Net Neutrality Is Unlikely to Depress Telecom Investment

Carl Weinschenk
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Fifteen Wi-Fi Predictions for 2015

The biggest news by far last week was that the Federal Communications Commission (FCC) imposed net neutrality rules that will treat broadband as a public utility.

Of course, it will be years before legal challenges are exhausted, the level of control the FCC will take is established, and dozens of other practical questions are answered.

High on the list of unanswered questions is what impact the new operational landscape will have on investment. One of the tried-and-true defenses that businesses trot out whenever regulation is on the table is that investment will suffer. Whether that actually happens, however, is far from clear. Telecommunication Industries Association (TIA) CEO Scott Belcher, for instance, played the investment card in his statement after last week’s vote.

The feeling is not universal among carriers, though. Earlier last month, before the decision, Sprint Chief Technology Officer Stephen Bye suggested that the tie between net neutrality and reduced investment may not be tight. Bye spoke to Reuters on the issue of reduced investment:

"It's one of those topics that is highly charged, highly politicized and we took a step back and said it works in the interest of our customers, our consumers and the industry and we frankly found some of the arguments (of our competitors) to be less than compelling," Bye told Reuters this week.

Bye added that other carriers “are representing a situation that won't play out" by saying investment will be staunched. As evidence, he pointed to the FCC wireless spectrum auction that raised $44.9 billion. It closed in January, clearly within the shadow of the FCC decision. Companies are unlikely to bid on spectrum if they have no plans to make the investments necessary to utilize it.

The idea is that carriers, knowing that net neutrality likely was coming, will go ahead anyway is echoed by a Factset graphic at Quartz. It shows generally healthy investments since mid-January by Comcast, Time Warner Cable, Charter, Verizon and AT&T.

Ironically, where that seems to be having the most significant impact on current investment is the buildup to a free market, non-government stimulated event: the proposed acquisition of Time Warner Cable by Comcast. At LightReading, Alan Breznick points to research from Infonetics and comments by Bob Stanzione, the chairman and CEO of cable gear vendor Arris, about the merger putting a damper on equipment investments. It figures that if the government doesn’t let the deal close, investments by the two companies would accelerate.

The logic is that investments won’t slow down, at least appreciably. The same subscribers are lining up for services and the same entrepreneurs are inventing new and enticing products. Dealing with the government a bit more seems unlikely to rain too much on the parade. Indeed, it seems that providers themselves, based on their recent investments, understand this – at least outside of the public affairs department.

Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Internet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at and via twitter at @DailyMusicBrk.

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