People + Policy
= Positive Change for the Public Good
Timothy Karr, 201-533-8838
WASHINGTON — On Monday, Free Press released a comprehensive report examining internet-industry developments in the two years since the Federal Communications Commission’s February 2015 Open Internet Order. At that time, the agency adopted strong Net Neutrality rules and reclassified broadband-internet access as a Title II telecommunications service.
It’s Working: How the Internet Access and Online Video Markets Are Thriving in the Title II Era documents financial disclosures, statements to investors, and infrastructure deployments publicly traded internet service providers (ISPs) in the United States made during the years leading up to and following the FCC’s historic vote. The report also examines investments, growth and other developments for businesses and industry sectors that rely on the open internet to reach their customers. The data overwhelmingly suggest continued growth in investment and innovation in both the ISP and internet “edge” sectors.
“If investment is the FCC’s preferred metric, then there’s only one possible conclusion: Net Neutrality and Title II are smashing successes,” said Free Press Research Director S. Derek Turner, the author of the report. “The restoration of Title II for broadband-internet access was designed to preserve what the FCC rightly calls the internet’s virtuous cycle of investment and innovation. All available data indicate that the 2015 decision to adopt strong rules on a sound legal footing is working as intended, benefiting internet users, broadband-access providers and the myriad businesses that distribute services over the open internet.”
Despite the wealth of facts pointing to the Open Internet Order’s successes, President Trump’s FCC chairman, Ajit Pai, has launched a proceeding to repeal the 2015 policy. The centerpiece of Pai’s push is his demonstrably false claim that the mere existence of Title II authority has caused a reduction in broadband investment.
“This claim is both false on its face — aggregate investment by publicly traded ISPs is up since the FCC’s vote — and completely illogical,” Turner said. “Infrastructure investment is influenced by a number of factors, including interest rates and investment climates, competition and consumer demand, and of course the networks and capacities that a company has already built out. The idea that a single FCC decision could have this impact on investment is preposterous. Yet Pai continues to repeat the claim, ignore what these companies are telling their own investors, and look away from the mountain of available evidence showing that the internet economy overall is thriving since the FCC acted in 2015.”
Instead of having FCC staff produce their own objective analysis, Pai has relied on manipulated data from ISP-funded analysts. These estimates selectively removed billions of dollars in capital expenditures by AT&T and Sprint from their investment tallies.
“These rigged estimates arrive at their intended result by distorting two companies’ publicly reported data,” Turner said. “The manipulation of AT&T’s and Sprint’s investment data is unjustified. But it also shows the danger of assessing the broadband market’s health solely through this simplistic lens of aggregate industry investment. If we drop AT&T and Sprint out of the equation, the rest of the publicly traded ISPs’ investments are collectively 9 percent higher than they were before Title II. In other words, most ISPs are investing more, not less, after the 2015 vote. This is a strong indicator that Title II has not caused a systemic decline in investment.”
“It’s irresponsible to reach sweeping conclusions about Title II’s impact without looking at what each individual ISP is telling its investors, and what capacities these individual ISPs are actually deploying,” Turner said. “Maybe Chairman Pai should have paid attention when AT&T’s CEO explained that Title II had nothing to do with his company’s capital spending. In fact, every single ISP makes it abundantly clear to its investors why its spending goes up or down, and not a single one of the publicly traded carriers has claimed that Title II had a negative impact on its investments. If the FCC is interested in the truth and not ideology, it would pay attention to these irrefutable facts and stop peddling falsehoods.”
As the report demonstrates, and as Turner concludes, “ISPs are investing, and just as important or more is the explosive growth in online video competition and edge company investment. More new over-the-top video services are launching, and these are generating tremendous value for consumers and content creators. All of this is occurring with the certainty of the FCC rules as a backdrop. Net Neutrality and Title II are benefiting businesses and internet users alike. The case is clear. ”
Key findings from It’s Working include:
Read more of Free Press’ findings in It’s Working: How the Internet Access and Online Video Markets Are Thriving in the Title II Era.
People + Policy
= Positive Change for the Public Good
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