Broadband investment continues to decline

May 21, 2014
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Just last week, this site discussed how AT&T and Comcast were basically threatening the FCC and general public that if their companies were to be reclassified under Title II, their investments and deployment would suddenly slow down if not stop!

Title II Truth BusinessInsider

In fact, there is little if any truth to these statements by the cable/broadband giants. As Matthew Yglesias of Vox.com points out, these companies are actually DECREASING how much they spend on infrastructure investment over the last five years.

The National Cable Telecommunications Association (NCTA) has been circulating a letter to members of congress stating:

In the years that broadband service has been subjected to relatively little regulation, investment and deployment have flourished and broadband competition has increased, all to the benefit of consumers and the American economy.

NCTA-Charts_O Vox.com

So, what is misleading about the chart? I will let TechDirt explain that:

Beyond changing the number of years before showing the totals, this chart is exceptionally misleading in that it is showing cumulative investment, rather than the actual rate of investment. Matthew Yglesias called NCTA out on this, leading NCTA to more or less admit Yglesias was right, though denying that he was. Still, NCTA finally released some actual year-by-year numbers. Of course, as people quickly noted, those year-by-year numbers seemed to support Yglesias’ point. Furthermore, they weren’t adjusted for inflation.Thankfully, one of our readers using the name cincinnatus (nice one), posted the inflation adjusted numbers, and we’ve taken the liberty of making a new chart with those numbers:

E9ilFKQ TechDirt

So, what are we to make of these numbers? Real competition has decreased while investment has been cut back significantly. The NCTA’s only response was to issue a new chart which showed flat spending at best over the past few years.

Matt Yglesias used the NCTA’s numbers and found that very same conclusion:

broadband Vox.com

At the national Cable Show, National Cable and Telecommunications Association CEO Michael Powell argued against those who think broadband internet access should be regulated as a public utility and deemed it so “because the internet is not regulated as a public utility it grows and thrives, watered by private capital and a light regulatory touch.”

Of course he didn’t mention the fact that customers continue to rate their broadband/cable providers almost unanimously dead last in just about every customer satisfaction survey.

Justin Fox of the Harvard Business Review took a look at specifically how Comcast has been investing over the last few years and found that they are simply making big acquisitions and giving lots of cash back to shareholders:

When I looked at a single company, industry leader Comcast, the story was one of a long, steady decline in cable investments as a percentage of cable systems revenue over the past decade and a half (I calculated it that way to reduce distortions from the acquisition of NBC Universal in 2011).

comcast-shifts-down-investment Harvard Business Review

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