AT&T and CenturyLink say the FCC Title II reversal will spur new investment

FCC headquarters
One of the main arguments between supporters and critics of current net neutrality rules is over the effect Title II classification had on network investment. (FCC)

AT&T, CenturyLink and other large telcos said the FCC's proposal to take Title II out of the current net neutrality rules will unshackle their ability to make new network investments.

Joan Marsh, SVP of federal for AT&T, said in a statement that the 2015 ruling on net neutrality did not do anything but cause uncertainty for itself and other service providers.

“When the 2015 reclassification Order was adopted, Chairman (then Commissioner) Pai and Commissioner O’Rielly objected vigorously on both legal and policy grounds,” Marsh said. "Putting that kind of straight jacket on internet providers served no beneficial purpose, addressed no harm and, predictably, suppressed investment. American consumers will be better served by a return to the light touch regulatory regime that garnered bi-partisan support for decades and fostered infrastructure deployment, innovation, freedom and entrepreneurship.”

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CenturyLink echoed a similar sentiment in its statement on the FCC’s move.

“CenturyLink strongly supports a return to a light-touch regulatory framework that classifies the internet as an information service as opposed to a public utility,” CenturyLink said. “Removing excessive and over-reaching Title II public utility-style regulation will lead to more innovation and investment and help ensure the internet continues to evolve and expand to meet customers’ ever-growing online demands.” 

CenturyLink added that it “is committed to an open internet that allows our customers to access all the lawful content of their choice from any location or device and will continue to be transparent about the handling of internet traffic, customers’ privacy and the overall internet experience.”  

As part of its Notice of Proposed Rulemaking, the FCC said in a statement that the regulator proposes to return to the bipartisan framework that preserved a flourishing free and open internet for nearly two decades. The FCC approved the proposal 2-1, with Chairman Ajit Pai and Commissioner Michael O’Reilly approving and Commissioner Mignon Clyburn dissenting.

The Notice proposed to reverse the FCC’s 2015 decision to impose Title II utility-style regulation on internet service providers (ISPs) and return light-touch framework under Title I of the Communications Act.

However, this vote does not immediately overturn the current net neutrality rules. Instead, it is the start of a long commenting period during which companies, consumer interest groups and advocates can file their views with the FCC.

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It also has an effect on the wireless industry. The proposal advocated a return to the FCC’s original classification of mobile broadband internet access service as a private mobile service. Citing innovation and success of the wireless marketplace prior to the Title II Order, the commission said the proposal is expected to “substantially benefit consumers and the marketplace.”

Finally, the Notice proposed to eliminate the internet conduct standard created by the Title II Order.  By eliminating the internet conduct standard, the FCC majority said it will eliminate regulatory uncertainty for service providers.

FCC divisions

FCC Chairman Ajit Pai
Ajit Pai

Unsurprisingly, the new proposal drew differing points of view from FCC Chairman Ajit Pai and Mignon Clyburn.

Pai said in his prepared remarks that the new proposal will give service providers a regulatory regime that has driven ongoing innovation and investment.

“Today, we propose to repeal utility-style regulation of the internet,” Pai said. “We propose to return to the Clinton-era light-touch framework that has proven to be successful. And we propose to put technologists and engineers, rather than lawyers and accountants, at the center of the online world.”

FCC Commissioner Clyburn Image: FCC
Mignon Clyburn

Mignon Clyburn, the commission’s only democrat, disagreed with having looser regulations, arguing they “would deeply damage the ability of the FCC to be a champion of consumers and competition in the 21st century.”

Incompas, TIA, others offer contrasting views

Telecom and other related advocacy groups also greeted the FCC’s proposal with a similar divisive tone.

On one hand, telco-centric organizations like the Telecommunications Industry Association and the Heartland Institute, praised the FCC’s actions.

Cinnamon Rogers, senior VP of government affairs for TIA, said that eliminating Title II from the net neutrality framework will benefit customers because service providers will be able to build out additional networks to support more applications and higher speeds.

“The FCC’s longstanding approach to a light touch regulatory framework allows providers to deliver more access, higher speeds and greater connectivity to consumers,” Rogers said. “A free and open internet that protects consumers is essential – and is best delivered through balanced and broadly supported rules that encourage investment, competition and innovation.”

The Heartland Institute agreed, adding that a lighter touch regulatory environment will encourage new innovations for broadband and other services.

“Government-directed net neutrality was, is, and always will be a solution in search of a problem,” The Heartland Institute said in a statement. “Market incentives created the modern Internet, and free-market competition will ensure it self-regulates to serve consumers with the best service and lowest prices.”

Incompas, which provides advocacy for competitive service providers, claims that overturning the current rules will hurt consumers and businesses.

“Failed legal arguments and failed ideology presented by those seeking to let AT&T and Comcast block, throttle and control the internet will do great harm to upstarts and entrepreneurs, faith and religious organizations, and conservative and rural voices longing to be heard,” said Chip Pickering, CEO of Incompas.

Meanwhile, Carmen Scurato, director of policy and legal affairs at the National Hispanic Media Coalition, said that the FCC’s action could hinder Latinos from getting access to affordable broadband services.

“The FCC vote today shirks the agency’s obligations as a consumer watchdog in ways that threaten to widen the digital divide by giving Internet Service Providers more power to restrict access to the internet,” Scurato said. “The cost of internet access is already a major reason why half of Latino households are offline and remain disconnected.”

Capital fights continue

One of the main arguments between supporters and critics of current net neutrality rules is over the effect Title II classification had on network investment.

On one side of the debate, groups like US Telecom—which serves as the advocate for the traditional ILEC industry—contend that service provider spending on network facilities declined in 2015 when the current order was passed.

The industry group said its estimates show that in 2016, capital expenditure for ISPs was $71 billion, down from $73 billion in 2015 and $74 billion in 2014.

“Our annual report on broadband investment (see methodology here [PDF]) showed investment dropped by $1 billion in 2015 and our preliminary look at 2016 capital expenditures suggests that slide continued,” a US Telecom spokesman said in a statement.

However, reports from the Free Press and Internet Association paint a different picture.

According to a study by Free Press (PDF), the aggregate capital investments at publicly traded ISPs were 5% higher during the two-year period following the FCC’s open internet vote in February 2015 when compared to the two years prior. 

Free Press contended that 16 of the 24 publicly traded ISPs following the FCC’s vote, led by spending on core network expansion. Cable ISPs showed the biggest increase, with physical network investments up 48% over the two years. 

Similarly, a new study (PDF) by the Internet Association showed that service provider investment in telecom infrastructure rose 5.3% to $7.3 billion from the periods 2013-2014 to 2015 to 2016.