Comcast Network Investment Drops Despite Repeated Claims Killing Net Neutrality Would Trigger Investment Wave

from the ill-communication dept

Fri, Jan 25th 2019 6:07am — Karl Bode

Why it's almost as if the Ajit Pai FCC and broadband industry haven't been entirely honest with us.

This week we noted how Wall Street is predicting that the telco and cable industries will see notable declines in network investment next year, despite the FCC and industry's repeated, breathless claims that killing net neutrality would somehow spur network investment. This, as we've long noted, was based on the bogus industry claim that net neutrality somehow stifled such investment, a claim repeatedly disproven by public SEC filings, earnings reports, and even statements by more than a dozen major ISP CEOs.

Almost as if on cue, Comcast released the company's latest earnings report showing, you guessed it, that the company saw a 3% dip in cable network CAPEX last quarter despite all of that sweet, potent, "internet freedom" Ajit Pai claims to have been spreading around:

"Comcast's cable division spent 3 percent less on capital expenditures last year, despite promises that the repeal of net neutrality rules would boost broadband network investment. Comcast's cable division spent $7.95 billion on capital expenditures during calendar year 2017, but that fell to $7.72 billion in the 12 months ending on December 31, 2018."

That is, if you're playing a long at home, precisely the opposite of what Comcast and other large ISPs repeatedly proclaimed while successfully convincing the FCC to effectively neuter itself, shoveling any remaining authority to an FTC that lacks the authority or attention span to police bad actors in telecom. In 2014, for example, Comcast repeatedly proclaimed that the FCC's net neutrality rules (arguably modest by international standards) would devastate job creation, network investment, and innovation:

"The sheer uncertainty surrounding such a regulatory environment would produce ‘a profoundly negative impact on capital investment.’ By itself, reduced investment would inhibit job creation, hinder the deployment of broadband infrastructure, and undermine the ‘virtuous circle’ of innovation that the open Internet rules are designed to advance."

By that logic, the inverse should have happened in the wake of the repeal. Instead, facing the one-two punch of little broadband competition and little real oversight of a growing natural monopoly, Comcast and other ISPs did what everybody knew they'd do, pass that savings on to investors and executives, instead of shoring up their networks or historically terrible customer support. All while raising rates higher and higher. And, oh, laying off employees despite nabbing billions in both Trump era tax cuts and regulatory favors, the financial impact of the latter is largely incalculable.

None of this was hard to predict, especially if you've studied history (especially telecom history). This is the same pattern has played out time and time again in telecom. Promise the earth, sea, and sky in exchange for taxpayer subsidies, tax breaks, and regulatory favors, then use the regulatory capture to double down on all of the industry's worst habits. By the time the press and public has figured out you're full of shit, you're off to the next PR ploy, which, in Comcast's case, involves pushing for regulation that hamstrings online ad players you desperately want to compete with in the streaming ad wars to come.

You'd like to think this is a cycle of dysfunction we'd eventually learn our way out of, but there's simply no indication that's occurring any time soon.

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: ajit pai, capex, fcc, investment, net neutrality
Companies: comcast

20 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Anonymous Coward, 25 Jan 2019 @ 6:39am

Starlink will need to compete
We need a high-speed low latency internet alternative and until we have one, state actors like these will continue to use their government-granted monopolies to extract money from you, their resource.
[ link to this | view in chronology ]
- Anonymous Coward, 25 Jan 2019 @ 7:24am
  
  Re: Starlink will need to compete
  If launching 11,943 satellites into orbit is easier that getting governments to protect people from harmful monopolies, something is very wrong. Municipal open-access fiber networks are the obvious down-to-earth alternative.
  [ link to this | view in chronology ]
  - Daniel McKimm, 26 Jan 2019 @ 7:55am
    
    Re: Re: Starlink will need to compete
    Open Access is the only bipartisan solution that can bring ideologies, political parties, races, genders, colors on to a common ground, absent of course the crony capitalist incumbent ISPs. Their business model transcends anything other than their ownership rights to the virtual highway involving any and all digital access to and from your home, business and every digitally connected device you touch.
    
    Open Access via community owned fiber is our only chance to gain bipartisan support for saving Internet access from these monopolists. www.entpnt.com www.ilsr.org www.muninetworks.org
    [ link to this | view in chronology ]
- Gary (profile), 25 Jan 2019 @ 7:53am
  
  Re: Starlink will need to compete
  So to enable competition we need government sponsored initiatives to deploy muni broadband.
  [ link to this | view in chronology ]
  - Daniel McKimm, 26 Jan 2019 @ 8:06am
    
    Re: Re: Starlink will need to compete
    Unless you have a better solution?
    [ link to this | view in chronology ]
  - Anonymous Coward, 26 Jan 2019 @ 9:10am
    
    Re: Re: Starlink will need to compete
    To enable competition perhaps government should remove the prior protections?
    [ link to this | view in chronology ]
- Iggy, 25 Jan 2019 @ 9:50am
  
  Re: Starlink will need to compete
  We've already been promised satellite internet and broadband over power-lines in lieu of line sharing requirements and competition law. That was 15 years ago.
  
  We've also been promised jetpacks if we privatize the road system:
  
  https://www.youtube.com/watch?v=AR-F0O6Pyt8
  [ link to this | view in chronology ]
Anonymous Coward, 25 Jan 2019 @ 6:52am

Clearly this shows that net neutrality isn't truly dead yet.

Time to kill it harder to make sure we don't harass these poor harmless mega-corporations that only have our best interests in mind!
[ link to this | view in chronology ]
Anonymous Coward, 25 Jan 2019 @ 7:58am

The only solution
Clearly, the only solution is for Pai's FCC is to give Comcast, Verizon, and other big Telco's more subsidies, tax breaks, and reduced regulatory "burdens" to increase their capital expenditures.

I am sure this time it will work. But we will make them double promise to spend it on infrastructure. Nobody can break a double promise.

/s
[ link to this | view in chronology ]
- Daniel McKimm, 26 Jan 2019 @ 8:13am
  
  Re: The only solution
  Why would we even sarcastically suggest they deserve to monopolize even one more mile of our community-owned ROWs with subsidized fiber?
  [ link to this | view in chronology ]
This comment has been flagged by the community. Click here to show it

Anonymous Coward, 25 Jan 2019 @ 8:03am

Hey sheeple you elected those are supposed to be looking out for you .
Better try an new approach next time voting comes about .......vote em all out ......................
[ link to this | view in chronology ]
Anonymous Coward, 25 Jan 2019 @ 8:36am

Think Before You Write
"Why it's almost as if the Ajit Pai FCC and broadband industry haven't been entirely honest with us."

You burned out my computer's sarcasm meter.
[ link to this | view in chronology ]
- Comic Book Guy, 25 Jan 2019 @ 8:41am
  
  Re: Think Before You Write
  "Oh, a sarcasm detector. Oh, that's a real useful invention."
  [ link to this | view in chronology ]
  - Anonymous Coward, 25 Jan 2019 @ 9:40am
    
    Re: Re: Think Before You Write
    I tried to give up sarcasm. It's going great.
    [ link to this | view in chronology ]
- That One Guy (profile), 25 Jan 2019 @ 9:02am
  
  Three words:
  'Sarcasm meter insurance'.
  
  Trust me, well worth the extra cost to get a free replacement when browsing TD inevitably burns out your current one.
  
  Again.
  [ link to this | view in chronology ]
David, 25 Jan 2019 @ 10:32am

That does not prove Ajit Pai wrong
He said that Net Neutrality was stifling investments, and this stifling of course expressed itself as additional costs for doing such investments. So the humongous amounts of money that have gone into meeting net neutrality requirements according to the letter of the regulation are now actually gone from the investment costs. Nevertheless, the total amount, now actually going towards improvements of the network rather than placating regulatory protocol, has only fallen by 3%, far less than offsetting the damage previously caused by Net Neutrality cost.

Man, I should do this for a living. Too bad my nose is already on the long side.
[ link to this | view in chronology ]
- Anonymous Coward, 25 Jan 2019 @ 10:43am
  
  Re: That does not prove Ajit Pai wrong
  
  the humongous amounts of money that have gone into meeting net neutrality requirements
  
  lolwut? Net Neutrality requirements were to do nothing. There was no additional costs. In fact, NN was aimed at stopping network prioritization, something that costs a lot of money to implement and operate. NN saved money.
  
  You've clearly swallowed the party line and the false narrative supporting it.
  [ link to this | view in chronology ]
  - Anonymous Coward, 25 Jan 2019 @ 10:49am
    
    Re: Re: That does not prove Ajit Pai wrong
    Hey AC: Read the last two sentences. To me that screamed "/s"
    [ link to this | view in chronology ]
ECA (profile), 25 Jan 2019 @ 1:25pm

Investment
Investment is an internal thing..
If they want to FIX things inside a corp...Stockholders may take a hit. Or run away.
To many corps are just bill collectors, and repair isnt part of that. this is why it takes 2-6 weeks to get things done in this country.
And WHY, there was a bill to Force corps to PAY, persons that were 24hrs on call..for THAT 24hours..
[ link to this | view in chronology ]
Anonymous Coward, 30 Jan 2019 @ 2:36am

Karl, please stop using the word "breathless". Thanks.
[ link to this | view in chronology ]