The Truth About Broadband Economics: Title II Won't Harm Investment

WASHINGTON — On Thursday, the Federal Communications Commission convened the fifth in its series of Open Internet Roundtable Discussions.

The Thursday roundtable, on the economics of broadband, featured an agency-selected group of speakers debating various approaches to protecting and promoting Internet openness. Aside from accepting some comments and questions via email and social media, the agency has not given the public a forum for direct participation in the roundtables.

Research Free Press conducted and submitted to the FCC shows that nondiscrimination rules — and other common-sense, common-carriage safeguards — would not harm broadband investment or broadband providers.

Free Press Research Director S. Derek Turner made the following statement:

“CEOs and lobbyists for companies like AT&T, Comcast and Verizon have insisted that Title II reclassification would harm broadband deployment and investment in tomorrow’s networks. But there’s no evidence to back up those claims.

“Telecom companies fully deployed DSL services in urban areas while under Title II. Indeed, average annual investment by telecom carriers was actually 55 percent higher when their broadband services were subject to Title II. Cable’s broadband offerings have a murkier legal history, but cable’s average annual investment was also higher — a full 250 percent higher — in the years before the FCC put cable-modem service outside of Title II. In fact, today the cable industry spends only about 1 percent of its revenues on network expansions.

“The data also show that an increase in capital investment followed the implementation of the FCC’s 2010 Open Internet Order. This is noteworthy because the same cast of characters warning us today about the supposed harms of Title II made the same dire predictions about those 2010 rules — predictions that were flat out wrong. And when the FCC proposed reclassification in the run-up to that 2010 decision, cable and telecom stocks performed better in the wake of the announcement than the stocks of edge companies.

“The data are crystal clear: Title II doesn’t harm investment or market valuations for broadband providers. Cable and telecom CEOs acknowledge this when they tell their investors that nondiscrimination rules and common-carrier protections would be no big deal. And when it comes to broadband services for big businesses, these companies fully support a light application of Title II, with AT&T calling it an 'unqualified regulatory success story' in a filing last year. But these truths never seem to stop these same companies and their paid economists from telling false scare stories.

“Anyone who says that Title II spells trouble for the Internet economy hasn’t reviewed the history. Reclassification of Internet access providers as common carriers would benefit Internet users and the U.S. economy at large — with no harm whatsoever to broadband providers.”