- Jonathan Alcorn/Reuters
Despite what you hear from critics of the current net neutrality rules, when it comes to their effect on how much broadband providers are investing in their networks, the sky doesn’t seem to be falling.
That’s the word Monday from Free Press, a consumer advocacy group. In a new report, the group took a look at investments made by the publicly traded broadband companies before and after the Federal Communications Commission put in place its strong net neutrality rules in 2015.
In the two-year period following the new rules, overall broadband-related investment among those companies was up 5% from the two-year period immediately preceding them, Free Press found. And if you exclude Sprint and AT&T, both of which decreased their investment after completing the build out of their high-speed LTE networks, overall investment would have been up 9%, according to the report.
“If investment is the FCC’s preferred metric, then there’s only one possible conclusion: Net Neutrality and Title II are smashing successes,” Derek Turner, Free Press’ research director, said in a statement. Title II is the section of the federal Communications Act that the FCC controversially used to undergird its net neutrality rules.
Free Press’ finding is important because it addresses one of the key arguments against those rules — that they would stymie investment. FCC Chairman Ajit Pai, relying on industry commissioned figures, has argued that investment has actually declined since the new rules took effect.
Citing those figures, Pai has proposed repealing the rules. The FCC is scheduled to vote Thursday to begin the process to overturn them. The FCC vote will begin a comment period in which the public and interested organizations can argue for and against repealing the rules. Supporters of the rules have been planning to attack his rationale regarding broadband investment head-on in their effort to oppose repeal.
In its new report, Free Press found that during 2015 and 2016 combined, investment was up at 16 of the 24 public broadband companies it examined compared with the period from 2013 to 2014. At some companies, investment was up markedly over that period. Investment by Comcast, for example, rose nearly 27%from the two years before the new rules to the two years after them to $14.6 billion. Frontier’s investment was up 71% over those time periods, while Cincinnati Bell’s was up 50%.
The biggest drop in investment among public companies was at US Celluar, where investment fell by 24% from the first time period to the second. But Free Press noted the company had previously informed investors it would curtail its investment after completing its own LTE roll-out.
Free Press also examined Census Bureau data to get a sense of whether and how the rules affected investment by private companies. The Census Bureau data indicated that total investment by the telecommunication industry rose by $553 million to $87.2 billion in 2015 compared with 2014.
Not only was investment up overall, but so too were overall industry revenue and profits, Free Press found.
“The supposition made by Chairman Pai, and by his supporters inside Washington and cable company lobbying shops, is that irrational fear of a hypothetical future intervention could kill off investment in an otherwise booming sector of the economy,” Free Press said in its report. “Don’t believe them.”