Oh Look, Wireless Sector Investment Is Declining Despite Tax Cuts, Repeal Of Net Neutrality

from the ill-communication dept

You’ll recall that one of the top reasons for killing popular net neutrality rules was that it had somehow killed broadband industry investment. Of course, a wide array of publicly-available data easily disproves 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 spike.

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

A few weeks 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 by the Trump FCC. Trump’s “tax reform” alone netted Verizon an estimated $3.5 billion to $4 billion. A recent FCC policy order, purporting to speed up 5G wireless deployment (in part by eliminating local authority over negotiations with carriers), netted Verizon another estimated $2 billion. And that’s before you even get to the potential revenue boost thanks to the repeal of net neutrality and elimination of broadband privacy rules.

Ironically, Verizon’s dip in CAPEX came right on the heels of the wireless industry and Ajit Pai, in perfectly coordinated unison, trying to claim that a CAPEX rise in 2017 was directly due to the repeal of net neutrality. They ignored an important point however: net neutrality wasn’t even repealed until June of this year. If this endless roster of favors was to impact network investment, accelerate network deployment, and unleash a magical wave of “innovation,” that should all be happening right now. And yet, the opposite is happening. And of course it’s not just Verizon. AT&T and Sprint are also reducing overall CAPEX:

“Sprint, Verizon and AT&T have all reduced their overall capex numbers for 2018. The operators cite a variety of reasons, from timing issues to more efficient network technologies. But the ultimate result is the same: Where there was once excitement, now there?s a decided sense of pragmatism.”

Now there’s a number of different reasons for this, including some cost savings in moving from legacy hardware to more efficient virtualization technologies. But again, a decline is not what was promised ahead of the sales pitches for the tax cuts and the attack on net neutrality. The nation was, time and time again, promised unrivaled “innovation and investment boosts” if the nation’s companies received a multi-billion-dollar tax cut, and net neutrality and other “regulatory underbrush” was cleared out of the way. That didn’t happen.

Instead of investing all these tax breaks, perks, and savings back into the network, they were pocketed by investors and executives. Which, for anybody with half of a functional brain stem was the entire point of having a former Verizon lawyer running the FCC in the first place. This is a longstanding trend in telecom: promise the public the world if they get tax cuts, subsidies, and blind deregulation, then avoid doing pretty much all of those things while pocketing the savings. Perhaps someday America will actually learn some kind of lesson from the experience.

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Companies: at&t, sprint, t-mobile, verizon

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Comments on “Oh Look, Wireless Sector Investment Is Declining Despite Tax Cuts, Repeal Of Net Neutrality”

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45 Comments
That One Guy (profile) says:

If it's not total, why bother?

You see, while they’ve received partial tax cuts and some regulations have been removed, they haven’t received complete tax immunity and had all regulations (that they did’t write) removed, and as such they are still tragically crippled, and can only barely get by with reduced investment.

I’ve no doubt that the very month(if not week or even day, given how amazing they are) they get both complete tax immunity and are covered only by regulations that they directly write themselves the absolute explosion of investment and service will astound all, and silence forever all those cynics who doubted them.

bob says:

its the politicians that didn't learn.

America did remember, which is why the majority supported net neutrality. Problem was that politicians didn’t care because those companies made lots of donations.

Yes it’s true we elected those officials and the american people aren’t yet holding them accountable on this one issue; but there are many reasons besides net neutrality issues to vote for/against a particular person.

This is becoming a bigger issue with voters because you are getting more tech savy constituents so I wouldn’t be surprised if over the next 10 year’s elections politicians do focus on this issue as a key point. Too bad it will probably take that long to be addressed.

Thad (profile) says:

Re: its the politicians that didn't learn.

This is becoming a bigger issue with voters because you are getting more tech savy constituents so I wouldn’t be surprised if over the next 10 year’s elections politicians do focus on this issue as a key point.

Honestly? I would.

Net neutrality is a bedrock issue for the sort of person who posts in the Techdirt comments section. But if you see voters or politicians starting to prioritize it over, say, abortion, immigration, tax policy, and healthcare, I think you’re greatly misjudging the electorate’s priorities.

nasch (profile) says:

Re: Re: Re: its the politicians that didn't learn.

But what’s crazy is the majority support it. So why wouldn’t politicians eventually focus on it sooner for an easy win.

Because if people don’t cast votes based on NN then it doesn’t matter. The politicians don’t care what you think or want, only how you vote. So if they get campaign contributions to vote against NN, and nobody is voting in the elections based on NN, their course is clear.

Anonymous Coward says:

Oh, look, the sky is falling--and there's nothing we can do!

Boycott online Christmas purchases.
Tell Amazon (and the like), as well as your congressman/woman, that you want local ISP competition. Just like you can shop locally at DIFFERENT gas stations and DIFFERENT grocery stores, you should be able to choose locally among different ISPs.

Take a stand this Christmas. Buy from your local brick and mortar, and tell your friends/family to do the same.

Don’t complain, and do the same thing; complain and do something different.

That One Guy (profile) says:

Re: Re: Re: This again?

Exactly what do you think they would do? Do you really expect a company like Amazon to see people boycotting them and decide the best recourse would be to start diverting resources to convincing politicians to support competition in the ISP realm? When that didn’t work who would you go after next, Tesla and their cars?

Boycotting Amazon to try to pressure ISP’s is like refusing to use a particular taxi company because a restaurant is doing something you object to.

Anonymous Coward says:

Re: Re: Re:2 This again?

You’re not reading, Guy. Who suggested that only Amazon would be pressured? To have any type of affect, all online retailers would have to be both notified (told why we’re boycotting) and then boycotted for Christmas–the biggest shopping season of the year.

-or-

You could just continue to complain, and offer no suggestions to fix the lack of ISP competition on the local level.

Anonymous Coward says:

Re: Re: Re:3 This again?

Why would pressure on online retailers affect ISPs in the slightest?

It’s like boycotting shopping malls in order to protest highway tolls.

If you offer Solution A, and it actually does something to solve your problem, then sure, you can ask for a Solution B which is better than yours. However, when Solution A is just wasting a lot of time and effort and not getting you any closer to achieving your goal, then “Do nothing” is, itself, a better solution.

Anonymous Coward says:

you again

Another crab in the barrel who just wants to pull down anyone who attempts to come up with a fix. Put your energy towards a solution to the problem for once.

I never suggested that online stores give a cut to ISPs. If you would read, you would see that I also said to tell the online stores and the congressional critters why you’re boycotting: to get local ISP competition. Online stores rely on ISPs just like we consumers do. If the online stores start loosing $$, and we let them know why we’re boycotting (to get local ISP competition–in case you forgot), then maybe…just maybe they’ll also lean on the powers that be and demand the same changes.

If you don’t have a better suggestion or a constructive criticism, why are you here?

PaulT (profile) says:

Re: you again

“Online stores rely on ISPs”

Yes, as do banks, Netflix, charities, home office workers and Skype, among many other businesses that have sod all to do with online retail. Including – get this – brick and mortar stores, who depend on an online presence for everything from advertising to payment processing.

Is the picture getting any clearer yet about how stupid your suggestion is?

Chip says:

Re: you again

We should “boycot” Pet STORES! That “way” there will be Satrving “Dogs” roaming the Streets and ISP will be “scared” into being More COMPETETEVE.

My idea is very “smart”, becasue I am Very “smart”. You know my Idea is the Best IDEA, because I don’t see anybody “else” Coming Up with any “ideas”!

Every Nation eats the Paint chips it “deserves”!

That One Guy (profile) says:

Re: you again

I am not an automotive engineer. I know only the basic ideas behind the fine details of how they work, such that I could not build a car to save my life.

However, if I see someone proposing that the wheels be replaced with square blocks, and the engine replaced with a lemon or potato ‘battery’ like you see in basic science experiments, I would still feel confident in saying that they’re doing it wrong, despite the fact that my lack of knowledge in the field would mean I might not be able to come up with a better ‘improvement’ beyond ‘not that’.

Likewise when I see someone proposing a boycott of a completely third-party company, in a manner that’s got minimal at best likelihood of success because what you’re trying to pressure them to do will cost much more than what they stand to lose(taking a hit during the holidays is going to be a lot cheaper than matching/beating ISP ‘donations’), I feel confident in pointing out that they’re doing it wrong.

You want better suggestions roping in big companies to bring in their resources to the fight? Convince them that it’s in their best interests to do so by something other than a miss-aimed boycott.

In Amazon’s case that could be by pointing out that they offer a streaming service, and something like network neutrality protects that should an ISP also happen to offer something similar and might want to give their content a leg up at Amazon’s expense via zero-rating. A competitive ISP market would also decrease the odds of zero-rating shenanigans even without real network neutrality rules in place, so even that can be in their favor.

There are options to deal with the lack of ISP competition and try to fix it, but ‘hold unrelated company hostage to try to get them to do it for you’ is not likely to get you very far.

Anonymous Coward says:

Re: Re: you again

Thanks for finally offering a different suggestion, Guy. I needed that. I wish you would have started with this response, instead of the usual ‘oh no, that’s wrong, shut up’ sentiment.

I still can’t help but to think that there’s some other way to get lawmakers and ISPs to give us what we really want (more local competition). Maybe I expect change too quickly, but it appears we’re NOT EVEN headed to the competitive landscape that we want.

There’s got to be an effective way to stop paying both politicians (via our tax $$) and ISP’s (via our paychecks) to screw us. It seems like that, by continuing to pay our ever increasing monthly ISP bills, we’re just saying that we approve of the way that things are going.

“No sir, I don’t like it.”
rant over

That One Guy (profile) says:

Re: Re: Re: you again

It’s an uphill battle, and unfortunately the ISP’s have a massive advantage due to the money they have to throw around and how the political system all but requires a candidate to sell out if they want to be viable and get elected, which means the public has to provide almost overwhelming pressure before a politician will consider caving and threatening that sweet stream of ‘donations’.

This is not to say it’s an impossible fight, rather that it’s a difficult one, and there are a number of ways to at least try to tip the scales back in favor of the public, from trying to get better candidates in office, putting pressure on those candidates by making clear that if they aren’t going to represent your interests then you’ll be looking for alternatives come next election, working on allowing local competition if it’s not been blocked at the state level(and working to pressure politicians to reverse it if it has been)…

There are options, difficult to be sure, but they are there, it’s just important to recognize that the deck is stacked against you and try to focus on methods with higher odds of success rather than ones that aren’t likely to get you anywhere.

Thad (profile) says:

Re: Re: Re:2 you again

A majority in the Senate voted to keep net neutrality; it just died in the House.

Now that the Democrats have taken the House (net neutrality shouldn’t be a partisan issue, but that’s what it’s become), an NN bill could presumably pass the House come January, but not the Senate.

(Congress can overturn an executive branch regulatory change with a simple majority within 60 legislative days, which is how the NN rollback passed the Senate before; however, now that the deadline is up, any future NN bill would have to be brought to the floor by McConnell and pass a cloture vote, neither of which is going to happen in the coming term. Don’t forget to vote in 2020; in the meantime, look to the states and the courts.)

OB Vious says:

While rest of economy is on shaky ground.

Minion makes no mention of possible causes that have foiled many other predictions, let alone compares to other areas, just asserts that it’s some invidious plot by ISPs to put us all back on dial-up at twice the cost.

Typical Techdirt Twaddle.

IF any new readers here, this constant barrage of anti-ISP hate is about all that this minion goes with any more. It’s bizarre.

ECA (profile) says:

how is it...

That so many people can understand whats happening and WILL happen, AND those responsible for regulating things, DONT.

Has anyone of those responsible taken Basic Economy classes?? The hardest class Iv taken was balancing my checkbook, and watching the corps for Many years, and EVEN you could see at least 1/2 of the ramifications of GIVING MONEY and EXPECTING SOMETHING from the corps..

The corps Now, are not the old corps that BUILT stuff. They dont want things to change or improve…Even when the Gov. and Customers pays for it 10-100 times over.. They have all become bill collectors. And they are in-charge of the major communications in the USA.. the end points, your phone, your TV, your internet and cellphone…all in one.

How would it be if the Gov, turned them into a Federal utility?? allot of new jobs, to clean things up and make things better?? Or hand it over to a 3rd party and over pay them also??

michael mantion says:

False conclusions

Watched a video on youtube that suggest government corruption.

Dear Techdirt, never use the author again. he is suggesting that tax cuts passed by the senate and congress benefited Verizon have something to do with NN it doesn’t. then it shows that removal of NN and other fascist government policies have decreased cost, increased revenues and benefited Verizon as well as all companies. At no point has it shown that Verizon or any company has decreased investment. It only shows that the harmful regulations wasted money. OH and NN isn’t dead, that oppressive policy could still return. It doesn’t take much for the deep state to twist a couple of senate arms to vote for the deep state corruption. Only Trumps veto pen keeps us safe for now and all corporations know that may only be for another 2 years.

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