You'll recall that one of the top reasons for killing popular net neutrality rules was that they had somehow supposedly crushed broadband industry network investment. Of course, a wide array of publicly-available data easily disproved this claim, but that didn't stop FCC boss Ajit Pai and ISPs from repeating it (and in some cases lying before Congress about it) anyway. We were told, more times that we could count, that with net neutrality dead, sector investment would explode since carriers would be "unchained" from "burdensome regulation."
You'll be shocked to learn this purported boon in investment isn't happening.
A few months ago, Verizon made it clear its CAPEX would be declining, and the company's deployment would see no impact despite billions in tax cuts and regulatory favors from the Trump FCC. Both AT&T and Verizon have similarly announced massive workforce reductions as well. Some investment growth is happening in wireless as carriers prepare for fifth-generation (5G) wireless service (which they would have deployed regardless of the attacks on net neutrality). But even that's a bit lower than Wall Street and sector analysis expected.
And according to the latest analysis from MoffettNathanson, both fixed-line telcos and cablecos are expected to see notable declines in CAPEX and investment:
"Telco-related wireline capex, meanwhile, is slated to fall from $20.3 billion in 2018 to $19.6 billion this year. That slight drop comes as AT&T completes the fiber buildout commitments originally promised when it acquired DirecTV by July, and as Verizon redirects capital to wireless, Moffett said. Capital spending among the four publicly traded cable operators covered by the MoffettNathanson -- Comcast, Charter, Altice USA and Cable One Inc. -- is expected to decline significantly this year -- some 5.8%.
My math may be shaky, but a 5.8% decline in cable industry CAPEX doesn't quite sound like the investment revolution Ajit Pai and his squad of industry allies promised.
To be clear, there's a lot of reasons that ISP CAPEX rises and falls. When Pai and friends were trying to claim that net neutrality killed network investment back in 2017, we noted extensively how they were cherry picking very narrow windows of CAPEX decline that had nothing to do with net neutrality. For example, one company's CAPEX had dipped under net neutrality because it had just finished a cable set top box upgrade project.
The same is true here. As MoffettNathanson notes, some of this dip is thanks to AT&T shifting its focus toward paying off debt for its megamergers. Another chunk of it is because streaming competition is reducing the desire for the clunky old cable box. And in the case of the biggest dip at Charter Communications (Spectrum), it was in large part thanks to the completion of an all-digital transition in the wake of its costly acquisition of Time Warner Cable.
None of that changes the fact that Ajit Pai and a chorus of telecom industry sycophants repeatedly misled the public and Congress about the net benefits of their historically-unpopular policies. Repeatedly. Now, we're left with the end result; a coalition of natural monopolies with even less competition or accountability than ever, eager to get to work not on investing back into the network, but extracting higher and higher consumer and competitor costs courtesy of limited competition. Limited competition Ajit Pai and friends can't even admit is real, much less have a plan to do anything about.
I know this is a crazy thought, but it's almost as if when you appoint industry sycophants to positions of oversight, their primary goal is to improve carrier revenues, leaving everything else (competition, consumer welfare, innovation) foundering in the rear view mirror.