Investment and Network Neutrality

[Commentary] L. Gordon Crovitz claims that the 2015 network neutrality protections passed by the Federal Communications Commission and upheld in court “stifle the internet and discourage investing in broadband” (“A Shadow Falls Over Silicon Valley,” Information Age, June 20). Crovitz cites telecom-industry economist Hal Singer to support this notion. Singer’s flawed analysis is flat-out wrong. It uses selective data and excludes investments from the real total reported by broadband companies.

My organization Free Press ran the actual numbers and found that broadband-industry capital expenditures increased in 2015, as did the industry’s profits and revenue. Unlike Singer’s, our analysis is based on a thorough review of these companies’ public statements as well as their quarterly and annual reports to the Securities and Exchange Commission. The increases in 2015 reflect economic common sense and the sentiment that these phone and cable companies themselves conveyed to the investment community both before the FCC’s vote and in the year since. While industry analysts and real investors understood the FCC’s actions correctly, ISP lobbyists and their paid loyalists in Washington continue predicting gloom and doom. Yet they fail to explain how a regulatory mechanism for preserving the internet as an open platform—which has been a cash cow for the industry—harms the broadband market. Their declarations about investment and profit declines are devoid of real evidence. They’re scare tactics.

[Wood is Policy Director at Free Press]