Does The Tumble In Broadband Investment Spell Doom For The FCC's Open Internet Order?

[Commentary] They said it wouldn’t happen. They offered assurances from three Wall Street analysts, who insisted that Internet service providers (ISPs) would continue to invest at the same levels regardless of the regulatory climate. AT&T’s capital expenditure (capex) was down 29 percent in the first half of 2015 compared to the first half of 2014. Charter’s capex was down by the same percentage. Cablevision’s and Verizon’s capex were down ten and four percent, respectively. CenturyLink’s capex was down nine percent. Although the Federal Communications Commission’s Order failed to perform any cost-benefit analysis, a companion statement issued by the agency pursuant to the Congressional Review Act speculated that the Open Internet rules would generate $100 million in annual benefits for content providers. Given the roughly $78 billion in ISP capex in 2014, Title II would need to scare off a mere 0.13 percent of ISP capex (equal to $101 million) to generate net losses for the economy.

On December 4, some unfortunate FCC attorney will have to defend the Open Internet Order before a panel of judges on, among other things, cost-benefit grounds. With luck, a judge will ask about those assurances from the three Wall Street analysts.

[Hal Singer is a principal at Economists Incorporated and a senior fellow at the Progressive Policy Institute]