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Comcast Network Investment Drops Despite Repeated Claims Killing Net Neutrality Would Trigger Investment Wave

Why it's almost as if the Ajit Pai FCC and broadband industry haven't been entirely honest with us.

This week we noted how Wall Street is predicting that the telco and cable industries will see notable declines in network investment next year, despite the FCC and industry's repeated, breathless claims that killing net neutrality would somehow spur network investment. This, as we've long noted, was based on the bogus industry claim that net neutrality somehow stifled such investment, a claim repeatedly disproven by public SEC filings, earnings reports, and even statements by more than a dozen major ISP CEOs.

Almost as if on cue, Comcast released the company's latest earnings report showing, you guessed it, that the company saw a 3% dip in cable network CAPEX last quarter despite all of that sweet, potent, "internet freedom" Ajit Pai claims to have been spreading around:

"Comcast's cable division spent 3 percent less on capital expenditures last year, despite promises that the repeal of net neutrality rules would boost broadband network investment. Comcast's cable division spent $7.95 billion on capital expenditures during calendar year 2017, but that fell to $7.72 billion in the 12 months ending on December 31, 2018."

That is, if you're playing a long at home, precisely the opposite of what Comcast and other large ISPs repeatedly proclaimed while successfully convincing the FCC to effectively neuter itself, shoveling any remaining authority to an FTC that lacks the authority or attention span to police bad actors in telecom. In 2014, for example, Comcast repeatedly proclaimed that the FCC's net neutrality rules (arguably modest by international standards) would devastate job creation, network investment, and innovation:

"The sheer uncertainty surrounding such a regulatory environment would produce ‘a profoundly negative impact on capital investment.’ By itself, reduced investment would inhibit job creation, hinder the deployment of broadband infrastructure, and undermine the ‘virtuous circle’ of innovation that the open Internet rules are designed to advance."

By that logic, the inverse should have happened in the wake of the repeal. Instead, facing the one-two punch of little broadband competition and little real oversight of a growing natural monopoly, Comcast and other ISPs did what everybody knew they'd do, pass that savings on to investors and executives, instead of shoring up their networks or historically terrible customer support. All while raising rates higher and higher. And, oh, laying off employees despite nabbing billions in both Trump era tax cuts and regulatory favors, the financial impact of the latter is largely incalculable.

None of this was hard to predict, especially if you've studied history (especially telecom history). This is the same pattern has played out time and time again in telecom. Promise the earth, sea, and sky in exchange for taxpayer subsidies, tax breaks, and regulatory favors, then use the regulatory capture to double down on all of the industry's worst habits. By the time the press and public has figured out you're full of shit, you're off to the next PR ploy, which, in Comcast's case, involves pushing for regulation that hamstrings online ad players you desperately want to compete with in the streaming ad wars to come.

You'd like to think this is a cycle of dysfunction we'd eventually learn our way out of, but there's simply no indication that's occurring any time soon.

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