One More Time With Feeling: Net Neutrality Didn't Hurt Broadband Investment In The Slightest

from the dollar-a-holler-science dept

You'll recall that ISPs (and the lobbyists, think tanks, politicians, and consultants paid to love them) argued incessantly that if we passed net neutrality rules, investment in broadband infrastructure would grind to a halt, leaving us all weeping gently over our clogged tubes. ISPs like Verizon proudly proclaimed that net neutrality rules would "jeopardize our investment and the development of innovation in Broadband Internet and related services." ISP-tied think tanks released study after statistically-massaged study claiming that net neutrality (and the reclassification of ISPs as common carriers under Title II) would be utterly catastrophic for the broadband industry and its consumers alike.

But as time wore on it became abundantly clear that these warnings were the empty prattle of a broken industry, using a thick veneer of bunk science to defend its monopoly over the uncompetitive broadband last mile.

Since net neutrality was passed there has been absolutely no evidence that a single one of these claims had anything even remotely resembling merit, with broadband expansion pushing forward at full speed, constrained only by the ongoing lack of competition in many markets. We've watched as outfits like Google Fiber continue to expand its footprint. We've watched as Verizon suddenly promised to deploy fiber to cities long neglected. We've watched as Comcast and AT&T rushed to try and keep pace with gigabit investments of their own. In short, nothing changed, and things may have even improved.

And now companies like Comcast, AT&T and Verizon are doling out what could be as much as $86.4 billion in what may be the most expensive spectrum auction ever:

"The FCC’s forward auction headed into Round 8 on Monday with a total of more than $11.5 billion in bids, according to the auction dashboard. The figure was up from just $8.5 billion in auction proceeds from the first round of bidding last week. Demand appeared to be holding strong...Forward auction bidders are striving to hit an $86.4 billion price target set by broadcasters in the reverse auction. If demand does not reach supply, then a second reverse auction will be held with a lower clearing target of 90 MHz, the FCC has said.

You'd think that carriers tripping over themselves to pursue fifth-gen (5G) wireless alone would be enough to put onerous claims about the negative impact of net neutrality rules to bed. But you'd be wrong. Revolving door regulators like Verizon lawyer turned FCC Commissioner Ajit Pai have consistently tried to claim that net neutrality somehow stifled investment, we just apparently didn't notice. Other sector chicken littles have turned to citing unrelated business downturns to try and obfuscate how full of crap the lion's share of these organizations and consultants were on the subject of net neutrality.

Tech Freedom, for example, spent some time last week rewteeting claims that Cisco's decision to lay off an estimated 5,500 employees was somehow thanks to net neutrality:Except Cisco's global layoffs have nothing to do with some relatively simple net neutrality rules passed in the States. Cisco is downsizing because of the rise in virtualization and the company's shift from its hardware roots into a software-centric organization, something the company itself admits, and something you'd think an economist would understand. This conflation attempt isn't unique. Industry-tied think tanker Hal Singer has done yeoman's work the last year or two trying to claim networking investment is down despite all evidence pointing to the contrary.

Singer, whose study played the starring role in the industry's manufactured denial, continued to beat the same drum beat on Twitter last week:But as noted previously Singer's 8% stat comes from his own study. A study repeatedly criticized for cherry-picking unrelated data to intentionally indicate a network investment downturn that doesn't exist. In many instances he included companies whose CAPEX was dropping because they'd just finished major deployments (Charter's finished deployment of new digital set top boxes, for example). Elsewhere, Singer and other think tankers have tried to claim that CAPEX reductions and cost savings due to the rise in software-defined networking (SDN) and network function virtualization (NFV) were actually caused by net neutrality.

Ironic, then, that Singer took to The Hill to pen an op-ed accusing the FCC of playing fast and loose with empirical evidence when it comes to efforts like net neutrality or cable box reform:

"It is simply irresponsible for regulators to rely on gut feelings – or political pressure or public opinion polls. Rather they should be guided by empirical evidence, rigorous analysis of regulatory costs and benefits and basic economic principles taught on every college campus across the country together. What matters most is not the sheer number of docketed public comments or the enthusiasm of those blockading of the Chairman’s driveway, but instead a sober analysis of the need for regulation in light of proven market failures."

Again, that's an ISP-funded think tanker, freshly proven incredibly, repeatedly, and quite-possible intentionally wrong across numerous fronts, blasting the FCC for ignoring actual economic data. Gosh, it's almost as if these folks are paid to be as intellectually rigid as possible, utterly immune to any attempts at honest discourse when presented with conflicting evidence. Do you get to give people lectures on economics and integrity when your bunk studies are used repeatedly to smear net neutrality rules designed to aid consumers, startups and small businesses nationwide? Apparently.

In short, ISPs and their "dollar-a-holler" think tankers used crap science and economics to intentionally mislead the public on net neutrality, but their predictions have been proven repeatedly and painfully wrong. But instead of acknowledging error and moving on to the next misleading argument, they've decided to double down and promote a broadband investment cataclysm that never actually happened.

Filed Under: fcc, investment, net neutrality, spectrum, title ii, wireless
Companies: at&t, comcast, verizon

House Passes Bill Attempting To Gut Net Neutrality, Supporters Declare The Internet Saved

from the up-is-down dept

As we've been discussing, the House has been pushing a new bill dubbed the No Rate Regulation of Broadband Internet Access Act" (pdf). As the name implies, the bill is being framed as a way to keep an "out of control" government from imposing new price caps on broadband, not coincidentally as the broadband industry increasingly eyes usage caps and overages to take advantage of a lack of sector competition. The bill has numerous problems, not least of which being that a special definition of "rate regulation" included in the bill would effectively prevent the FCC from doing, well, anything.

Of course despite these problems the House has passed the measure 241 to 173, with folks like Marsha Blackburn insisting she's saved the day:

"We all know that what they'd like to do is regulate the Internet so they can tax the Internet, so they could then come in and set all the rates," said Rep. Marsha Blackburn, R-Tenn."

With most people still not really even understanding what the Internet is, House supporters of the bill have great success in framing net neutrality as an attempt to tax the Internet. The primary pusher of the bill, Illinois Representative Adam Kinzinger, proudly proclaimed at his website that the net neutrality-killing bill would actually foster greater innovation and "better services" for consumers:

"Since its inception, the Internet has been free from rate regulation and has thrived under that model. Both Chairman Wheeler and President Obama assured Congress and the public that any regulations that were adopted under the open Internet order would refrain from allowing the federal government to regulate rates of broadband Internet access. H.R. 2666 codifies both the President’s and Chairman Wheelers’ past promises and will allow innovative companies to do what they do best: create new products and better services to benefit consumers."

Of course by gutting FCC authority over an un-competitive broadband market you'd obviously be doing the exact opposite, though given that AT&T is a top Kizinger donor, he's apparently willing to overlook any concerns on that front. Fortunately the White House has stated it intends to veto this latest bill should it wind its way through the Senate, making the effort an entirely empty gesture -- outside of it being a public oath of fealty to telecom campaign contributors.

As the EFF is quick to note, those who thought the neutrality fight was over last February when the FCC voted to approve the rules need to realize it's going to take constant fighting and public attention to keep those rules in place. The Presidential election and the ongoing industry lawsuits against the FCC remain the biggest threat to the rules, though no limit of bills continue to be introduced that aim to cut neutrality off at the knees, usually under the guise of trying to save the Internet from "Internet populists" and a power-mad FCC.

Filed Under: congress, fcc, marsha blackburn, net neutrality, rate regulation, title ii

Cruz, Rubio Celebrate One Year Anniversary Of Net Neutrality Rules -- By Trying To Kill Them

from the hurting-consumers-for-the-good-of-consumers-everywhere dept

It has already been a year since the FCC voted to reclassify ISPs as common carriers under the telecom act. And despite the countless calories spent by the telecom industry and its various mouthpieces claiming Title II and net neutrality would demolish all Internet investment and innovation as we know it, you may have noticed that things by and large did not implode. In fact, while the FCC has been snoozing on things like zero rating and usage caps, the mere threat of rules helped the Internet by putting an end to the interconnection shenanigans causing Netflix performance degradation.

But because some apparently believe that opposing a concept with broad bipartisan support is a brilliant political strategy, eight Senators -- including Presidential hopefuls Marco Rubio and Ted Cruz -- decided to mark the one year anniversary with a new bill that aims to dismantle the rules and Title II. In a statement posted to the Rubio campaign website, Rubio outlines how the Restoring Internet Freedom Act (pdf) is all about (insert casual, nonsensical use of words like innovation and diversity here):

"The Internet has always been one of the best models of the free market,” said Rubio. “There are low barriers to entry, back and forth communication between consumers and providers, and a rapid evolution of ideas. “Through burdensome regulations and tight control like the net neutrality rule, the government only hinders accessibility and the diversity of content,” added Rubio. “Consumers should be driving the market, and we can help by encouraging innovation, incentivizing investment, and promoting the competitive environment this industry needs."

While certain Internet businesses may enjoy a free market, with net neutrality specifically we're talking about the telecom industry, which simply isn't free. The telecom market is a protectionist cabal in which a handful of companies, soaked with generations of unaccountable subsidies, enjoy limited competition thanks to their immense political power. The kind of power Comcast is currently abusing with usage caps and zero rating to hurt alternative video services. The kind of power that convinces Presidential hopefuls to proudly declare they're fighting one of the most meaningful and broadly-supported consumer protection efforts in a generation -- because of an undying love of consumers.

It's also hard to argue that the net neutrality rules are "burdensome" when the FCC really hasn't even bothered to enforce them yet, and there's absolutely no objective example of said burden. Comcast imposing usage caps on uncompetitive markets, then exempting its own streaming services from them is about as clear of a violation of net neutrality that you're going to get. But because the FCC's "burdensome" regulations pussy-footed around the threat of caps and zero rating, we're actually left with the rules that don't go quite far enough.

And yes, for about the millionth time you wouldn't need net neutrality rules if we had effective competition in the broadband space. But when push comes to shove, the same people lambasting net neutrality aren't keen on supporting this policy, since it means standing up to the most powerful lobbying operations (AT&T, Verizon, Comcast) the country has to offer. As a result we get politicians that gut consumer protections, do absolutely nothing about the abysmal state of broadband competition, then proudly pat themselves on the back for being such wonderful pals to the American consumer.

Filed Under: competition, fcc, innovation, internet freedom act, marco rubio, net neutrality, ted cruz, title ii
Companies: at&t, comcast, verizon

One Year Later, ISP Claims That Title II Would Demolish Broadband Investment Found To Be Total, Indisputable Bullshit

from the nostradamus-you-ain't dept

In late 2014, the Obama Administration and the FCC shocked everybody by announcing that the government would be uncharacteristically ignoring telecom lobbyists and reclassifying broadband service under Title II -- ensuring it had adequate legal foundation for tougher net neutrality rules. As you might expect, the cable and phone companies immediately set to work with a blistering public relations barrage, with think tankers, editorials, industry consultants and thousands of industry mouthpieces all making one common refrain: Title II would utterly decimate broadband sector investment and crush innovation.

Ignore that the wireless industry had been classified under Title II for the majority of explosive growth years. Ignore as well that companies like Verizon had been classifying its FiOS fiber under Title II for mammoth tax breaks with no ill effect. No, according to companies like AT&T in 2014, Title II was absolutely certain to effectively usher in a telecom investment ice age that would leave the country reeling:

"Reclassification would mire the industry in years of uncertainty and litigation, and it would abruptly stall the virtuous circle of investment and innovation that has propelled the United States to the forefront of the broadband revolution."

Comcast had its own similar predictions in 2014:

"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."

But as the last year rolled on, people who could be bothered to actually read industry CAPEX numbers found that investment -- much of it in Google Fiber markets -- was as healthy as ever, if not better. Comcast announced plans to deploy two gigabit service to eighteen million homes, more recently unveiling plans for a major gigabit cable initiative in 2016. Time Warner Cable, Comcast and AT&T all spent much of the year crowing about notable speed upgrades and improvements, from expanded gigabit fiber pushes to housing developments, to notable DOCSIS 3.1 cable and set top box upgrades.

Closing on one year after the FCC voted to enact Title II, Kate Cox at the Consumerist did an amazing job digging through the absolute mountain of misleading claims made by AT&T, Time Warner Cable, Comcast, Verizon and Charter, and comparing them to the companies' recent earnings statements and CAPEX numbers. In nearly every case, claims of the investment apocalypse were found to be utter and undeniable bullshit, with the companies repeatedly indicating that Title II didn't impact company plans in the slightest:

"By and large, the half-dozen companies representing the overwhelming majority of cable Internet and wireless broadband customers in the country, are continuing to invest. But is that just puffed-up chest-thumping to cheer up investors? Those most directly impacted by broadband investment don’t seem terribly concerned. In January, Multichannel News reported that the suppliers who make the stuff that the telecoms spend their money on aren’t losing sleep about a decrease in investment.

Shocking, right? It's almost as if think tankers, lobbyists, and other hired sockpuppets were just spouting nonsense to scare the government away from meaningful net neutrality protections. And when it became clear the data wasn't going to support their predictions, industry think tankers (and Verizon lawyers turned FCC Commissioners) concocted misleading studies claiming sector CAPEX was dropping, and are still making the same claims even now. But as we previously noted in great detail, those studies used farmed statistics and cherry picked CAPEX windows to artfully paint a picture easily disproven by spending just five minutes with any major telecom earnings report.

Of course, the fact that these companies have been proven to be lying through their teeth won't stop them from continuing their lawsuit against the FCC. If said lawsuit doesn't demolish the rules, it's entirely possible the elections will, since any Presidential victor could gut the existing FCC staff and the rules in one, fell swoop. Should that happen, the neutrality debate in the States will reset to zero, giving telecom industry disinformation artists ample opportunity to once again highlight how the broadband industry's greatest innovation isn't in broadband, but in bullshit.

Filed Under: broadband, fcc, investment, net neutrality, title ii
Companies: at&t, comcast, verizon

AT&T Pretends It Was Just About To Offer A Bunch Of Awesome Services, But Then Net Neutrality Happened

from the credibility-gap dept

AT&T was just about to offer all manner of amazing, innovative services, but then net neutrality happened. At least that's the gist of a speech recently given by AT&T Senior VP Bob Quinn at the Phoenix Center's Annual US Telecoms Symposium. According to Quinn, net neutrality has created enough "legal uncertainty" that it caused the telco to shelve a "bunch of stuff." Quinn also proclaimed that the FCC's rules has the telco stuck in a sort of regulatory quagmire, where fifteen AT&T lawyers have to sit around debating what is and what isn't allowed by the nation's net neutrality protections:

"Since the Open Internet order came out we've had weekly calls with the business units and literally 15 lawyers who are all trying to figure out whether that stuff we've invested in ... would be a violation of the order," he said. "We've had to shelve a bunch of stuff because we've got to wait and see."

Right. Except that's absolute bullshit. We've noted time and time again that while the new net neutrality rules thankfully prohibit the most heavy-handed of behaviors (outright site blocking or throttling), the rules are actually generous to a fault when it comes to allowing all manner of "creative" pricing. That's especially been true when it comes to usage caps and "zero rating," which together let companies trample all over the idea of an open Internet -- provided they're just clever about it.

AT&T, for example, has had no problem offering its "Sponsored Data" service, which lets companies pay a premium to have their content not count against user wireless data usage allotments. Despite the fact this dramatically tilts the playing field in the favor of larger, wealthier companies (by letting them buy their way to a preferred status), the FCC has yet to bat an eyelash at the practice. The rules even go so far as to insist that such models may "benefit edge providers (content companies) by helping them distinguish themselves in the marketplace and tailor their services to consumer demands."

And while it's possible the FCC is waiting on the industry's lawsuit against the rules to be settled before taking action, the fact it has publicly applauded such models suggests that's not likely. T-Mobile, for example, has been lauded by the FCC for its "Binge On" and Music Freedom" services, which exempt the nation's biggest music and video services from the company's usage caps. In fact, the FCC boss went so far as to call these services "innovative" and "pro competition" despite the dangerous precedent at play (again, small independents not being whitelisted alongside by default).

Hell, the FCC has even sat on its hands as Comcast offers a streaming video service that doesn't count against the company's ever-expanding usage caps, which is generally seen as the worst net neutrality tap dance we've seen so far.

So yeah, as it stands now there's nothing the FCC hasn't allowed. Sounds horribly oppressive, doesn't it? And Quinn can't be bothered to cite a single example of a service that the company had to scrap because of the rules. That's because, much like its BS claim it was going to freeze non-existent fiber deployments in reaction to the rules, AT&T's not really creatively developing innovative new services. Instead, it's stuck doing what the government-pampered legacy behemoth historically does best: pouting about what's actually pretty lax regulation.

Filed Under: innovation, net neutrality, title ii
Companies: at&t

Sorry Net Neutrality Chicken Littles, Title II & Net Neutrality Still Haven't Hurt Broadband Investment In The Slightest

from the the-sky-is-not-falling dept

It's the ISP lobbyist and think tank meme that simply won't die. ISPs of course predicted all manner of doom and gloom should net neutrality and Title II reclassification come to pass. Tubes were supposed to clog, innovation was supposed to die, and investment in broadband networks was supposed to shrivel up completely. Of course, none of that happened. Instead what we've seen is broadband investment actually spike, many of the companies feuding before the rules came to pass suddenly getting along beautifully, and Netflix streams that no longer suck thanks to the threat of a regulator actually doing its fucking job.

Of course, if you're a mega-ISP lobbyist or executive (or one of the millions of people paid to parrot their bullshit in one fashion or another) you can't admit that, lest you get kicked out of the ISP think tank astroturf adventure club.

So instead, we've seen everyone from ex-Verizon lawyers turned FCC Commissioners to Congressmen repeat the idea that Title II killed the broadband golden goose. As net neutrality opponents continue to hold a series of show pony hearings intended to shame the FCC for daring to stand up to ISPs, the claim that net neutrality is the anti-Viagra to sustained broadband spending continues to play front and center. Though entertainingly, even the "experts" that neutrality opponents have been inviting to DC to tell them what they want to hear have even started to balk:

"Robert Shapiro, co-founder Sonecon LLC, has predicted investment could eventually decline between 5 percent and 20 percent per year because of the rules. He said the rules will have a "substantial adverse effect" but noted that those who claim to know fully how the rules will affect investment are "talking through their hat." Michael Mandel of the Progressive Policy Institute similarly said, "We don't know now what is going to happen." The institute has previously blamed the rules for a decline in broadband capital expenditures in the first half of 2015, though others have disputed the cause."

The same Progressive Policy Institute claiming "we don't know what is going to happen," is the same organization that's been circulating a study by Hal Singer for months claiming that Title II was responsible for a 12% dip in network investment. That study has been popping up in everything from editorials to Congressional testimony for months. Except as we've already explored at length, Singer cherry-picked his data, including companies that were winding up major projects that had nothing to do with net neutrality (like AT&T's completion of "Project VIP" fiber upgrades, or Charter's finished digital cable conversion).

And indeed, the one or two people in the tech and telecom press that can be bothered to actually look at CAPEX numbers are discovering that lo and behold, investment is doing just fine:

"In the nine months ending September 30, Comcast said its "capital expenditures increased 12.8 percent to $5.9 billion compared to the prior year." The Q3 increases are primarily due to "increased spending on customer premise equipment related to the deployment of the X1 platform and wireless gateways and our ongoing investment to expand business services," Comcast said.

...Time Warner Cable, the nation's second biggest cable company after Comcast, reported today that its capital expenditures increased to $3.5 billion in the first nine months of 2015 due to efforts "to improve network reliability, upgrade older customer premise equipment and expand its network to additional residences, commercial buildings and cell towers."

...The new classification hasn't slowed mobile investment at Verizon, which is preparing for an upgrade to 5G and reported that its wireless capital investment is "$8.5 billion year to date, up 8.4 percent from a year ago." The increase was even more striking when comparing Q3 2014 to Q3 2015, with wireless capital spending going up 17.6 percent from $2.48 billion to $2.92 billion.

Anybody noticing a trend? And again, in the instances where an ISP did reduce spending, it was usually related to things that have jack shit to do with net neutrality, such as AT&T and Verizon's refusal to upgrade their DSL networks, or cable companies finishing up set top box deployment projects. Surely Hal Singer and the net neutrality chicken little band will be issuing statements admitting they were in error any day now? Of course not. What they'll do is insist that it's just too early to see the diabolical impact real net neutrality rules will have on the broadband sector. Then, in ten years, when there's still no impact (assuming the rules aren't sued into oblivion), these folks will be on to the next scary paymaster talking point, pretending they never made these predictions at all.

Filed Under: investment, net neutrality, title ii
Companies: comcast, time warner cable, verizon

Hey, Remember How Net Neutrality Was Supposed To Destroy The Internet?

from the chicken-little dept

Before and after the FCC imposed new net neutrality rules, you'll recall there was no limit of hand-wringing from major ISPs and net neutrality opponents about how these "draconian regulations from a bygone era" would utterly decimate the Internet. We were told investment would freeze, innovation would dry up like dehydrated jerky, and in no time at all net neutrality would have us all collectively crying over our busted, congested, tubes.

And, of course, shockingly, absolutely none of that is happening. Because what the ISPs feared about net neutrality rules wasn't that it would senselessly hurt their ability to invest, but that it would harm their ability to take aggressive and punitive advantage of the lack of competition in last mile broadband networks. Obviously ISPs can't just come out and admit that, so what we get instead is oodles of nonsense, including bogus claims that net neutrality violates ISPs' First Amendment rights.

About a year ago, you'll recall that companies like Netflix, Cogent, and Level 3 accused most of the major ISPs of intentionally letting their peering points get congested. The goal, these companies claimed, was to kill the long-standing idea of settlement-free peering, and drive services like Netflix toward striking new interconnection deals that would, presumably, be jacked up over time. One year on and Cogent CEO Dave Schaeffer notes that most of the congestion that plagued these interconnection points last year has somehow magically disappeared:

"Speaking to investors during the Deutsche Bank 23rd Annual Leveraged Finance Conference, Dave Schaeffer, CEO of Cogent, said that the FCC's adoption of net neutrality rules that include Title II regulation, and passage of similar rules in the European Union, have led to ports on other networks becoming unclogged. "The adoption of the Open Internet order and Title II jurisdictional authority were mirrored in the EU and on June 30 the European Commission adopted a set of regulations that were passed by the parliament and the council," Schaeffer said. "As a result of that we have seen significant port augmentations."

Schaeffer proceeded to note that AT&T and Verizon "are nearly congestion free" and would be completely congestion free sometime in the fourth quarter. Negotiations with other ISPs appear to also be going well. Funny how that works, huh? And note the FCC didn't even have to do all that much; we simply needed the mere threat of a regulator actually doing its job to make the mega-ISPs play nice. In other words, net neutrality rules that were supposed to destroy the Internet have instead resulted in companies that were at each other's throats a year ago suddenly getting along famously, and the Internet itself working better than before.

Sure, some ISP think tankers are being paid to pretend the last few weeks that network investment has dried up, but there's absolutely no indication that's the case. In fact, the biggest ISPs historically opposed to net neutrality have announced major deployment projects since, including Comcast's plan to deploy two gigabit fiber to 18 million homes, Verizon's plan to invest heavily in the fifth-generation of wireless technology, and AT&T's $68 billion acquisition and subsequent plans for fixed-wireless broadband and (when they can bothered to get around to it) gigabit fiber.

Granted, ISPs will argue that it's still early and that the sky will likely fall due to net neutrality any day now. A more likely explanation is that incumbent ISPs and their army of paid mouthpieces were utterly and unmistakably full of shit.

Filed Under: congestion, fcc, interconnection, net neutrality, title ii
Companies: cogent

FCC's Pai Desperately Tries To Pretend He Was Right About Net Neutrality Rules Killing Broadband Investment

from the revolving-door-chicken-littles dept

Before the FCC passed new net neutrality rules, countless ISP consultants, think tankers, and various other sockpuppets desperately proclaimed that the rules would totally destroy the Internet and stifle all network investment. Now months after the rules took effect, everything seems to be operating as it was before -- if not better. Google Fiber continues to deploy to a growing number of underserved cities, municipal broadband providers and smaller ISPs continue to push gigabit upgrades, and even Comcast has announced it's deploying two gigabit service to around 18 million subscribers before the end of the year.

While the broadband industry still suffers from a lack of overall competition, it appears completely unbothered by what many claimed was "draconian regulation for a bygone era" that we were repeatedly told would "utterly crush innovation" and "stifle network investment." In fact, we've seen several instances where the rules already have put big ISPs on their best behavior, most notably on the interconnection front. Granted, numerous ISP execs predicted there'd be no issues, not that anybody heard them under the din of AT&T and Verizon fear mongering.

Of course, these folks can't just admit they were wrong and were motivated to make shit up to scare people away from net neutrality, so they're now trying to retroactively claim they were right -- despite the total absence of any real evidence. Case in point is FCC Commissioner (and former Verizon regulatory lawyer) Ajit Pai, who this week proclaimed that net neutrality chicken littles were right all along, and the FCC's use of Title II net neutrality rules has utterly depressed broadband investment:

"As evidence, Pai pointed to research that showed a decline in capital expenditures by the major wireless companies of 12% in the first half of 2015 compared to the same time period in 2014—when the FCC was still expected to restore open Internet rules without reclassifying broadband.

"In my statement dissenting from the Commission’s Title II decision, I warned that '[b]roadband networks don’t have to be built. Capital doesn’t have to be invested here,'" Pai said. "'Risks don’t have to be taken. The more difficult the FCC makes the business case for deployment—and micromanaging everything from interconnection to service plans makes it difficult indeed—the less likely it is that broadband providers big and small will connect Americans with digital opportunities.' And that I fear is what we are now witnessing."

Right, except we're not witnessing that at all. Pai can't be bothered to show his math, but it appears he pulled the 12% number from a recent editorial by industry-linked think tanker Hal Singer, whose work has been the backbone of a decidedly pointed attempt to mislead the public over the last few weeks. Singer's the same guy who was widely criticized for manipulating statistics for the broadband industry to help them claim that net neutrality would result in $15 billion in new taxes. You'll be shocked to learn that most of his worst-case-scenario predictions supporting these numbers show no indication of being true.

In his Forbes editorial, Singer makes these specific claims:

"They said it wouldn’t happen. They offered assurances from three Wall Street analysts, who insisted that Internet service providers (ISPs) would continue to invest at the same levels regardless of the regulatory climate...AT&T’s capital expenditure (capex) was down 29 percent in the first half of 2015 compared to the first half of 2014. Charter’s capex was down by the same percentage. Cablevision’s and Verizon’s capex were down ten and four percent, respectively. CenturyLink’s capex was down nine percent. (Update: The average decline across all wireline ISPs was 12 percent. Including wireless ISPs Sprint and T-Mobile in the sample reduces the average decline to eight percent.)

Except, causality does not equal correlation. If you bother to look at AT&T SEC filings, you'll note that AT&T already planned to scale back capex because it was already winding up an upgrade initiative dubbed "Project VIP," which had nothing to do with net neutrality. Indeed, Verizon and AT&T (which comprise the lion's share of the capex cuts) were already dramatically scaling back their fixed-line network investments, which also had absolutely nothing to do with net neutrality. Charter, meanwhile, just finished up its all-digital network upgrade, and its declines too have nothing to do with net neutrality.

On the wireless side, AT&T and Verizon have acknowledged winding down massive LTE network upgrades, and all of the wireless carriers have been engaged in a little belt-tightening as they deal with the disruptive behavior of T-Mobile. There are about a million reasons for capex cycles, including a lack of competition resulting in muted network upgrades, completed projects, to numerous ISPs in holding patterns as they wait for mergers and acquisitions. But there's absolutely no data that directly links these capex reductions to net neutrality or the FCC's implementation of Title II to govern ISPs. And, meanwhile, just a few days before Pai claimed that companies like Verizon were no longer investing in wireless... Verizon announced that it was ramping up its schedule for 5G deployment (the next big upgrade after LTE), which will lead to the next big round of capital expenditure in wireless. So, apparently the new rules did not scare off Verizon -- arguably the biggest opponent of net neutrality in the United States.

So basically you've got a revolving-door regulator who used to work for the broadband industry, citing statistics from a think tanker with ties to the broadband industry, both hoping that a wish, a dream, some out-of-context data and a little make believe will fool people into thinking these guys weren't utterly full of crap all along.

Filed Under: ajit pai, broadband, capital expenditure, fcc, hal singer, investment, net neutrality, title ii, wireless
Companies: at&t, verizon