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

from the head-fake dept

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.

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


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  • identicon
    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.

    reply to this | link to this | view in chronology ]

  • identicon
    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.

    reply to this | link to this | view in chronology ]

    • identicon
      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.

      reply to this | link to this | view in chronology ]

    • identicon
      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.

      reply to this | link to this | view in chronology ]

      • identicon
        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.

        reply to this | link to this | view in chronology ]

  • icon
    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.

    reply to this | link to this | view in chronology ]

    • identicon
      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.

      reply to this | link to this | view in chronology ]

      • icon
        Thad (profile), 23 Jan 2019 @ 11:56am

        Re: Re:

        Most of them didn't.

        reply to this | link to this | view in chronology ]

        • identicon
          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.

          reply to this | link to this | view in chronology ]

          • icon
            Thad (profile), 23 Jan 2019 @ 2:44pm

            Re: Re: Re: Re:

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

            reply to this | link to this | view in chronology ]

            • icon
              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.

              reply to this | link to this | view in chronology ]

          • identicon
            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.

            reply to this | link to this | view in chronology ]

            • identicon
              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.

              reply to this | link to this | view in chronology ]

            • identicon
              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.

              reply to this | link to this | view in chronology ]

              • icon
                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.

                reply to this | link to this | view in chronology ]

                • identicon
                  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!

                  reply to this | link to this | view in chronology ]

                  • icon
                    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?

                    reply to this | link to this | view in chronology ]

                    • identicon
                      Anonymous Coward, 24 Jan 2019 @ 10:26am

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

                      Follow the thread, it escalated.

                      reply to this | link to this | view in chronology ]

                      • icon
                        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?

                        reply to this | link to this | view in chronology ]

                        • identicon
                          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.

                          reply to this | link to this | view in chronology ]

                          • icon
                            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

                            reply to this | link to this | view in chronology ]

                            • identicon
                              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.

                              reply to this | link to this | view in chronology ]

                              • icon
                                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!

                                reply to this | link to this | view in chronology ]

  • identicon
    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."

    reply to this | link to this | view in chronology ]

  • identicon
    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...

    reply to this | link to this | view in chronology ]

  • identicon
    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...

    reply to this | link to this | view in chronology ]

  • icon
    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.

    reply to this | link to this | view in chronology ]

    • icon
      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.'

      reply to this | link to this | view in chronology ]

  • identicon
    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

    reply to this | link to this | view in chronology ]

  • identicon
    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.

    reply to this | link to this | view in chronology ]


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