The Federal Communications Commission's primary justification for eliminating Title II net neutrality rules is that broadband network investment has tanked since the rules were implemented two years ago.

FCC Chairman Ajit Pai has cited a few research reports describing declines in capital expenditures, and industry lobbyists have repeatedly argued that investment was harmed by the FCC classifying ISPs as common carriers under Title II of the Communications Act. But when ISPs talk to their investors, the story is completely different.

"We found that not a single publicly traded US ISP ever told its investors (or the SEC) that Title II negatively impacted its own investments specifically," pro-net neutrality advocacy group Free Press said in a report issued yesterday.

The Free Press report also disputes the investment numbers cited by Pai, saying that its own analysis shows an increase in network investment spending since the 2015 Title II net neutrality order. It isn't surprising that people on opposite sides of the issue would come to different conclusions on investment data. What can't be disputed is the fact that ISPs have given a rosy picture to investors, and the Free Press report provides examples of ISPs affirming that Title II hasn't hurt them:

In December 2015, AT&T’s CEO told investors that the company would “deploy more fiber” in 2016 than it did in 2015 and that Title II would not impede its future business plans.

In December 2016, Comcast’s chief financial officer admitted to investors that any concerns it had about reclassification were based only on “the fear of what Title II could have meant, more than what it actually meant.”

That same month, Charter’s CEO told investors, “Title II, it didn’t really hurt us; it hasn’t hurt us.”

Just a few days after the election, Cablevision and Suddenlink’s parent company Altice reaffirmed its plan to deploy FTTH [fiber-to-the-home] service to all of its customers and told investors that it remained “focused on upgrading our broadband networks to drive increases in broadband speeds and better customer experience.”

Despite increasing its own capital investment by 10.2 percent in Q1 2017, Comcast claimed in a blog post last month that the FCC's treatment of broadband providers "harms investment and innovation."

Investment continues

Publicly traded companies are required to give investors accurate financial information, including a description of risk factors involved in investing in the company. If Title II imposed significant financial burdens on publicly traded Internet providers, the companies should have informed investors. Instead, ISPs either haven't mentioned Title II in calls with investors or have said the FCC policy hasn't affected their investment, according to the Free Press report.

And ISPs have continued investing in order to expand network capacity. Free Press provided many examples that you can read in the full report. Here are a few regarding some of the biggest ISPs:

Comcast spent $7.6 billion on its cable segment capital expenditures during 2016, the most the company has ever invested in a single year.

Charter Communications is yet another example of an ISP that dramatically increased its network investments during the two years following the FCC’s Open Internet Order vote... From 2015–2016 Charter’s pro forma capital investments [including newly acquired Time Warner Cable and Bright House Networks] topped $14.5 billion, a 15 percent increase which came despite hundreds of millions of dollars (or more) in synergies that Charter claimed following the May 2016 closing of the deal.

Verizon’s capital investment total increased during the year following the FCC’s adoption of the Open Internet Order (just as the company said it would a month before the February 2015 vote). And Verizon’s total two-year post-vote capital expenditures were 3.1 percent higher than they were in the two years preceding the vote, even as the company divested its Florida, Texas, and California systems to Frontier Communications.

There has also been an "explosion" in online video competition since the imposition of net neutrality rules that prevents ISPs from trying to restrict access to sites that compete against their cable TV offerings, Free Press wrote.

AT&T CEO Randall Stephenson said in a January 2017 earnings call that Title II regulation is "suppressive to investment," but appeared to be talking about the industry in general rather than AT&T specifically. He did not attribute any investment decline at AT&T to Title II. In December 2015, Stephenson said the Title II rules were not an impediment to AT&T and that "Everything that we’re planning on doing fits within those rules."

Pai vs. Free Press

Pai publicly expressed his disdain for Free Press in the speech in which he announced his plan to dismantle net neutrality rules, calling it "a spectacularly misnamed Beltway lobbying group" that demands government control over the Internet.

Investment data cited by Pai comes from the USTelecom broadband industry lobby group, the conservative Free State Foundation, and economist Hal Singer, who found a 5.6 percent decline in capital expenditures by 12 big ISPs.

Free Press notes that USTelecom and Singer excluded the money Sprint used on a "new strategy of purchasing smartphones and then leasing them to its customers," even though "purchasing equipment to lease is a real capital expense, recognized under Generally Accepted Accounting Principles ('GAAP')."

"Sprint risked billions of dollars to purchase and then lease handsets. That is a key part of its broadband business strategy, and no different than a cable ISP’s purchasing and leasing of modems," Free Press wrote.

Singer argues that "it is important to ignore Sprint’s capitalization of handsets, an accounting change that occurred in the middle of the experiment," and notes that Sprint itself "breaks out these 'investments' separately from network investment." Singer also argues that AT&T's investment numbers have declined by an unexpected amount, especially when you exclude the company's investments in DirecTV and some Mexican cellular properties.

But AT&T predicted its own spending decline years before the FCC considered the use of Title II to enforce net neutrality rules. In November 2012, AT&T said it would increase capital expenditures in wireless and wireline for three years and return to the previous, lower investment levels starting in 2015. By February 2015, AT&T told investors that it had "substantially completed" the project.

"Because AT&T alone accounts for nearly a third of the total ISP industry’s investments, any cyclical shift at AT&T can impact the aggregate in a manner that swamps the overall actual trend," Free Press wrote. But even including AT&T, Free Press said it found a 5 percent increase in ISP investment during the two-year period after the net neutrality vote and capital increases at 16 of 24 publicly traded ISPs:

"These increases are due primarily to continued core network expansion as well as investments in capital equipment needed to expand lines of business that utilize the same network (e.g., customer-premise equipment such as modems or IP-based video set-top boxes)," Free Press wrote.

Like the AT&T decline, "any increases or decreases in capital spending at each individual firm were clearly explained by each company before, during and after the FCC’s Open Internet vote. None of the firms that saw declines attributed them to any FCC action," Free Press said. Even those ISPs that did spend less "continue[d] to increase broadband-network capacity." AT&T, for example, has been providing gigabit speeds over fiber to millions of new customer locations, though it has also failed to upgrade old copper networks in many less profitable areas.

FCC votes on Thursday

On Thursday this week, Pai's Republican majority is expected to approve a Notice of Proposed Rulemaking that would eliminate the Title II classification and eliminate or replace the net neutrality rules. (A final vote, after public comment, would occur in the second half of this year.) Pai claims that this action will reverse a decline in broadband spending and encourage ISPs to bring Internet access to more people.

Don't believe him, Free Press says. "Chairman Pai’s only supposed justification for dismantling the FCC’s Title II-based Open Internet framework is the utterly false claim that it dampens ISP investments," the group wrote. "He has nothing but phony and nonspecific evidence to support his irrational belief, which runs contrary to the stunning number of verifiable counterfactuals."

Disclosure: The Advance/Newhouse Partnership, which owns about 13 percent of Charter, is part of Advance Publications. Advance Publications owns Condé Nast, which owns Ars Technica.