Telco broadband investment dipped to $76B in 2016 due to net neutrality rules, says USTelecom

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Following the FCC’s move to reclassify traditional telco’s under Title II of the Communications Act, investment in broadband infrastructure declined to $76 billion from about $77.9 billion in 2015, a new USTelecom study claims.

In its seventh-annual broadband investment research report put out this week, USTelecom said that telcos’ annual spending was $2.4 billion less in 2016 than at the recent peak of $78.4 billion in 2014.

USTelecom

Over the 20-year period between 1996 to 2016, USTelecom reported the telecom industry made a total of $1.6 trillion in capital network investments.

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As part of its analysis, USTelecom noted that the data it collected includes minor historical revisions to the time series. Some of these revisions reflect how top telcos such as AT&T and Verizon report capital spending in their public earnings statements.

AT&T, for one, does not report how much capital it spent on wireline and wireless under its new structure.

“The lines between wireline and wireless investment are blurring for integrated providers as wireline backhaul investments are essential to wireless service, and as devices increasingly shift between wireless and wireline networks,” USTelecom said in its report.

Likewise, Verizon’s ongoing moves to grow its media business by acquiring AOL and Yahoo reflect services that are not directly related to either wireless or wireline.

“Verizon has historically reported capital expenditures in categories for wireline, wireless, and other,” USTelecom said. “As Verizon has acquired online services such as America Online, Yahoo!, and other services that do not fit into wireless and wireline categories, the other category for capital expenditures has grown.”

The organization’s revised estimates indicate that industry capital expenditures fell by about a half billion dollars from 2014 to 2015 and by nearly $2 billion from 2015 to 2016. USTelecom claims that the start of the capex decline—the first since the recession ended in 2009—coincided with FCC’s 2015 decision to adopt the Open Internet Order.

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