard to increase mobile broadband access.  It is bringing additional spectrum into the hands of wireless broadband providers, through the AWS-3 auction it is currently running and the incentive auction it plans to run in 2016.  It is reforming the Lifeline portion of the Universal Service program, to cover broadband as well as voice service.  

Industry is also doing its part.  In 2014 alone, between capital expenditures and the AWS-3 spectrum auction, the wireless industry is on track to invest well over $75 billion in its infrastructure.  The fixed broadband providers are investing roughly $42 billion this year.    

But the FCC must also ensure that another of its proceedings, the Open Internet proceeding, is consistent with the goals of net equality as well as net neutrality.  By continuing to define broadband access as a lightly-regulated information service rather than reclassifying it as a heavily-regulated telecommunications service, the FCC can accomplish at least two things.  It can help keep broadband affordable:  information services are not subject to the numerous local, state, and federal taxes to which telecommunications services are subject.  And it can encourage continued investment in broadband access, both fixed and wireless.  

Since November 10, wireless stocks have sharply underperformed the market.  Between the market-opening on November 10 and its closing on December 18, the S&P rose 1.4 percent and the NASDAQ rose by 2.5 percent.  By contrast, Sprint was down 13.6 percent, T-Mobile down by 8.6 percent, Verizon down by 7.5 percent, and AT&T down by 4 percent.  

On November 10, President Obama encouraged the FCC to reclassify broadband Internet access as a telecommunications service under Title II of the Telecommunications Act.  On November 13, the AWS-3 auction began, and investors discovered how expensive spectrum has become.  And a stream of earnings and cash-flow estimate-cuts promises no relief. 

Thus, the investor-flight.  Investors are stunned by the cost of acquiring additional spectrum at the same time that they are reeling from the price wars that have beleaguered the wireless industry.  Those factors alone would be enough to alienate investors, but they are greatly compounded by the fear that the FCC will impose stultifying regulations designed for monopoly on a highly competitive industry.  Innovation and competition are so clearly central to the Internet ecosystem, investors cannot fathom how broadband providers can operate successfully under an early-20th-Century business model.  

While Washington has debated the impact that reclassification under Title II would have on investment, investors have made their views clear.  They are selling the stocks they consider most vulnerable to the lethal combination of high capital requirements, declining cash flow, and regulatory interference that would make it difficult for companies to respond effectively to their environment.  Unless investors are persuaded that this is an investible industry, the providers will have to cut back their spending on infrastructure and additional spectrum. 

Reclassification of broadband access would hurt all consumers, but it would hurt those who rely on mobile broadband most.  If the U.S. is to achieve net equality, the FCC must accomplish net neutrality without losing its focus on access and affordability.  

Kovacs is a Visiting Senior Policy Scholar at Georgetown University’s Center for Business and Public Policy.  She has covered the communications industry for more than three decades as a financial analyst and consultant.