Study: Net Neutrality Rules Did Not Harm Broadband Investment

For years now giant ISPs like Comcast and AT&T (and all of the people paid to love them) have made the claim that net neutrality protections demolished broadband sector investment. The problem: the only data supporting this thesis tends to come from ISP think tanks, paid specifically to muddy the water with cherry picked data. Privately, numerous ISP executives from the likes of Charter, Verizon, Sonic, Sprint and others have repeatedly and candidly admitted that net neutrality didn't really harm them in the slightest.

A new report from consumer group Free Press once again pours cold water on the idea that net neutrality killed broadband industry investment.

According to the group's full study (pdf), aggregate capital investments at publicly traded ISPs wwas 5% higher during the two-year period following the FCC’s Open Internet vote when compared to the two years prior to the vote. In fact, CAPEX was higher at 16 of the 24 publicly traded ISPs following the FCC's vote, predominantly thanks to network investment.

"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," added Turner. "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."

That position is supported consistently by journalists that have taken the time to examine ISP SEC statements, earnings reports and other publicly-available data. It has also been supported by ISPs like Sprint and Sonic, both of which have candidly admitted that the "net neutrality killed network investment" claim is a stale canard. Even executives at Verizon, the company that sued to overturn the rules, have admitted that this narrative is false.

Free Press is quick to point out how think tank economists (which consistently try to obfuscate their funding ties to giant ISPs) were intentionally selective when it comes to the data used in their reports, at times taking entirely unrelated investment pauses (for example, when Charter ended its last digital cable box upgrade) and blaming net neutrality. The report also states ISP economists intentionally and 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."

And again, while ISPs like Comcast, AT&T and Verizon privately used this bogus science to publicly claim net neutrality killed investment, privately they consistently stated they saw no real negative impact from the rules. The report is quick to note that "not one single publicly traded ISP has ever told its investors (or the SEC) that Title II had a negative impact or negatively impacted its investments."

Despite there being no objective data supporting the point, the idea that net neutrality killed broadband sector investment is consistently used as a bogeyman in the net neutrality debate, and will surely be trotted out again Thursday when the FCC votes to begin the process of dismantling the rules.

The group's full study can be found here (pdf), and its full announcement can be found here