In his ongoing push to eliminate net neutrality rules, FCC Chairman Ajit Pai said this month that the rules caused capital investment in wireless networks to drop in 2016. But in doing so, Pai has not addressed data from The previous years did not fit his anti-net neutrality statement.
“The most concerning emerging issue we see is that investment in wireless networks has dropped significantly in 2016,” Pai said in a paper. speech at the Mobile World Congress on September 12. “According to the report UBS Wireless 411, in fact, the investment is down 9 percent, a big drop outside of the recession.”
The elimination of net neutrality rules and the related classification of broadband providers as common carriers will change the trend, Pai predicted. “As part of our process of restoring Internet Freedom, the FCC is currently evaluating whether we should change our Internet regulations in order to encourage greater deployment and investment and bring the digital world to more Americans,” he said. tell.
Pai hit the town again this week at the FCC’s Annual report on wireless competitionwhich emphasized the investment decline in 2016. The current net neutrality rules were voted by the FCC in February 2015 and took effect in June 2015.
But investment also dropped between 2013 and 2015, before the current rules were in place, Democratic FCC Commissioner Mignon Clyburn pointed out. (There was no recession in those years, either.)
Clyburn said these in his critique of the report:
The discussion of investment in the mobile wireless services industry is fundamentally flawed. By showing a decrease in investment between 2015 and 2016, this section is clearly written to support the false narrative that the 2015 Open Internet Order prevents wireless carriers from investing in their networks.
Despite my office’s request, this report does not include data from the 19th, 18th, and 16th Competition Reports, which show that investment from all commercial wireless companies declined from $33.1 billion in 2013 to $30.9 billion in 2015. In case you missed it, the news predated 2015 Order. Also, despite my request, this report does not include CTIA investment data indicating that investment for consumer metrics declined from 2006 to 2009. In case you missed it again, that preceded the 2015 and 2010 Open Internet Orders. These statistics show that there must be other factors, besides Open Internet Orders, that account why wireless carriers reduce their investment in their networks.
Previously, a weak set of net neutrality rules was approved by the FCC in 2010 but a court decision was removed in January 2014. The 2010 rules required mobile ISPs to disclose network management practices and prohibit them. to block legitimate websites — today, wireless Providers face strict rules against hacking and prepayment.
Investments rise and fall in cycles
Wireless network investment rose by 18.9 percent from 2011 to 2012 and rose another 10.1 percent from 2012 to 2013, despite limited net neutrality rules in place at the time, according to CTIA data cited by the FCC in its annual reports. As Clyburn noted, investment then declined from 2013 to 2015, although there were no net neutrality rules for all of 2014 and half of 2015.
The data shows investment going up and down in cyclical patterns, a trend that the FCC has in previous years attributed to the beginnings and ends of technology upgrade systems rather than to neutrality rules. net.
In response to Clyburn’s statement, the FCC’s Republican majority edited a chart in the competition report to include annual capital expenditures by four nationwide service providers since 2010. journalist released before the council election, the chart only goes back to 2013.
But those final report does not have all the data requested about Clyburn and is otherwise identical to the actors on the question of investment. The section on investment before the chart still does not take into account the previous investment movements noted by Clyburn, focusing only on the most recent decline.
“According to the UBS Wireless 411 report, in 2016, wireless service providers spent an additional $28.0 billion, which is a decrease of approximately 9 percent from the $30.9 billion invested in 2015,” the report said.
The report also states that the four largest carriers (AT&T, Sprint, T-Mobile USA, and Verizon Wireless) “spent a combined $27.5 billion in 2016, $30.3 billion in 2015, and $31.2 billion in 2014, making accounting for nearly 100 percent of total corporate capital investment as tracked by UBS during these time periods. “
The report is an otherwise glowing review of the wireless industry and finds for the first time in a decade that US wireless consumers are benefiting from “effective competition.” This finding could influence how the FCC regulates wireless carriers and whether it approves mergers such as a possible combination of T-Mobile and Sprint.
When contacted by Ars this week, the FCC chairman’s office pointed to the inclusion of data going back to 2010 in the updated chart. But Pai spokespeople did not give us any response to the statement by Clyburn or provide an explanation on what caused the previous investment decline.
The cyclical nature of investment is described by the FCC herein March 2013 reportwhich noted that investment increases in 2010 and 2011 followed a decrease in 2009. “This pattern of a period of reduced investment followed by a period of increased investment is consistent with the “The cyclical pattern of technology adoption in the mobile wireless service industry, including increases in capital investment since 2009, likely reflects the transition from third to fourth generation wireless network technologies,” the FCC said at the time.
“Chairman Pai continues to hide the truth”
Consumer advocacy group Free Press criticized Pai for focusing only on the 2016 investment decline in a letter to Pai and in a Press release titled “Chairman Pai Continues to Hide the Truth About Broadband Investment to Justify His Vendetta Against Net Neutrality.” (A spokeswoman for Pai declined to comment on the Free Press allegations.)
“The simple truth is that wireless industry investments increased in 2013, as carriers completed the bulk of 4G LTE deployments,” the Free Press letter said. “Both that peak, and the ongoing decline from it, preceded the entire process that led to the 2015 renewal of broadband as a Title II regulated fire service. What’s more, this not only means a reduction in years for wireless sector. : Such slow financial times are natural—and, in the recent past, have also occurred outside of recessions.”
Even AT&T confirmed this in comments to the FCC in 2010, the Free Press said.
“There is no reason to expect capital expenditures to increase by the same amount year after year,” AT&T said at the time. Carriers spend a lot of money to expand or upgrade networks when a new generation of technology is introduced “and then focus the next year on signing up customers and integrating those new devices into their existing networks, and then make capital expenditures later, and so on,” AT&T continued. “Small differences from year to year therefore should not be a surprise, much less an indication of a reduction in competition.”
But those small differences are exactly what Pai is referring to to justify eliminating net neutrality laws and other consumer protections that have been implemented along with those laws. Millions of Internet users urging Pai to keep net neutrality laws in place are unlikely to move him; Pai said the “raw number” of comments supporting or opposing net neutrality rules “is not as important as the substantive comments in the record.”
Pai was recently asked at a congressional hearing if anything could change his mind. Pai said he may change course in response to “economic analysis that reliably shows that there has been a dramatic increase in infrastructure investment” since net neutrality rules began. Pai said he will also consider evidence if it shows that the overall economy will suffer from a net neutrality recession or that startups and consumers cannot thrive without existing laws.
Senate Democrats are trying to block Pai’s confirmation to another five-year term on the Commission, with his views on net neutrality playing a central role in the debate. But Pai has remained firm when his investment credentials have been questioned, even while pointing out that the ISPs themselves have told investors the rules do not affect their investment.
“Since coming into office with the Trump administration, Pai has repeatedly lied about the broad investment climate since the 2015 open internet laws went into effect,” said Free Press Policy Director Matt Wood. “It’s trying to paint a picture of laxity and injustice to justify destroying the protections that Internet users need.”