Charter Communications is very excited to inform you about all your new broadband network investments.
“Improving Flagship Broadband Speeds; Giving Customers More for Less,” is the company’s headline new show on this subject. The second largest cable company in the US has increased the standard download speed from 60Mbps to 100Mbps — “at no additional cost to our customers” — while offering speeds of 200Mbps or 1Gbps in some markets. Gigabit service is available in “Oahu, Hawaii with additional products to be launched in the coming weeks,” Charter said.
What’s surprising is that Charter is doing all this despite the Federal Communications Commission’s net neutrality rules and the related Title II regulation of ISPs as common carriers. In July, Charter told the FCC that the “broad and vague prohibitions” contained in the rules “have caused broadcasting providers to re-evaluate innovations and investments due to the concern that regulators may cause, or force significant changes to, those transactions after the funds are spent.”
The uncertainty caused by the rules “undermines the ongoing private investment needed for the Internet to flourish,” Charter said. Charter said it has “experienced the deterrent effects described above in its own operations” itself since the rules were imposed in 2015.
Under such disturbing conditions, how can any ISP invest more in its network? Title II’s alleged impact on investment is the main reason FCC Chairman Ajit Pai has cited for repealing net neutrality rules, after all.
But in reality, Charter’s capital expenditure arrival between 2015 and 2016, a period encompassing the first full year in which the law was in effect. The company’s network investments continued to rise in 2017 with the laws remaining on the books.
Title II “doesn’t really hurt us”
What accounts for the difference between what Charter tells the FCC and its actual network investments? Perhaps the answer can be found in Charter’s statements to investors.
“Title II, it didn’t really hurt us; it didn’t hurt us,” Charter CEO Tom Rutledge said at an investor event in December 2016, according to Reported by the advocacy group Free Press.
Rutledge added that Title II “has the potential to hurt us.” But the Free Press’ report in May 2017 noted that “Charter’s capital investments went up 15 percent after the FCC’s Open Internet Vote (when we include the prior investments of Charter, Time Warner Cable, and Networks Home Lighting) did. And not only. Charter’s investments were up, they were 12 percent higher than Charter’s estimates for investors before closing that merger.” (Charter purchased TWC and Light House in June 2016.)
Charter’s statements to the FCC and investors mirror those made by other ISPs. When talking to the FCC, ISPs say the rules are an investment killer; When talking to investors, ISPs aren’t too bothered by Title II or net neutrality laws. The distinction has provided ammunition to proponents of negativity—for example, see, “Charter acknowledges net neutrality does not harm broadband investment” in DSLReports.
Although the Charter said that does not “prevent, impede or interfere with the legitimate activities of our customers,” and hopes that the net neutrality repeal will help it fight at least one lawsuit.
New York Attorney General Eric Schneiderman sued Charter this year, claiming that its TWC subsidiary made false promises of fast Internet service. Charter said the FCC’s attempt to preempt state regulation of broadband supports the company’s motion to dismiss the case.
“Careful, new” investment
Charter seems to anticipate that net neutrality advocates can point to the company’s actual investments when trying to refute the cable industry’s claims that net neutrality rules are harming investment.
Charter told the FCC in its July filing that it had “taken (n) cautious, conservative steps toward some innovations and investments in recent months,” due to “increasing expectations” that the rules would be repealed. .
But as noted earlier, Charter increased investments in 2016, before there was any indication from the FCC that the rules would change.
Charter also said it suspended Wi-Fi network service due to net neutrality laws:
Charter put on hold a project to build an outdoor Wi-Fi network, due in part to concerns about whether future interpretations of Title II would allow Charter to continue offering a Wi-Fi network as a benefit to existing follow up. subscribers, or whether Charter will be forced to separate access to its wireless network from its wired broadband services and sell them separately—a question that will significantly affect the business model, cost, and investment case for such a production.
Pai’s office has cited this example in its push to end net neutrality laws. But nothing in the laws would require anything like what the Charter suggests. The rules didn’t stop Comcast from building a network of more than 15 million Wi-Fi hotspots by December 2016.
“Charter’s ongoing investments”
Charter is available criticized for allegedly dragging its feet in upgrading the speeds of existing TWC customers while moving those same customers onto higher-priced packages. Lexington, Kentucky, held a public hearing to discuss problems with Charter’s post-integrated customer service.
That may help explain why Charter is trumpeting its rapid upgrades now. Besides boosting Internet speeds, Charter’s latest press release says its video service uses “more efficient bandwidth management and advanced optimization technologies” in order to improve video quality and reduce bandwidth requirements. The bandwidth is no longer needed for video “and can be dedicated to significantly increasing our broadband speed.”
All of these upgrades, Charter said, “were made possible by Charter’s ongoing investments in infrastructure and technology.”
Disclosure: The Advance/Newhouse Agreement, which includes section 13 of the Charter, is part of Advance Declarations. Advance Publications is Condé Nast, which owns Ars Technica.