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Why Rescind Net Neutrality? Hint: It Wasn't About Encouraging Investment

Carl Weinschenk

Don't be fooled by those who say that net neutrality stood in the way of investment. Removing it was about control, not money.

This is how Stuart Carlaw, the chief research officer at ABI Research, put it in a press statement after the vote:

The repeal of the net neutrality legislation will enable the communications industry to work within the bounds of a more natural market condition. It will allow those companies that are burdened with the massive expense of rolling out new networks to support 5G (both fixed and wireless) and IoT solutions to be able to generate sufficient revenues to justify investment. If anything, this legislative move will likely provide the much-needed boost to timelines for more meaningful technological deployments that will enable companies to transform digitally and allow consumers to benefit from technology driven improvements in service from multiple industry segments based on best of breed communications.

The problem with this statement is that there is no investment problem. Consider 5G and the IoT: They have gone from barely recognized geekiness to tools that are being used today. Hugely expensive technologies, such as software-defined networks and network functions virtualization, are being rolled out.


The disappearance of net neutrality may be a bonus for these companies, but the decisions to put the huge amount of development and capex funds on their roadmaps was made when a Democrat was in the White House and the smart money said that another Democratic president, who would be more likely to strengthen net neutrality than end it, would follow.

The FCC press release on the vote sounded the same note:

And restoring a favorable climate for network investment is key to closing the digital divide, spurring competition and innovation that benefits consumers.

Not to belabor the point, but there seems to be an awful lot of innovation going on considering that the investment climate supposedly is so poor.

So if the assumption is made that the investment argument doesn't hold water, it is fair to take a less charitable interpretation. Michael Fauscette, chief research officer for business review site G2 Crowd offered a statement that captures this view well. It was released shortly before the December 14 vote.

Look for the return of “fast lanes” (and of course “slow lanes”) which will cost many companies, but will also ultimately cost consumers and restrict the free flow of information across the internet.

And guess who gets to be the cops controlling those fast and slow lanes?

It is impossible to say how this will all hash out. For instance, as Fauscette pointed out elsewhere in his statement, there will be lawsuits. One thing is clear, however: The legion of big companies that control physical networks and content will take what the FCC has given them and drive it as far as possible to their advantage. Indeed, it will be their fiduciary responsibility to their shareholders and other owners to do so.

The "lighter touch" brought by reclassifying broadband under Title I (information service) instead of Title II (telecommunication service) of the Telecommunications Act means that oversight will move from the FCC to the Federal Trade Commission (FTC). This is the heart of the end of net neutrality, not an effort to encourage investment.

The most likely impact of the end of net neutrality is that big companies that control the infrastructure will have far freer rein to choke off upstart competitors, let their corporate political positions influence whose voices are heard most clearly, raise subscriber rates more aggressively, and take other actions that now will be within the rules.

One thing it won't be about is trying to get them to make investments. They are already doing that.

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 cweinsch@optonline.net and via twitter at @DailyMusicBrk.


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