Net Neutrality: Policy and Stock Market Implications

From 2011 to 2015, the Telecommunications Industry faced changing FCC regulations that impacted daily business operations and stock price changes due to Net Neutrality. These changing regulations stemmed from technology rapidly morphing. The three types of firms in this study are Internet Service Providers (ISP’s), Content Providers (CP’s) who provide video streaming services and those who do not (ISP’s, CP’s streaming and CP’s not streaming). During this era, the FCC went through two different regulation regimes of the Preserving the Open Internet order and the Open Internet – Bright Line Rules with two key court hearings in between. These key dates were analyzed based off how the announcement of the news impacted stock prices for the thirty-nine firms in the study. The Preserving the Open Internet order impacted the firms across our study with the most relevance. Date 1 resulted in a 0.836% excess returns for the stock prices while all other variables were held constant for our firms. Date 2 resulted in a 1.6% excess returns for the stock price while all other variables were held constant for our firms. Date 3 did not result in any significant results for our firms daily. Date 4, while impacting the firms at different sample levels, did not result in any significant results for our firms daily at an entire sample level. With consumer preferences changing and firms changing business operations regularly, it is important to understand how policies, whether efficient or not, impact the stock market.