The Wall Street Journal Doubles Down On Dumb: Falsely Claims Net Neutrality ('Obamanet') Has Crushed Broadband Investment

from the it's-election-season dept

Last week, we noted that the Wall Street Journal appeared to have reached a completely new low in the "conversation" about net neutrality, with a bizarre, facts-optional missive about how Netflix was to blame for pretty much everything wrong with the Internet. According to Holman W. Jenkins Jr., Netflix is the diabolical villain at the heart of a cabal to regulate the Internet, cleverly convincing regulators to treat hard-working, honest companies like Comcast unfairly. As we noted, the screed is part of a broader telecom-industry attempt to vilify Netflix for not only its support of net neutrality, but for daring to erode traditional cable TV subscriptions through (gasp) competition.

This week the Journal decided to double down on notably cryptic and dumb editorials, with another rambling tirade about net neutrality. Piece author Gordon Crovitz, who we've repeatedly documented as aggressively wrong on everything from surveillance to encryption, begins by riling up the partisans in claiming "'Obamanet is hurting broadband":
"The FCC never planned to set rates and terms for broadband under the laws that dictated how railroads operated in the 1880s and the phone system in the 1930s. But President Obama decided “net neutrality” was good politics, so he demanded that the commission impose the most extreme form of regulation. Today bureaucrats lobbied by special interests determine what is “fair” and “reasonable” on the Internet, including rates, tariffs and business arrangements. The FCC got thousands of requests for new regulations within weeks of the new rules."
Right, except none of that is true. While the FCC has issued some warnings about interconnection shenanigans (which has resulted in Netflix, transit and last mile ISPs suddenly getting along famously), the FCC is forbearing from most of the more aggressive portions of Title II regulations. And despite the fact that anti-net-neutrality folks don't want to believe him, it's clear that FCC boss Tom Wheeler doesn't want to regulate broadband pricing. The proof is in the fact that the agency continues to turn a blind eye to industry prices (it's simply never even mentioned as an issue), and the agency has effectively given the green light to usage caps, overages and zero rating.

If they had any sense, net neutrality opponents should be happy about this, as it's abundantly clear the FCC's only looking to enforce the most ham-fisted of neutrality abuses (filtering, blocking, heavy throttling of competing services), and ISPs can continue doing precisely what they're doing now (aggressively cashing in on uncompetitive markets) with no worry of regulatory interference. Most ISPs understand the message is subtle but it's there: ISPs can continue to experiment with this kind of "creative" pricing, they just need to be subtle about it. There's zero indication that Wheeler has any interest in serious rate regulation.

Crovitz then proceeds to parrot a new missive the broadband industry has loyal mouthpieces chanting at the top of their lungs the last few weeks: that, like neutrality opponents ingeniously predicted, the FCC's new rules have indeed stifled broadband sector investment. Like FCC Commissioner Pai last week, his evidence once again comes courtesy of broadband-industry tied "consultant" and professional statistics-massager Hal Singer:
"Now Mr. Singer has analyzed the latest data, and his prediction has come true. He found that in the first half of 2015, as the new regulations were being crafted in Washington, major ISPs reduced capital expenditure by an average of 12%, while the overall industry average dropped 8%. Capital spending was down 29% at AT&T and Charter Communications, 10% at Cablevision, and 4% at Verizon. ( Comcast increased capital spending, but on a new home-entertainment operating system, not broadband.)"
Except Mister Singer cherry picked his statistics and ignored context. AT&T and Charter's capex dropped because both were winding up major investment projects ("Project VIP" and a digital video upgrade, respectively) that had nothing to do with net neutrality. Singer also intentionally ignores that capex reductions in AT&T and Verizon's fixed-line networks are because those companies had already frozen "next-gen" broadband deployments and are hanging up on unwanted DSL users, something that again has nothing to do with net neutrality. So right out of the gate, the vast majority of Singer and Crovitz's "proof" evaporates into thin air.

While Singer acknowledges that Comcast boosted capex, he intentionally ignores that the company subsequently announced a huge nationwide plan to deploy two-gigabit broadband service. And while Verizon's capex dropped 4% due to winding down LTE upgrades (that tends to happen when a job is complete), the company just last week announced a huge investment initiative in 5G wireless broadband technology. Odd that Singer and Crovitz somehow forget to mention that two of the country's biggest neutrality opponents just announced major new investment initiatives yeah?

Singer also ignores the fact that capex was up for a huge number of broadband ISPs, including Google Fiber, Sprint, T-Mobile, Frontier, Windstream, Suddenlink, and Time Warner Cable -- not to mention continued growth on the municipal (community driven) broadband front. In short, Crovitz, Singer, Pai and other neutrality opponents are trying to make a claim that -- no matter how you twist the data -- simply can't be substantiated. The capex fluctuations they're pointing to as proof positive of broadband industry damage are perfectly ordinary and have absolutely nothing to do with net neutrality. Period. Full stop.

In the short term only the courts, not stat farmers, sockpuppets and bullhorns, can kill net neutrality. But since a 2016 administration change would allow the selection of a new (and decidedly anti-neutrality) FCC boss with the power to dismantle the rules, there are obvious benefits to riling up the uninformed masses just ahead of election season. You just hope some of them are able to read a simple spreadsheet.
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Filed Under: broadband, gordon crovitz, investment, l. gordon crovitz, net neutrality


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  1. icon
    orbitalinsertion (profile), 24 Sep 2015 @ 6:30pm

    But President Obama decided “net neutrality” was good politics, so he demanded that the commission impose the most extreme form of regulation.


    Regulation Extreme!

    Get pumped! Come see it this Sunday Sunday Sunday! Right off Exit Eleventy-Four +7i, take the first left through the trans-dimesnional barrier because it is so Extreme, it's in a completely different universe.

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