The FCC Is Using Garbage Lobbyist Data To Defend Its Assault On Net Neutrality

from the garbage-in,-garbage-out dept

By now it should be clear to most Techdirt readers that new FCC Boss Ajit Pai envisions a future where there's little to no oversight of giant telecom duo/monopolies like Comcast. Pai has wasted no time making that dream a reality since taking office, having killed plans for more cable box competition, undermined FCC attempts to stop prison phone monopolies from ripping off inmate families, and paved the way for killing net neutrality. He's made no mystery of his overarching goal: replacing functional FCC oversight of broadband providers with the policy equivalent of wet tissue paper.

If you spend twenty seconds with Pai's voting record (like that time he voted down holding AT&T accountable for actively helping crammers rip off its own customers by making scams harder to detect on customer bills), you'll discover his positions have one consistent beneficiary (tip: it's not you).

You'll also note his arguments are often comically disconnected from the actual facts. Like that time the FCC boss declared that Netflix was the real enemy of net neutrality -- simply because it operates a content delivery network. Or the time he insisted meaningful consumer protections would inspire Iran and North Korea to censor the internet. Or the countless times he's insisted net neutrality killed network investment -- despite that claim not being supported by objective data, SEC filings, quarterly earnings or ISP executive statements.

And while it's one thing to actively disagree on policy, Pai has consistently engaged in countless, easily-debunked falsehoods to justify his positions. Which is ironic, since pretty much every speech Pai makes involves him promising to bring more "sound economic analysis" to FCC policy making. Take this recent speech (pdf) given to the American Enterprise Institute (which takes substantive funding from the large ISPs that benefit directly from Pai's policies):

"I have long been concerned that economists haven’t been systematically incorporated into the FCC’s policy work. Instead, their expertise is typically applied in an ad hoc fashion, and often late in the process. We are taking a major step to correct that. A month ago, I kick-started a process to establish an Office of Economics and Data. This Office will combine economists and other data professionals from around the Commission. I envision it providing economic analysis for rulemakings, transactions, and auctions; managing the Commission’s data resources; and conducting longer-term research on ways to improve the Commission’s policies. My goal is to have the new office up and running by the end of the year. And I’d be remiss if I didn’t acknowledge the prior work done by Jeff Eisenach and others at AEI in providing the intellectual foundation for this office.

Again though, if you track Pai's votes and real-world actions, you'll consistently find a comic disconnect from this breathless, self-professed dedication to sound data and economic policy. In fact the very same day Pai was giving that speech, his Chief of Staff Matthew Berry took to Twitter to proclaim that new data suggests that Title II (the legal underpinnings of net neutrality) has reduced telecom sector investment by $5.6 billion:

BREAKING: @FSFthinktank releases new estimate that Title II has decreased broadband investment by $5.6 billion. https://t.co/rsdrwcx2LM — Matthew Berry (@matthewberryfcc) May 5, 2017

The source of that data is the Free State Foundation (FSF), a think tank that takes consistent funding from large broadband providers like AT&T and Comcast (and tries to obfuscate that fact). This isn't objective science. It's farmed data pushed by a lobbying arm of the telecom industry. And when you head over to the methodology of that report you'll note a fairly selective window chosen to support the group's position:

"USTelecom publishes data on broadband capital expenditures (capex) for each year dating back to 1996. Using this historical data, I collected figures on the previous twelve years before the Open Internet Order was adopted in February 2015. I picked 2003 as the first year because the market had just collapsed from the dot-com bubble and total broadband capex was at its lowest point since 1996. I established a trend line from 2003 to 2016, which created a linear pattern over the first 12 years before the Open Internet Order and estimated what we could have expected broadband capex to be in 2015 and 2016 without Title II public utility regulation.

One, the office of a former Verizon lawyer citing an ISP-funded think tank using data from an ISP-funded lobbying organization -- should be nobody's definition of "sound economic analysis." Two, Twitter users were quick to point out that the FSF specifically began tracking CAPEX movement in 2003 to avoid addressing an important point. Namely that large ISPs were under Title II until 2005 without the slightest impact on investment. In fact, as even USTelecom's data shows, it was under former FCC boss turned top cable lobbyist Michael Powell (who professed a similarly disingenuous respect for real data) that Title II was killed.

Perhaps you'll notice something in the data below:

@matthewberryfcc @FSFthinktank What about the $40 billion dollar loss the year cable ISPs were made info services? pic.twitter.com/eDrvn8XsNG — Dennis Restauro (@GroundedReason) May 5, 2017

Under Powell (2001-2005), the broadband industry was blindly deregulated and government began effectively letting large ISPs dictate federal internet policy. As a result, you saw less competition and more consolidation than ever before, cementing Comcast's reputation as an apathetic, anti-competitive giant (a monopoly that's currently growing even larger as telcos give up on fixed-line residential broadband). Powell tried to disguise this reality by frequently hyping broadband over powerlines (BPL) as a looming additional competitive option that would work hand-in-hand with sector deregulation to deliver telecom utopia.

This promised utopia never materialized. Powell ironically ignored real-world data showing that BPL was an interference-prone mess. The result? BPL never arrived to save us from the telco/cable duopoly, and things got worse as Powell made it harder than ever to hold ISPs accountable for failed promises and anti-competitive abuses of their power over the broadband last mile. As a result, net neutrality violations (the symptom) became more apparent manifestations of the disease (a lack of competition). Deregulation can benefit competitive industries, but in telecom... it helped create the Comcast we all know and love today.

Yet here we are with an FCC boss suggesting that more of what brought us to this particularly ugly dance is surely the thing that's going to make everything wonderful. After all, data from the very industry supporting the gutting of these consumer protections says so.

It's also worth noting that looking only at CAPEX doesn't really tell the entire story. Like the other piece of farmed think tank "economic analysis" the broadband industry regularly trots out to defend the "net neutrality killed investment" canard, you'll often see these groups ignore how any number of routine investment behaviors (like a cable company wrapping up a new digital set top box deployment) can impact investment numbers. Cherry pick a particular window of time, ignore the massive investments being made in wireless spectrum, and you can massage the data to suggest pretty much whatever you'd like.

But again, if you stopped and listened to candid comments by Sonic, Sprint, Frontier, Cablevision, Charter and even Verizon executives over the years, you'll consistently see them admit that Title II didn't impact investment one way or the other. And that's all supported by easily-perused earnings reports, SEC filings and other publicly-accessible data. And, pretty much like clockwork, every few months a reporter assembles that data to make the case that net neutrality didn't hurt telecom investment. Those same folks are similarly quick to point out that focusing exclusively on investment numbers helps the industry avoid subjects like... competition and high prices:

"If you think that the best way to measure the success of the U.S. broadband market is by the amount of money its biggest private businesses spend on the task of getting people connected, then it looks like we’re still winners, despite Title II. If you think that the best way to measure the success of the U.S. broadband market is in the number of people connected, the available speeds, the prices, the competition, and the customer service, well… We’ve still got quite a way to go to be as great as the ISPs say we always have been."

Only those prioritizing ISP revenues over consumer welfare and the health of the internet still think any of this is even debatable. If folks like Pai were actually interested in hard data and sound economic analysis, they'd cite respected reporters and objective economists untethered to the companies benefiting from these policies. Since those folks have repeatedly told Pai he's wrong, he's instead turned to using cherry picking, ISP-funded stat farms to massage existing data so it fits the overarching narrative that net neutrality has been a telecom investment apocalypse. All while expressing a very post-truth-esque dedication to hard data.

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Filed Under: ajit pai, data, fcc, net neutrality

Companies: free state foundation, us telecom