The Main Argument for Rolling Back Net Neutrality Is Pretty Shaky

[Commentary] Federal Communications Commission Chairman Ajit Pai’s central argument for eliminating network neutrality rules, which he introduced with a plan to “reverse the mistake” of the Obama-era regulations, is that doing so will fire up investment in broadband networks. But that prediction is very optimistic, say experts who warn that his proposal could very well do little or nothing to stimulate such investment.

Chairman Pai’s central argument is that [the Title II] net neutrality rules had the immediate effect of slowing down investment in broadband networks. He said the internet was already working fine before the FCC stepped in to impose unnecessary regulations for purely political reasons. “While investment in broadband infrastructure has certainly dwindled in recent years, the impact that net neutrality regulation has had is very much open to debate,” says Dan Hays, global tech, media, and telecom lead at PwC’s Strategy& group. “In fact, it’s quite plausible that growth in market penetration of broadband services, coupled with acceleration of industry consolidation over the past few years, have more to do with reduced spending, despite the pleas of network operators,” Hays says. The subtext here is that investors in telecommunication companies, as a rule, detest massive new capital expenditure spending on network infrastructure. Combining with other networks is one way to avoid doing so.