Remember When Ajit Pai Said Killing Net Neutrality Would Boost Network Investment? About That...

from the head-fake dept

Wed, Jan 23rd 2019 10:43am — Karl Bode

You'll recall that one of the top reasons for killing popular net neutrality rules was that they had somehow supposedly crushed broadband industry network investment. Of course, a wide array of publicly-available data easily disproved this claim, but that didn't stop FCC boss Ajit Pai and ISPs from repeating it (and in some cases lying before Congress about it) anyway. We were told, more times that we could count, that with net neutrality dead, sector investment would explode since carriers would be "unchained" from "burdensome regulation."

You'll be shocked to learn this purported boon in investment isn't happening.

A few months ago, Verizon made it clear its CAPEX would be declining, and the company's deployment would see no impact despite billions in tax cuts and regulatory favors from the Trump FCC. Both AT&T and Verizon have similarly announced massive workforce reductions as well. Some investment growth is happening in wireless as carriers prepare for fifth-generation (5G) wireless service (which they would have deployed regardless of the attacks on net neutrality). But even that's a bit lower than Wall Street and sector analysis expected.

And according to the latest analysis from MoffettNathanson, both fixed-line telcos and cablecos are expected to see notable declines in CAPEX and investment:

"Telco-related wireline capex, meanwhile, is slated to fall from $20.3 billion in 2018 to $19.6 billion this year. That slight drop comes as AT&T completes the fiber buildout commitments originally promised when it acquired DirecTV by July, and as Verizon redirects capital to wireless, Moffett said. Capital spending among the four publicly traded cable operators covered by the MoffettNathanson -- Comcast, Charter, Altice USA and Cable One Inc. -- is expected to decline significantly this year -- some 5.8%.

My math may be shaky, but a 5.8% decline in cable industry CAPEX doesn't quite sound like the investment revolution Ajit Pai and his squad of industry allies promised.

To be clear, there's a lot of reasons that ISP CAPEX rises and falls. When Pai and friends were trying to claim that net neutrality killed network investment back in 2017, we noted extensively how they were cherry picking very narrow windows of CAPEX decline that had nothing to do with net neutrality. For example, one company's CAPEX had dipped under net neutrality because it had just finished a cable set top box upgrade project.

The same is true here. As MoffettNathanson notes, some of this dip is thanks to AT&T shifting its focus toward paying off debt for its megamergers. Another chunk of it is because streaming competition is reducing the desire for the clunky old cable box. And in the case of the biggest dip at Charter Communications (Spectrum), it was in large part thanks to the completion of an all-digital transition in the wake of its costly acquisition of Time Warner Cable.

None of that changes the fact that Ajit Pai and a chorus of telecom industry sycophants repeatedly misled the public and Congress about the net benefits of their historically-unpopular policies. Repeatedly. Now, we're left with the end result; a coalition of natural monopolies with even less competition or accountability than ever, eager to get to work not on investing back into the network, but extracting higher and higher consumer and competitor costs courtesy of limited competition. Limited competition Ajit Pai and friends can't even admit is real, much less have a plan to do anything about.

I know this is a crazy thought, but it's almost as if when you appoint industry sycophants to positions of oversight, their primary goal is to improve carrier revenues, leaving everything else (competition, consumer welfare, innovation) foundering in the rear view mirror.

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Filed Under: ajit pai, broadband, capex, fcc, investment, lies, net neutrality
Companies: at&t, verizon

37 Comments

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Anonymous Coward, 23 Jan 2019 @ 11:02am

See also
Quote from Ars Technica:

Our analysis makes it clear that usage-based billing is among the most effective tools the industry has in managing consumption and reducing the need for massive capital expenditures

Apparently, all the extra hassle of data caps only reduces bandwidth by 9%, but it's enough to let them put off upgrades till a future fiscal year and get a bit of extra cash now.
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David, 23 Jan 2019 @ 11:15am

Now that's an outcome nobody could have expected.

You'll be shocked to learn this purported boon in investment isn't happening.

To be fair, the highest-paid experts in the industry predicted otherwise. Maybe we still have too much regulation?

If the carriers would not be required to invent fancy names for bullshit charges but could just place "bullshit charges" as a single item on the invoices, they might be able to use the time and paper and ink savings for laying down a bit of fiber.

So far, most of the fiber they take in their mouth does not result in anything but logorrhea.
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Anonymous Coward, 23 Jan 2019 @ 11:33am

Re: Now that's an outcome nobody could have expected.
This is not the time to be fair.
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Toom1275 (profile), 23 Jan 2019 @ 11:35am

You'd think if there was a fact-based argument for repealing Net Neutrality, it'd've been presented by now.
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Anonymous Coward, 23 Jan 2019 @ 11:46am

I think the facts-based argument goes something like this: "Repeal of net neutrality has dealt (or shortly will deal) a blow to child pornography, prostitution, addictive-toxin-smuggling, and all non-maritime/non-violent/non-property-damaging flavors of piracy. And most important of all, crooked businessmen won't see their bad reputations spreading from real life onto the internet."
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David, 23 Jan 2019 @ 11:49am

Re:
If people wanted fact-based arguments, they would not have voted for a government based on alternate realities.
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Anonymous Coward, 23 Jan 2019 @ 11:49am

Re:
I remember when I used to get high and make shit up too.
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Thad (profile), 23 Jan 2019 @ 11:56am

Re: Re:
Most of them didn't.
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Stephen T. Stone (profile), 23 Jan 2019 @ 12:20pm

Re:
I would call you a lunatic, but that would be an insult to genuine lunatics.
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Mason Wheeler (profile), 23 Jan 2019 @ 12:31pm

Re:
If this is a fact-based argument, please show us your facts.
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David, 23 Jan 2019 @ 1:33pm

Re: Re: Re:
If you don't like this country's political system, the native Americans will happily take it back. The country, not the political system.
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Anonymous Coward, 23 Jan 2019 @ 1:36pm

Re:
You moved the goalposts into another reality.
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Rocky, 23 Jan 2019 @ 2:16pm

Re:
I see you missed the /s
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David, 23 Jan 2019 @ 2:40pm

Re: Re:
"In God We Trust" is printed on the facts governing U.S. politics. The Founding Fathers would be proud.
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Thad (profile), 23 Jan 2019 @ 2:44pm

Re: Re: Re: Re:
Wow, how'd those goalposts get all the way over there?
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Anonymous Coward, 23 Jan 2019 @ 3:31pm

Re: Re: Re: Re:
The native americans didn't own the country, they just lived in it. They certainly don't want "the white man" here but they also don't believe in ownership of the land/nature.

It's also been shown that the group we call "native americans" didn't come from here and weren't even the first. This continent has a very long history of trading hands.
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Anonymous Coward, 23 Jan 2019 @ 4:21pm

Suffice to say that Ajit Pai is a scoundral working towards a lucrative career (or continue to do so) with the industry he is supposedly overseeing. I wonder how his children view him - a corporate shill or does he lie to them as well...
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Anonymous Coward, 23 Jan 2019 @ 5:24pm

Re: Re: Re: Re: Re:

The native americans didn't own the country, they just lived in it. They certainly don't want "the white man" here but they also don't believe in ownership of the land/nature.

I wouldn't purport to know what modern Native Americans would think, so saying they don't believe in land ownership isn't necessarily a safe statement. Plenty of them, including one of my coworkers who grew up on an impoverished reservation, live in cities, hold normal jobs, and aren't even necessarily distinguishable from white people unless they mention their heritage.
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Anonymous Coward, 23 Jan 2019 @ 5:44pm

Re: Re: Re: Re: Re:
Wow, I was unaware that we were in the presence of an anthropological expert on ancient human migration.

Perhaps you could treat us with some more of your vast knowledge on the subject of migratory patterns of early humans, because that subject has many interesting gaps and inconsistencies. Please educate us.
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Anonymous Coward, 23 Jan 2019 @ 10:15pm

Time to bunker down, boys; Richard Bennett's gone all diarrhea on the Ars Technica article. It's only a matter of time before we'll have to clean up his mess here, too...
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Scary Devil Monastery (profile), 24 Jan 2019 @ 1:12am

Re: Re: Re: Re: Re:
"Wow, how'd those goalposts get all the way over there?"

It started, I believe, with the outrage over having the political system of the US questioned, prompting the customary knee-jerk response.

Personally I think that when the citizenry stops doubting their political system is when democracy starts dying. But that's just me.
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SpanglePants the Mildly Magnificent, 24 Jan 2019 @ 3:43am

Re: Now that's an outcome nobody could have expected.
To be fair, there's a reason why they're the highest paid.
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Ninja (profile), 24 Jan 2019 @ 4:17am

I can't wait to see how they'll twist this decrease to make it look like Americans are surfing in 100Gbps connections with 110% stability, reliability and availability allover the country.
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Anonymous Coward, 24 Jan 2019 @ 5:17am

Re: Re: Now that's an outcome nobody could have expected.
Sure. It is a matter of supply and demand. Many experts think twice before selling off their hard-earned reputation to the highest bidder.
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Mason Wheeler (profile), 24 Jan 2019 @ 7:45am

Re: Re: Re: Re: Re: Re:
Oh come on. It's undisputed that they didn't originally come from here any more than the Europeans or the Africans now living here did. That's hardly expert-level material.

Here's where things get weird, though. In every other case of large population migrations, we see a clearly-defined pattern: emigrants arrive at some point, establish their civilization there, and begin to spread out from the point of origin, and the further you get from the origin, the less advanced the people are culturally and technologically. The reason for this is intuitively obvious: before the advent of industrial-age transportation technology, (and even for a good while after it, as seen in North America,) transporting resources over long distances was difficult, expensive, and unreliable, so the further you got from the core of civilization, the harder it became to get their help to build up infrastructure for your own civilization.

Here's where things get weird with Native Americans, though: most scientists agree that they migrated from East Asia to Alaska over an ice bridge during the last Ice Age, but we don't see the expected pattern of technology high culture radiating south and east from Alaska. That pattern does exist in pre-Colombian Native American civilization, but the "point of origin" is in Central America.
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That One Guy (profile), 24 Jan 2019 @ 8:28am

Re:
'Of course network investment is down, since we killed off the heinous 'network neutrality' rules that were keeping companies from realizing their greatness they one and all upgraded their networks to offer consistent 32KG service to everyone in the country, something that would have been impossible with those rules still in place.

Given that it's only natural that they don't need to invest anymore, since the US has, and will continue to have, the best internet service on the planet for years to come thanks to their tireless and self-less service and dedication to their customers.'
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Anonymous Coward, 24 Jan 2019 @ 8:36am

I know this is a crazy thought, but it's almost as if when you appoint industry sycophants to positions of oversight, their primary goal is to improve carrier revenues, leaving everything else (competition, consumer welfare, innovation) foundering in the rear view mirror.

The Republicans are the party that says government doesn't work, then they get elected and prove it. - PJ O'Rourke
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Anonymous Coward, 24 Jan 2019 @ 8:51am

Re: Re: Re: Re: Re: Re: Re:
There is some disagreement upon the exact details ...

so that means we can wash our hands of the terrible things that were done to them as their lands and ways of life were eradicated - brilliant!
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Mason Wheeler (profile), 24 Jan 2019 @ 9:37am

Re: Re: Re: Re: Re: Re: Re: Re:
...huh? Where did I say any of that? Where did I say anything that even resembles that in any way?
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Anonymous Coward, 24 Jan 2019 @ 10:26am

Re: Re: Re: Re: Re: Re: Re: Re: Re:
Follow the thread, it escalated.
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Mason Wheeler (profile), 24 Jan 2019 @ 10:46am

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:
OK, so someone else who was not me said something that may have been interpreted that way if you look at it sideways and squint. Why reply to me about that, though?
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Anonymous Coward, 24 Jan 2019 @ 11:04am

I am reminded of a little snippet from Mostly Harmless, the last true entry into The Hitchhiker's Guide to the Galaxy.

Trillian: The insurance business is completely screwy now. You know they've reintroduced the death penalty for insurance company directors?
Arthur: Really? No I didn't. For what offense?
Trillian: What do you mean, offense?
Arthur: I see.
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Anonymous Coward, 24 Jan 2019 @ 1:00pm

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:
Sorry man, nothing personal.

Just that not much has changed in the past few centuries and it is a bit ridiculous what some people say about the situation, as if it were no problem to be hypocritical about it wagging fingers at those who try to immigrate.
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Mason Wheeler (profile), 24 Jan 2019 @ 1:44pm

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:

Just that not much has changed in the past few centuries

o_0
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Drunk Uncle Sam, 24 Jan 2019 @ 2:29pm

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:
Hey, let's run some oil pipelines underneath the drinking water supply these indigenous tribes use ... what could possibly go wrong? Oh, and if they complain just send in the local police, swat, and whatever to kick their asses because that is not really their land.
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Mason Wheeler (profile), 24 Jan 2019 @ 3:33pm

Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re: Re:
Yes, that happened in one specific case. And it was terrible and should not have happened, and the oil companies responsible needs to be sued into nonexistence and have execs thrown in jail for it. But it's nowhere near normal and common, the way things were back in the days of "the only good Indian is a dead Indian." A whole freaking lot has changed in the last few centuries!
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Thad (profile), 25 Jan 2019 @ 8:12am

Re:
It seems like he has some kind of fixation. Possibly a quaint one.
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