One of the most common myths in the broadband industry (well, many industries) is that if you just stop regulating providers and let them do whatever they'd like, network investment will explode and we'll all be living in a Utopia of ultra-fast, inexpensive connections in no time. Of course time after time after time we're shown this isn't true, as shortly after deregulating a company like AT&T users wind up getting socked with higher rates and worse service than ever
History and fact repeatedly isn't on the side of the "less regulation means greater network investment" argument, yet this doesn't stop carriers (and their massive armies of assorted paid mouthpieces) from using it every time they want government to do (or not do) something
"Giving us almost everything we want each year and even letting us write telecom law sure is nice," incumbent ISP execs and lobbyists will argue, "but if we don't get X, network investment will shrivel and die and you'll all cry over your clogged tubes."
This week, ISPs are marginally-worried the FCC may classify ISPs as common carriers, even though there's really no serious indication that the FCC or Wheeler have the spine to ever make this happen
. Like clockwork, the industry is leaping to the "regulation kills investment" trope in letter being circulated this week to members of Congress
The letter warns that reclassification could open the door to a "wide array of regulatory burdens and restrictions" that could halt progress toward improved broadband service. "I respectfully urge you to consider the effect that regressing to a Title II approach might have on private companies’ ability to attract capital," it concludes.
Except, once again, if you actually bother to look you'd note that despite the industry being increasingly and dramatically deregulated over the last decade, network investment is actually dropping
as the increasingly unregulated (or regulator-for-hire driven) markets get less competitive by design:
My chart properly shows annual average investment during these periods and shows clearly that investment is down. I didn't even adjust for inflation, since it's hard to calculate that without NCTA giving us specific annual figures....if you think the light regulatory touch is working because it's leading to an investment boom, you are mistaken. The industry is acting like a low-competition industry, scaling back investment and plowing its profits into dividends and share buybacks and merger efforts.
And that's just cable. Vox doesn't even touch on the fact that AT&T and Verizon (also historically deregulated and in the midst of a massive new and successful deregulatory push
) have frozen next-gen broadband expansion (despite some bunk promises about 1 Gbps
). In fact, they're hanging up on tens of millions of DSL users they don't want to upgrade, making things even less competitive
for cable across more than half of the country.
Why? Because having wimpy, intentionally incompetent, or former lobbyists as regulators isn't the path to technological nirvana, it's the path to uncompetitive markets. Until we stop pretending otherwise (usually under the banner of childish partisan fisticuffs disguised as reasonable conversation) we're destined to run the same hamster wheel over and over again. It's well-past time to stop believing in magic deregulatory horsies and fairies
if we're ever to improve our broadband fortunes. Update
: Industry CEOs today all got together and penned a very similar letter to the FCC
insisting that a tough regulator with the authority to prevent anti-competitive abuses would somehow eliminate this spike in network investment -- that isn't actually happening.