DO NET-NEUTRALITY RULES HURT THE POOR?
FCC says broadband investment has fallen and likely affected low-income areas, but others say the issue’s not so cut-and-dried
A big reason current Netneutrality rules need to get the boot, says the head of the Federal Communications Commission, is that they’re curbing broadband investment in lowincome neighborhoods — cutting off important information and services 21st-century citizens access via high-speed Internet.
But were these 2015 rules, which aimed to prevent companies that bring Internet into homes from favoring their own content over others, really the culprit?
A review of broadband investment over the past two years paints a more complicated picture. One study of the largest carriers, the basis for the FCC’s claim, does show investment fell over the two-year period the rules were in effect.
But that was largely due to AT&T. It’s blamed the Open Internet rules for decreased broadband investment. Analysts point out, however, that like other large carriers, it was engaged in a competitive shift that likely played a role — two mammoth acquisitions including the $85.4 billion deal for Time Warner. At the same time, Comcast — another big spender of broadband investment — increased its outlays by double digits.
“You are going to hear a lot of posturing when it comes to the attempts to stifle some of those regulations,” said Tuna Amobi, an equity analyst at CFRA Research who tracks companies such as Comcast and Charter Communications (which want the rules repealed) and Netflix (which supports them).
“What we saw ultimately was that, frankly, it was more or less a lot of noise,” Amobi said. The market is simply too competitive not to invest, he says. “No one wants to be left behind.”
Disagreement over what actually happened since the rules were passed means both sides have ample debate points as they enter into a fight over the rules’ repeal, which could happen by year’s end.
FCC Chairman Ajit Pai argues that the rules, which rely on utility-style authority based on Title II of The Communications Act of 1934, overburden Internet service providers (ISPs) and kept them from investing in low-income rural and urban areas. Democrats say that didn’t happen. And they consider the current regulations as critical to protecting consumers from Net providers blocking or slowing some content, while possibly favoring their own.
Public comment for the rules has already begun. The last time the public was invited to voice their views on Net neutrality, the FCC received nearly 4 million comments.
And these extenuating factors also mean that if the rules are repealed, it’s questionable whether increased broadband investment will necessarily follow.
“The idea that there’s a nuclear winter in broadband, or even just in rural broadband, because of the Title II classification just doesn’t make sense,” said Kevin Werbach, an associate professor of legal studies and business ethics at The Wharton School at the University of Pennsylvania.
The FCC began its rule-making process in 2014, and rules were approved in 2015 under the helm of Chairman Tom Wheeler, a Democrat.
According to the study that’s the basis for the FCC chairman’s claim, U.S. broadband capital investment by the major providers dropped 5.6% by 2016 from 2014.
Net-neutrality regulations may not have necessarily caused lower spending, but the timing suggests some correlation, says George Washington Institute of Public Policy senior fellow Hal Singer, who compiled and analyzed the data, factoring out other investments.