FCC Boss Calls Net Neutrality A 'Mistake,' Repeats Debunked Claim It Stifled Broadband Investment
from the truth-is-whatever-I-say-it-is dept
So for several years now, the broadband industry (and the politicians, think tankers, and policy folk paid to love them) has desperately tried to claim that the FCC's net neutrality rules killed investment in broadband networks, clouding the entire telecom market in a dark shroud of "regulatory uncertainty." And it doesn't matter how many times we (and others) debunk this claim, it just keeps popping up like an undead groundhog. The reality is this: net neutrality had zero negative impact on the CAPEX, growth, or financials of major broadband providers. It simply isn't true.
And yet this narrative was front and center in a speech given this week by FCC boss Ajit Pai at the Mobile World Congress in Barcelona. At the event, Pai reiterated his disdain for net neutrality, claiming the rules were a "mistake" that caused, you guessed it, a massive network investment decline:
"Two years later, it has become evident that the FCC made a mistake. Our new approach injected tremendous uncertainty into the broadband market. And uncertainty is the enemy of growth. After the FCC embraced utility-style regulation, the United States experienced the first-ever decline in broadband investment outside of a recession. In fact, broadband investment remains lower today than it was when the FCC changed course in 2015. And we have seen much concern about whether the FCC would permit or ban service plans."
It's nonsense. And repetition doesn't magically forge reality. Pai has made this claim numerous times, but based his claims on broadband industry-tied think tank data from the likes of Hal Singer, who cherry picked and massaged data. If you look at actual SEC filings, earnings reports, stock trajectories and other public data, it's painfully obvious this dead duck of a talking point still isn't true. Consumerist's Chris Morran did a phenomenal job doing just that this week, first noting that this lack of growth due to "uncertainty" is a bogus canard:
"Since Feb. 26, 2015, the day that the FCC voted to approve the neutrality rules, AT&T’s share price has increased by more than 20%, Comcast’s is up 26%. Verizon’s stock price is at the same level as it was, though it has fluctuated as much as 15% in either direction since then. Charter’s share price is up 40%, after the FCC allowed it to acquire Time Warner Cable and Bright House in 2016. The only major broadband provider whose stock has fallen dramatically in the last two years is CenturyLink, whose share price has sunk around 50% in that time."
So yes, if you're going to claim that "uncertainty is the enemy of growth," and there's a hell of a lot of growth, you should be able to do the rest of the logical math. Morran also looked at CAPEX at most of these ISPs, and found that too is soaring (in large part due to ongoing investment in business services and wireless broadband):
"Likewise, AT&T said it its most recent earnings that it spent $22.9 billion on capital investment in 2016, up from $20.7 billion in 2015. Granted, the 2015 number was slightly down from the $21.4 billion spent in 2014, but it’s higher than the $19.7 billion or $20.2 billion spent in 2012 or 2011, respectively, seeming to undercut Pai’s claims of historic low levels of investment.
Because of the massive merger with Time Warner Cable, there’s no apples-to-apples comparison to be made. However, Charter did spend $7.5 billion on capital expenditures in 2016, 85% of that on expanding and building out its network. That appears to more than the combined investment by Charter and TWC in capital expenditures during the pre-merger years.
Even Verizon, which has not seen the same growth as the other companies is spending more on capital expenditures than it did before the neutrality rules were put in place. In 2015, the year where Pai contends investment sunk to levels unseen outside of a recession, Verizon spent $17.8 billion on capital investments, more than in any other year since the U.S. came out of the recession."
In other words growth is up, CAPEX is up, and these companies are all hugely profitable. It's not a debate. So where is Pai getting his contradictory data from? ISP lobbyists, of course:
"So what is Pai’s justification for this claim? According to a rep at the FCC, the Chairman’s comment was based on data provided by USTelecom, the industry’s lobbying arm that is actively pushing for the FCC and Congress to roll back net neutrality and privacy regulations on broadband providers. The FCC has not responded to our query as to why Chairman Pai would use data provided by industry lobbyists over the actual numbers these companies are providing publicly."
I'd recommend not holding your breath while you wait. Of course, Morran's takedown of Pai's bogus claim is just one of countless similar stories published every few months eviscerating this idea that net neutrality was an innovation, investment and growth killer. Yet this being the post-truth era, where truth is apparently defined not by hard data but by bluster and bullshit, there's apparently zero repercussions for repeatedly lying.
And it's probably about to get worse. Pai and the FCC know that rolling back net neutrality via FCC process is difficult if not impossible. It would require convincing the courts that things have changed substantially since the recent FCC court win, and involve another lengthy public comment period. Given a record 4 million consumers spoke out the last go round (largely in favor of the rules), that's not something the GOP, Pai and Trump want to repeat. As such, their plan will be to pass new legislation (possibly a Communications Act rewrite) that kills FCC authority generally and the rules specifically.
At the heart of the sales pitch for this "modernization" of the FCC and killing of net neutrality rules? An ocean of farmed industry data insisting that net neutrality protections stifle broadband investment, damage the self-esteem of children, harm puppies, and threaten to rip the Earth off of its orbital axis. All magically fixed, of course, if we free some of the least-liked and most anti-competitive companies in America from regulatory oversight and public accountability.
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Filed Under: ajit pai, broadband, competition, fcc, investment, net neutrality
Reader Comments
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Re:
Don't like the DOJ? Hire a guy who doesn't either
Don't like the EPA? Hire a guy who doesn't either.
Don't like Pub Ed? Hire a gal who doesn't either.
Don't like Housing? Hire a guy who has no clue.
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Re: Re: It's a feature, not a bug
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Remember the old political axiom
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Ashit Poop
Ishit Poo
Every time I read that bastard's name I see an image from "Weird Science" when Chet's turned into festering pile of shit.
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Re: Re: Re: Re: It's a feature, not a bug
Electoral politics has been show over substance for a while (to be fair, how much substance can you have if you're not in office yet?) and Trump just stopped pretending it was anything but a (byzantine) popularity contest.
People get their information from a small bubble of sources, despite the vast availability of news content. And they don't think critically of people they aren't, well, critical of. The people who criticize Trump for having no foundation in reality are usually the people who would have disliked him anyways.
TL;DR: everyone has been pretending that elections aren't a circus and that facts really matter to voters. Trump had no such preconceptions. He just shouted what people wanted to hear, and - surprise! - people liked it.
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FCC Media template
Yes, it's always the same storyline and template here:
FCC & regulation = Intrinsically Good & Wonderful
Trump FCC appointees = Horrible & Irredeemable
Free Markets = Silly Fairy Tale
The big cable companies are abusive semi-monopolies precisely because of stupid government regulation.
Giving the FCC control over the internet was incredibly stupid, no matter what short term benefits one perceives (Net Neutrality). It is a pact with the Devil that will be disastrous for consumers, long term.
If you hate Pai, much worse individuals will be handed the FCC's massive powers... down the road.
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Re: FCC Media template
Actually, we disagree with most regulation and generally don't trust the FCC. But certain FCC regulations made sense, based on the condition of the market, which is a tiny duopoly situation, where the main players have abused their market position repeatedly. But, seriously, look back at what we've written about the FCC over the years. We've rarely been a fan, and are rarely supportive of more regulation. But in this situation, it totally made sense, because the "regulation" wasn't really much regulation at all. It was just preventing some really bad behavior by some firms with a history of bad behavior.
Pai was appointed way before Trump. This has nothing to do with Trump.
Wut?!? We're actually big supporters of free markets here. The problem with the broadband space is that it's anything but a free market. Honestly, in the ideal world, we'd actually have the major broadband providers need to open up their networks, so that there's be a real free market in the service space on top of the infrastructure level.
It doesn't have "control" over the internet. Don't spread myths. It was just saying that companies can't fuck over customers. That was a good thing.
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I'd suggest that name calling is not particularly useful and actually seems childish and counterproductive.
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I'd tend to agree, but it does give a decent boost to dopamine levels which is a win, regardless of whether or not the argument is valid or even applicable.
If the target of the disparagement finds out about it, it could cause them anger issues or even anxiety issues, which is also a win.
Remember, Trump and his followers only exist on the elementary school playground level.
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Or just not enforce net neutrality
Isn't it also possible that Pai will just refuse to enforce the Open Internet Order?
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Re: Or just not enforce net neutrality
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Sink to his level and you give him the excuse he needs to destroy even more of your freedoms, as he has a very thin skin..
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That type of thinking will only end up in circular pattern. Trump is the bully in your playground. You come down to his level and become the bully because you don't like Trump. Now someone else doesn't like you so they become the bully too. In the end, you all imitated the very thing you were fighting against. What I find interesting is your second sentence. "I'd tend to agree, but it does give a decent boost to dopamine levels which is a win, regardless of whether or not the argument is valid or even applicable." Makes me wonder if that pattern happens a lot because it is addicting.
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Because he is a thieving POS
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Re: FCC Media template
Does it ever get tiring, knowingly beating up strawmen?
People have repeatedly pointed out that TD's position with regards to pretty much anything, but most certainly regulations is more nuanced than 'Regulations Good', so if you're still repeating that tired line despite that I can only assume that you don't actually read what people are saying, and are just continuing to comment based upon what you think people are saying, or you just don't care what's said for the same reason.
If you want to have a conversation it helps to read what people are actually saying, and not just continue to assume that you don't need to bother because you know what they really mean to say.
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Re: Stifled Broadband Investment
That doesn't mean it should be the function of an agency whose duty is to maintain standards that relate directly to the exercise of the 1st amendment.
The way you support trade, is by supporting the whole market. And that includes the millions of small enterprises whose business's will be effected by constraints imposed unilaterally by carriers.
Yes, the big players are restricted. THAT IS THE FUCKING POINT! They don't innovate. They never have. The market floats despite of them, not because of them. They suppress innovation to expand their own marketshare at the expense of overall market growth. They always have.
Really this is the same bullshit that killed the automotive industry in the 70's. Protectionist legislation allowed fat, badly managed companies to flounder rather than be forced into a new market. (the fuel crisis) It is pretty clear that much of the innovation in the communications sector is moving to the EU, much like the automotive talent migrated to Japan back then.
Fuck up Network Neutrality, and you will certainly cause some new communications investment... In foreign language learning audio books.
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Wouldn't it be wonderful...
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Re: FCC Media template
Also, you are "big supporters of free markets", except when the government has created non-free private broadband duopolies -- then government bureaucrats must intervene even further to lessen the harm caused by previous government errors. And you say "Honestly, in the ideal world, we'd actually have the major broadband providers need to open up their networks, so that there's be a real free market", but ya know that "ideal {fairy tale} world of broadband free markets is very unrealistic -- so we will reluctantly stick with the bumbling FCC commissars.
But we really really support free markets.
You strongly assert that the FCC "doesn't have "control" over the internet", but the FCC and courts insist that wired/wireless broadband is now a "regulated" utility at FCC discretion. That represents massive control "authority" over providers & content. Perhaps you are confident that no present or future FCC bureaucrats would ever ever restrict internet access or censor content in any way, but FCC history in TV/Radio does not support such optimism.
The FCC and free market broadband are direct contradictions -- please pick one view and dismount the fence. ☺
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Trump has said "I have a very thick skin", so it must be true!
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Re: Re: FCC Media template
Sometimes only the government has the power to correct previous government mistakes.
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Re: Re: FCC Media template
The FCC absolutely has Constitutional authority to regulate telecommunications networks. I mean, are you kidding?
No, they don't have the authority to impose "arbitrary" rules (nor capricious!) which is they why the courts have rejected some of their attempts over the years. But they do have the authority, granted by the telecom act, to impose specific rules in specific conditions, after a thorough (not arbitrary) process that includes open comment periods and review.
Do you not know this?
This may be a giant shock to you, but some things are more nuanced than your simplistic black and white view of the world. Yes, we support free markets, but part of that is not allowing abusive monopolistic/oligopolistic control to hinder innovation. The reason that the market is a duopoly is NOT because of regulation. That's just silly. Look at just about anywhere else in the world, which doesn't have an FCC, and the only places where there is real competition is because of regulatory mandates for competition.
It's pretty straightforward: to date, broadband technology requires heavy infrastructure investment, which makes it difficult (and inefficient and wasteful) to build up enough serious competition. Under such market conditions, you end up with dominant players who can (and do!) stamp out actual competition.
If you look at the actual net neutrality rules here, they are NOT what most people think of as "regulations." A standard ISP treating its customers right would never come up against any of them. They were just a few minor points to prevent bad behavior -- behavior which we'd already seen some of the largest players engaging in.
So, yes, we support free markets strongly. But the problem here is that the broadband market was far from a free market, and thus needs a few small tweaks to keep it competitive.
They are not a regulated utility and it's not "at the FCC's discretion." I don't think you understand how all this stuff works, or you've been reading some crazy bullshit propaganda.
The FCC has a mandate over certain things with significant limits on what it can actually do. And it can't just make willy nilly changes, nor has it.
You're right, that in an ideal world, we'd have lots of competition and innovation and there'd be no need for an FCC. We don't have that.
Sorry. You don't seem to have any actual understanding of a fairly nuanced system. You've been fed a load of bullshit by someone along the way. Educate yourself.
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Re: Re: Re: FCC Media template
Here's a question for you: is football "free?" Is it a free game? Even when kids play it they still observe the rules for the most part.
Now apply that to "the market." That's the FCC's job.
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Re: FCC Media template
Apparently I am insufficiently educated to appreciate the obvious wisdom of your position.
Nevertheless, it still seems clear IMO that you indeed strongly favor government regulation generally... and only nominally support free market economics (despite highly "nuanced" protestations to the contrary). The template here reflects that position. Cognitive Dissonance?
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Re: Re: FCC Media template
Monopolies may be granted by government but they can also occur without it if a supplier is able to lock out competition by artificially deflating prices. This usually happens long enough to drive competitors out of business, in which case prices rise again due to lack of competition.
In the telecoms world, the corporations have connived with the government to ensure monopoly status. If you hate government interference as much as you claim to do, what would you suggest instead of "Take it or leave it, peasant?"
Because that is not a free market solution, it's a supply-side solution because they have the advantage. A demand-side solution would require mass boycotts but I can only imagine the cries of "Socialism!" that would erupt if anyone actually tried to organise one. They'd also be hamstrung by the inability to provide an alternative.
Face it: anarcho-capitalism is not a solution, it's a problem.
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Re: Re: FCC Media template
Can you find a single other example of us supporting government regulation "generally" outside of stopping monopolistic/duopolistic broadband providers from doing bad stuff?
I'll wait.
In fact, for years we vocally opposed the FCC getting involved in net neutrality. It was only after it became clear that the broadband market had become so uncompetitive and the companies pattern of bad behavior was so unmistakable that we changed out position on that.
Nuance is something you should try to understand.
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