The FCC Is Using Garbage Lobbyist Data To Defend Its Assault On Net Neutrality

from the garbage-in,-garbage-out dept

Tue, May 9th 2017 6:26am — Karl Bode

By now it should be clear to most Techdirt readers that new FCC Boss Ajit Pai envisions a future where there's little to no oversight of giant telecom duo/monopolies like Comcast. Pai has wasted no time making that dream a reality since taking office, having killed plans for more cable box competition, undermined FCC attempts to stop prison phone monopolies from ripping off inmate families, and paved the way for killing net neutrality. He's made no mystery of his overarching goal: replacing functional FCC oversight of broadband providers with the policy equivalent of wet tissue paper.

If you spend twenty seconds with Pai's voting record (like that time he voted down holding AT&T accountable for actively helping crammers rip off its own customers by making scams harder to detect on customer bills), you'll discover his positions have one consistent beneficiary (tip: it's not you).

You'll also note his arguments are often comically disconnected from the actual facts. Like that time the FCC boss declared that Netflix was the real enemy of net neutrality -- simply because it operates a content delivery network. Or the time he insisted meaningful consumer protections would inspire Iran and North Korea to censor the internet. Or the countless times he's insisted net neutrality killed network investment -- despite that claim not being supported by objective data, SEC filings, quarterly earnings or ISP executive statements.

And while it's one thing to actively disagree on policy, Pai has consistently engaged in countless, easily-debunked falsehoods to justify his positions. Which is ironic, since pretty much every speech Pai makes involves him promising to bring more "sound economic analysis" to FCC policy making. Take this recent speech (pdf) given to the American Enterprise Institute (which takes substantive funding from the large ISPs that benefit directly from Pai's policies):

"I have long been concerned that economists haven’t been systematically incorporated into the FCC’s policy work. Instead, their expertise is typically applied in an ad hoc fashion, and often late in the process. We are taking a major step to correct that. A month ago, I kick-started a process to establish an Office of Economics and Data. This Office will combine economists and other data professionals from around the Commission. I envision it providing economic analysis for rulemakings, transactions, and auctions; managing the Commission’s data resources; and conducting longer-term research on ways to improve the Commission’s policies. My goal is to have the new office up and running by the end of the year. And I’d be remiss if I didn’t acknowledge the prior work done by Jeff Eisenach and others at AEI in providing the intellectual foundation for this office.

Again though, if you track Pai's votes and real-world actions, you'll consistently find a comic disconnect from this breathless, self-professed dedication to sound data and economic policy. In fact the very same day Pai was giving that speech, his Chief of Staff Matthew Berry took to Twitter to proclaim that new data suggests that Title II (the legal underpinnings of net neutrality) has reduced telecom sector investment by $5.6 billion:

BREAKING: @FSFthinktank releases new estimate that Title II has decreased broadband investment by $5.6 billion. https://t.co/rsdrwcx2LM

— Matthew Berry (@matthewberryfcc) May 5, 2017

The source of that data is the Free State Foundation (FSF), a think tank that takes consistent funding from large broadband providers like AT&T and Comcast (and tries to obfuscate that fact). This isn't objective science. It's farmed data pushed by a lobbying arm of the telecom industry. And when you head over to the methodology of that report you'll note a fairly selective window chosen to support the group's position:

"USTelecom publishes data on broadband capital expenditures (capex) for each year dating back to 1996. Using this historical data, I collected figures on the previous twelve years before the Open Internet Order was adopted in February 2015. I picked 2003 as the first year because the market had just collapsed from the dot-com bubble and total broadband capex was at its lowest point since 1996. I established a trend line from 2003 to 2016, which created a linear pattern over the first 12 years before the Open Internet Order and estimated what we could have expected broadband capex to be in 2015 and 2016 without Title II public utility regulation.

One, the office of a former Verizon lawyer citing an ISP-funded think tank using data from an ISP-funded lobbying organization -- should be nobody's definition of "sound economic analysis." Two, Twitter users were quick to point out that the FSF specifically began tracking CAPEX movement in 2003 to avoid addressing an important point. Namely that large ISPs were under Title II until 2005 without the slightest impact on investment. In fact, as even USTelecom's data shows, it was under former FCC boss turned top cable lobbyist Michael Powell (who professed a similarly disingenuous respect for real data) that Title II was killed.

Perhaps you'll notice something in the data below:

@matthewberryfcc @FSFthinktank What about the $40 billion dollar loss the year cable ISPs were made info services? pic.twitter.com/eDrvn8XsNG

— Dennis Restauro (@GroundedReason) May 5, 2017

Under Powell (2001-2005), the broadband industry was blindly deregulated and government began effectively letting large ISPs dictate federal internet policy. As a result, you saw less competition and more consolidation than ever before, cementing Comcast's reputation as an apathetic, anti-competitive giant (a monopoly that's currently growing even larger as telcos give up on fixed-line residential broadband). Powell tried to disguise this reality by frequently hyping broadband over powerlines (BPL) as a looming additional competitive option that would work hand-in-hand with sector deregulation to deliver telecom utopia.

This promised utopia never materialized. Powell ironically ignored real-world data showing that BPL was an interference-prone mess. The result? BPL never arrived to save us from the telco/cable duopoly, and things got worse as Powell made it harder than ever to hold ISPs accountable for failed promises and anti-competitive abuses of their power over the broadband last mile. As a result, net neutrality violations (the symptom) became more apparent manifestations of the disease (a lack of competition). Deregulation can benefit competitive industries, but in telecom... it helped create the Comcast we all know and love today.

Yet here we are with an FCC boss suggesting that more of what brought us to this particularly ugly dance is surely the thing that's going to make everything wonderful. After all, data from the very industry supporting the gutting of these consumer protections says so.

It's also worth noting that looking only at CAPEX doesn't really tell the entire story. Like the other piece of farmed think tank "economic analysis" the broadband industry regularly trots out to defend the "net neutrality killed investment" canard, you'll often see these groups ignore how any number of routine investment behaviors (like a cable company wrapping up a new digital set top box deployment) can impact investment numbers. Cherry pick a particular window of time, ignore the massive investments being made in wireless spectrum, and you can massage the data to suggest pretty much whatever you'd like.

But again, if you stopped and listened to candid comments by Sonic, Sprint, Frontier, Cablevision, Charter and even Verizon executives over the years, you'll consistently see them admit that Title II didn't impact investment one way or the other. And that's all supported by easily-perused earnings reports, SEC filings and other publicly-accessible data. And, pretty much like clockwork, every few months a reporter assembles that data to make the case that net neutrality didn't hurt telecom investment. Those same folks are similarly quick to point out that focusing exclusively on investment numbers helps the industry avoid subjects like... competition and high prices:

"If you think that the best way to measure the success of the U.S. broadband market is by the amount of money its biggest private businesses spend on the task of getting people connected, then it looks like we’re still winners, despite Title II. If you think that the best way to measure the success of the U.S. broadband market is in the number of people connected, the available speeds, the prices, the competition, and the customer service, well… We’ve still got quite a way to go to be as great as the ISPs say we always have been."

Only those prioritizing ISP revenues over consumer welfare and the health of the internet still think any of this is even debatable. If folks like Pai were actually interested in hard data and sound economic analysis, they'd cite respected reporters and objective economists untethered to the companies benefiting from these policies. Since those folks have repeatedly told Pai he's wrong, he's instead turned to using cherry picking, ISP-funded stat farms to massage existing data so it fits the overarching narrative that net neutrality has been a telecom investment apocalypse. All while expressing a very post-truth-esque dedication to hard data.

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Filed Under: ajit pai, data, fcc, net neutrality
Companies: free state foundation, us telecom

34 Comments

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Ninja (profile), 9 May 2017 @ 5:50am

So let's consider we are going through the same consumer apocalypse that struck after Powell took a huge dump on consumers back then. What will be the internet like in, say, 1 or 2 decades from now? I'll risk a prediction: there will be no internet if you don't pay a very steep premium. ISPs will downgrade the connections to a point where the only usable thing will be their own services effectively creating a walled garden. It was nice to meet you Americans in this free and nice Internets. :(
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Anonymous Coward, 9 May 2017 @ 6:48am

A bit disingenuous
I can't help but notice that the huge drop occurred in 2002. Now, what happened in 2001 that might have cause a huge drop in investment? I do agree that the ISPs are largely full of shit, and that consolidation is bad for consumers, but claiming that the drop in investment wasn't primarily caused by the dot.com crash is simply not true.
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Anonymous Coward, 9 May 2017 @ 6:55am

"Pai has consistently engaged in countless, easily-debunked falsehoods to justify his positions"

Lets be clear - he is a %$%@ liar!
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Capt ICE Enforcer, 9 May 2017 @ 6:57am

It is like Title 2 is the ISP equivalent of piracy to Hollywood. Kick, scream, cry, but bottom line it doesn't hurt them.
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Anonymous Coward, 9 May 2017 @ 7:09am

Re:
We must make sure that does not happen and if you want to help protect NN you can support groups like ACLU and the Electronic Frontier Foundation and Free Press who are fighting to keep Net Neutrality.

https://www.aclu.org/

https://www.eff.org/

https://www.freepress.net/

https://www.fightforth efuture.org/

https://www.publicknowledge.org/

https://demandprogress.org/

also you can set them as your charity on

https://smile.amazon.com/

also write to your House Representative and senators

http://www.house.gov/representatives/find/

https://www.senate.gov/general/contact_information /senators_cfm.cfm?OrderBy=state

and the FCC

https://www.fcc.gov/about/contact

You can now add a comment to the repeal here

https://www.fcc.gov/ecfs/search/filings?proceedings_name=17-108&sort=date_disseminated,DESC

h ere a easier URL you can use thanks to John Oliver

www.gofccyourself.com

you can also use this that help you contact your house and congressional reps, its easy to use and cuts down on the transaction costs with writing a letter to your reps.

https://resistbot.io/

The internet will never be a walled garden
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Anonymous Coward, 9 May 2017 @ 7:12am

Re:
Many are fighting to make sure the internet never become a walled garden, there will be a internet and we will keep it free
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Sasparilla, 9 May 2017 @ 7:17am

Public Shaming of the FCC head
One of the last levers left to the public when your public officials are embracing open corruption is public shaming them in their living areas.

https://www.theverge.com/2017/5/8/15577988/ajit-pai-protest-door-hangers-fcc-net-neutrality-proposal
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PaulT (profile), 9 May 2017 @ 7:27am

Re: A bit disingenuous
That's a good point, and definitely worth bearing in mind. However:

"claiming that the drop in investment wasn't primarily caused by the dot.com crash is simply not true"

Do you have any data to show that it wasn't also mainly to do with the loss of Title II categorisation? That is, had they still been compelled to operate under Title II, would investment have dropped in the same way, or would they have continued to invest and reduce expenditure elsewhere had they been under the old rules?

There's no way to truly know, of course, but it's worth avoiding blanket statements when you can't know the truth.
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Anonymous Coward, 9 May 2017 @ 7:31am

Re:
The more cables you have to maintain for fewer users, the more expensive they get. At some point it gets expensive when 1 person has to pay for 20 miles of cables and 1/1000 of other equipment, along with the running costs the total cost over 30 years is insanity for that person.

In 1 or 2 decades the dream today seems to be wireless with about 5 mile rage, connected to a central providing variable amounts of gb depending on distance. It is mostly a reaction to mobile technology driving that side of things and it has been the wet dream for decades since digging shit into the ground is expensive and it takes too much work to find errors on their end.

With wireless the fix will almost always be in the customers end and thus something you can more easily overbill people for.
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Anonymous Coward, 9 May 2017 @ 7:44am

Re:
Walled Gardens do not keep customers happy, thank you AOL for making this point very clear to those paying attention - to all others, wake up.

Now, your typical money grubbing C-suite asshole will whine and moan while throwing a fit because they are not getting legislation to force people to have a connection whether it works or not - sorta like water in Flint Mich, you are forced to pay for something that is unusable.

So yeah, dumbass management will kill the golden goose and blame those that raised the goose for its demise.
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jupiterkansas (profile), 9 May 2017 @ 7:46am

Re: Re:
I'll bet if you cherry picked 100 websites, and offered people a low price to access only those websites, that it would be all the internet most people would need and they would happy with it. They'll just turn back around to their walled garden when they get the message "You must pay for the premium plan to access this content." Some people never stray much further than Facebook, Netflix, and Google. This would position the ISP perfectly to blackmail those 100 sites to keep them on the lowest tier plan, or get them to pay up to reach the largest customer base.

i.e. lots of people are happy with walled gardens.
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Anonymous Coward, 9 May 2017 @ 7:48am

Re: A bit disingenuous
Did anything else of great impact occur during that time period?

Hmmm, wasn't there some planes that hit a building or something like that?
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Anonymous Coward, 9 May 2017 @ 7:49am

Re:
You can swear here, no one is going to put you in jail for it ... yet
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Anonymous Coward, 9 May 2017 @ 7:54am

Re: Public Shaming of the FCC head
Wow, the nerve of those terrorists going around his neighborhood and pointing out to his neighbors what an ass he is. Isn't that illegal or something? If not, it will be soon.

Wait a sec ... pai does not live in a gated, walled encampment with guards ?
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Baron von Robber, 9 May 2017 @ 8:02am

Re: Re: Public Shaming of the FCC head
Not yet. After his term is up, he has a nice 1% job at Verizon lined up.

"You've done a good job, Pai doggie. Here's a cookie."
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Anonymous Coward, 9 May 2017 @ 8:16am

Re: Re: A bit disingenuous
LOL! You bastid, I was going to post that.
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Anonymous Coward, 9 May 2017 @ 8:22am

Re: Public Shaming of the FCC head
Public shaming doesn't work on elected Republicans who know no shame.
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Anonymous Coward, 9 May 2017 @ 8:44am

the biggest piece of 'Garbage Lobbyist Data' is Pai himself! what else can you say about this ass hole other than he is nothing but a waste of space, bought and paid for, i can only assume, by the various ISPs like Comcast and Verizon! what other motivation can he have for wanting to destroy the very thing that actually makes the internet what it is, always has been and hopefully, always would be, except personal gain and greed??
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Anonymous Coward, 9 May 2017 @ 8:59am

Re: Re:
Maybe he's at work. I do the same thing if I am work, because they monitor/record everything.
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Anonymous Coward, 9 May 2017 @ 9:15am

Re:
No, no no... Cord cutting is like piracy to the ISP's and title II stops them from doing something to stop it, like ruining the experience users get when they go to that competition.
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mhajicek (profile), 9 May 2017 @ 9:30am

Re:
Depends on how Musk handles his satellite internet.
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Anonymous Coward, 9 May 2017 @ 9:55am

Re: Re:
The problem with a satellite Internet is that at best a satellite has the capacity of a single fiber, and you might get 8 or 10 usable from any one spot on earth. That is useful for getting the Internet to remote areas where there is very little population, or providing service to ship and oil platforms etc. However those satelites wil provide a very small fraction of the bandwidth available via a fsingle fiber bundle which can service part of a street.

Wehn looking at the usefulness of a technolgy, do not compare its bandwidth to what you use, but rather to the bandwidth that YouTube plus netflix, plus Prime, plus.... as that is what the Internet gives access to, all at the same time when you connect enough users.
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kallethen, 9 May 2017 @ 9:59am

Re: Re:
If cord cutting to cable companies is like piracy to media companies...

Then title II to cable companies is like fair use to media companies?
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PlagueSD (profile), 9 May 2017 @ 10:21am

Re: Re: Re:
Wasn't that AOL back in the early 90's??
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Anonymous Coward, 9 May 2017 @ 10:51am

We ain't seen nothin' yet...
I suspect that if the demolishing of NN goes through, ISP's will see it as a full endorsement of their fuckery and they will go crazy with extra fees, anti competitive behavior, and neutering the internet in general unlike anything we have ever seen before.
We have seen plenty of examples before, but back then they were just a tiny bit on shaky ground and they were testing the waters for what they were able to get away with.
This time it will signal full blown support from the government and they will all come out from the shadows to play... no more playing it safe and no obstacles.
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Ninja (profile), 9 May 2017 @ 11:48am

Re: Re: Re:
Yea, and even if the latency is better there is a physical limit to how low it can be. Still, if it can serve those remote areas and foster *some* competition then I hope he succeeds.
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Thad, 9 May 2017 @ 11:51am

Re: Re: Public Shaming of the FCC head
Elected?
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Anonymous Coward, 9 May 2017 @ 12:24pm

Re: Re: Re: A bit disingenuous
Sorry man - can not resist low hanging fruit.
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Anonymous Coward, 9 May 2017 @ 12:25pm

Re: Re: Re:
Ahhh - good point.
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Anonymous Coward, 9 May 2017 @ 1:01pm

Re: Re: Re:
lots of people are not happy with walled gardens and are fighting to make sure it does not happen
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Anonymous Coward, 9 May 2017 @ 1:05pm

Re: We ain't seen nothin' yet...
that why we must protect NN and make sure they dont demolish it, we must make sure they dont go crazy with extra fees, anti competitive behavior, and neutering the internet in general, most do not want that

we will make sure they dont come out of the shadows to play, we will force them to play it safe and put obstacles in there way!
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Anonymous Coward, 9 May 2017 @ 2:14pm

In Other News
The FCC Has Become A Garbage Lobbyist.
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Philip Mckinney, 9 May 2017 @ 3:45pm

Ajit Pai IS garbage, so of course he'd do this
Ajit Pai IS garbage, so of course he'd do this
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Web_Rat (profile), 9 May 2017 @ 4:24pm

It's not all negative out of the FCC, they have definitely demonstrated the old programmers' axiom of Garbage In, Garbage Out!
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