Who WIll the Big ISPs Blame Now?

For the last few years the biggest ISPs have blamed regulations for reducing the amount of capital they are willing to invest. They specifically blamed Title II regulation of broadband and net neutrality rules as being a disincentive for them to invest in broadband infrastructure.

The FCC Chairman Ajit Pai adopted this same narrative and used it for justification to repeal net neutrality. He is still sticking to this story now that Title II regulation has been repealed and this week will be telling this story to the House Communications Subcommittee. In a prepared statement he claims that the repeal of the net neutrality rules is now paving the way for increased capital investment and better broadband service.

However, the whole narrative is false. There is no evidence that big ISPs held back on broadband investments before Title II authority was repealed and there is no evidence that the repeal has somehow unleashed a wave of new broadband investment. I’m not going to track the numbers in this blog, but the capital budgets of all of the big ISPs have been relatively steady for a number of years.

This particular narrative is just the latest iteration on a theme that the big ISPs have used for decades. The big ISPs have always publicly claimed that regulations were killing them, while privately admitting that they were able to successfully work around most regulations. It’s the nature of regulated industries to push back against regulation and ISPs don’t differ from the many other regulated industries in this regard.

A quick look at each of the major ISPs shows a different story than is being pushed by Chairman Pai. AT&T is a good example. They were required by an agreement from the purchase of DirecTV to pass 12 million homes and businesses with fiber. For a while it looks like they were shirking that requirement, but somewhere along the line they seem to have embraced it. They have been quietly extending fiber to apartment complexes and also to any homes or business that are located close to any of their many fiber nodes around the country. This expansion started well before the net neutrality repeal. AT&T for now has no plans to deploy 5G and says they don’t see a business case for it yet. The company is quietly walking away from rural copper and only beefing up rural cellular broadband where the FCC funded it with CAF II money.

Comcast doesn’t seem to have changed strategies for a number of years. They build fiber to shrink node sizes to relieve local network congestion. They made a decision well before the net neutrality appeal to embrace upgrades to DOCSIS 3.1. The company has entered the cellphone business, but for now resells minutes from the other cellular company networks, and only in their operating footprint. They say they plan to eventually build cellular networks to increase the profitability of the business.

Verizon has been shrinking their landline broadband networks and sold a pile of customers, including many on FiOS fiber to Frontier. The company made an announcement several years ago, and before the repeal of net neutrality that they were going to build new FiOS fiber in Boston – but it appears that project has largely been put on hold. Verizon might be the only big ISP who claims to have plans to expand residential broadband and says it will build 5G in a number of markets outside of its traditional footprint. But there is a lot of industry skepticism that this will be much larger trials of new technology and not a major capital outlay.

CenturyLink recently made it clear that they are walking away from making new broadband investments. They new CEO made it clear that the company will not be making any new capital expenditures that will earn infrastructure levels of returns. That is a 180-degree turnaround from a company that built fiber in 2017 to pass 900,000 premises and is the opposite of what Chairman Pai is claiming.

All of the big telcos have largely abandoned DSL and haven’t made new investments for years, even though there are faster DSL technologies available. To make matters worse the telcos are trying to kill the regulations from the Telecommunications Act of 1996 that allows competitors to offer faster DSL using telco copper – a move that would kick hundreds of thousands of customers nationwide off of decent broadband and force the back to the more expensive cable monopolies.

I can’t see any evidence from the big ISPs that the repeal of net neutrality made any difference in their capital spending plans. When you look at what these ISPs tell their investors the topic of regulation never arises – which it shouldn’t. The big ISPs have always invested in areas where they could foresee returns and regulation had no real negative impact on those returns. The whole false narrative has been a lobbying effort to get out from under regulation – and with this FCC the lobbying worked.

Now that Title II regulation is dead I wonder what the ISPs will blame for not investing in residential and rural broadband? They can’t point the finger any longer at regulations and I’m sure they will find a new story that sounds good. The only ISP that seems to be telling the truth is CenturyLink, and I suspect that they will soften that narrative since they are telling existing residential customers that they no longer care about them.

One thought on “Who WIll the Big ISPs Blame Now?

  1. https://motherboard.vice.com/amp/en_us/article/xwkvqn/big-telecom-says-anti-competitive-internet-fast-lanes-will-be-wonderful

    https://www.deseretnews.com/article/900026700/curtis-says-its-time-to-take-partisanship-out-of-net-neutrality-debate.amp

    https://pagesix.com/2018/08/01/verizon-services-are-useless/

    It’s all out of pure greed. This for-profit scheme does not work and it never has.

    Every single one of these internet service providers needs to forcefully broken up again and cities and towns need to seize all of the wirelines.

    Liked by 1 person

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