Free Press Debunks Claims about Net Neutrality and Investment

New report shows Net Neutrality will likely increase investment and competition online
Contact Info: 
Moira Vahey, Free Press, (202) 265-1490 x31

WASHINGTON -- A new report by Free Press provides overwhelming evidence, despite the claims of companies like AT&T, that Network Neutrality will not harm network investment. On the contrary, the report shows that open Internet rules will likely have a positive impact on investment in both the network and applications markets.

"Big phone and cable companies have been crying wolf about Net Neutrality and investment," said S. Derek Turner, research director at Free Press and author of Finding the Bottom Line: The Truth about Network Neutrality and Investment.

"But the data suggest that if Net Neutrality has any impact on network investment, it will almost certainly be positive. And there is no doubt that without Net Neutrality, investment in the broader Internet applications and content markets will be substantially harmed."

Read the report here: http://www.freepress.net/files/Finding_the_Bottom_Line_The_Truth_About_N...

"Claims that Net Neutrality will hurt investment are an attempt to distract attention from efforts by companies like AT&T and Comcast to use their market power to thwart competition and reduce investment," Turner said. "Net Neutrality is an important protection needed to prevent abuses of market power that will harm our economy in the long run."

Finding the Bottom Line looks at historical trends and investment data from the telecommunications sector to demonstrate the impact of Net Neutrality and regulation on growth and investment. The report’s findings include:

A variety of factors drive investment, ranging from competition to supply costs. In the telecom sector, light regulation like Net Neutrality will play only a minor role in actual investment decisions.

  • Net Neutrality will likely encourage increased investment in network infrastructure and spur even higher levels of investment in the applications and content sector -- the key driver of growth in the Internet access market.

  • AT&T’s overall gross investment increased by more than any other Internet service provider’s in America during the two years that it was required by the FCC to operate a neutral network under merger conditions. During this period of mandated Net Neutrality, AT&T’s investment in its wireline network increased from 13 percent of revenue to 20 percent of revenue, well above the average of all other Internet service providers.

  • While claiming Net Neutrality will deter investment, most U.S. Internet service providers are currently disinvesting in their networks by depleting more in assets than they spend investing and maintaining their networks. AT&T, while operating under Net Neutrality merger conditions, was one exception to this trend.

  • Incumbent phone company investment rose dramatically during the years following regulations created by the 1996 Telecommunications Act, but declined after the FCC eliminated most of these rules.

"Policymakers need to look at the data and judge the facts for themselves," Turner said. "Net Neutrality will protect consumers and provide certainty to investors. Once this basic protection is secured, we must move on to more challenging issues facing the broadband market -- like bridging the digital divide and promoting competition."

Read Finding the Bottom Line: The Truth about Network Neutrality and Investment at http://www.freepress.net/files/Finding_the_Bottom_Line_The_Truth_About_N...

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Free Press is a national, nonpartisan organization working to reform the media. Through education, organizing and advocacy, we promote diverse and independent media ownership, strong public media, and universal access to communications. Learn more at www.freepress.net

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