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Did you hear? Net Neutrality is already killing the United States. It hasn’t even been a six months since the FCC passed new broadband rules that allow for the government to treat broadband internet as a public utility under Title II of the Communications Act. This means that the FCC now has the ability to protect consumers when the cable and broadband industries step over the line (as in cramming).

New Taxes

But now, the ugly truth about net neutrality is coming out. As Steve Pociask points out in an article on Forbes, “there are indeed plans underway to impose broadband taxes and there is now mounting evidence that investment is likely to decline as a result of common carrier regulations.”

That sounds terrible. Then again, what exactly is he referencing when he says that there are “indeed plans underway” to impose new broadband taxes? Let’s look into what he cited for that statement. He cites an interview done on “The Steve Malzberg Show” on Newsmax TV by FCC Commissioner Ajit Pai.

“Most immediately I think what is going to happen is that the FCC has specifically opened the door to a increase on the tax that is going to be placed on broadband. We are waiting for a joint board to recommend to us on April 7 how big that tax is going to be.” He added, “So I would imagine in the next month or two we are going to see, for the first time, taxes placed on broadband bills so your bills are going to go up .”

Oh, ok. So, there is no actual plan to tax consumers broadband bills for the first time. As the FCC commissioner himself admitted in his official comments about the subject, net neutrality “opens the door to billions of dollars in new taxes on broadband.”

2014TelecomRevenueThe April 7 date came and went without any tax-raising recommendation. Specifically, the April 7 date is in reference to the new power of the FCC (under Title II) that allows them to raise how much consumers pay monthly from a “Universal Service Fee.” As of today, the FCC is awaiting a response from the Federal State Joint Board. Meaning, there are no new taxes nor are there actual plans for new taxes. It is simply them guessing about what the FCC may or may not do to help the Universal Service Fee going forward.

Network Investment

Again, six months into net neutrality and apparently everyone is pulling their money OUT of the telecom world.

So what about the FCC’s claim that the more onerous common carrier regulations would have no effect on private broadband network investments? Well, that promise too now appears to be very much in question. A new economics study released by Georgetown University’s Center for Business and Public Policy shows what every knowledgeable businessman and economist should know – investors are more likely to avoid putting their money into risky, higher taxed, more highly regulated and costlier ventures. Specifically, the study’s authors conclude that the FCC’s reclassification of Internet services will produce a chill on private investments. – Forbes, Steve Pociask

Pociask notes that the study has quite the dim view of our tech future. You see, “if” capital expenditures decline by 20% thanks to net neutrality, that would mean that the tech economy would lose $15 billion. That 20% decline in investment would also lead to 300,000 jobs lost!

marketstrategies
marketstrategies

Where did they get that 20% number…well, nowhere really. They just guessed. But, I would be willing to bet that if the study had thrown out that network investment would decline by….let’s say 50%….that we would be in even more trouble with more job losses. Who knew? You can read the study here in case you think I am being too hard on them.

Applying Title II to the Internet does not per se dictate specific rates of return, and it does not stimulate entry; but it does likely increase costs and regulatory hurdles for providers. Introducing substantial, new regulation of the businesses that provide much of the Internet’s infrastructure and content could not only raise the cost and price of most Internet communications. – Georgetown Study

Let’s take a look at the real world.

Just yesterday, I noted that the nation’s largest provider of wireless infrastructure, Crown Castle, issued a report showing that network investment by U.S. wireless carriers was either staying at current levels or actually increasing. According to the CEO of Crown Castle, Verizon and T-Mobile have spent the most in 2015 on network spending while AT&T and Sprint were expected to spend the most going forward in 2015.

“The U.S. wireless market has one of the most compelling wireless investment stories in the world. With strong unit economics and relatively high ARPU reflecting U.S. consumers’ demand for mobile data and their willingness to pay for mobile services, U.S. carriers were able to generate positive incremental returns on their capital investments,” Moreland said during Crown Castle’s quarterly conference call with investors, according to a Seeking Alpha transcript of the event. – FierceWireless

Then there is the massive amounts of money being spent by telecom companies over the last few years.

  • In 2013, more than $80 billion was spent by telecom companies looking to purchase additional assets/companies.
  • Last month, Charter announced plans to spend close to $70 billion on multiple telecom acquisitions.
  • Wasn’t Comcast recently trying to spend $45 billion on Time Warner Cable?
  • Didn’t AT&T just get FCC approval for a $50 billion purchase of DirecTV?
  • Didn’t the latest wireless spectrum auction net a record $45 billion in bids?

Net Neutrality really is killing these companies ability to spend.

Then again, nobody should be shocked at Title II having absolutely no effect on telecom companies. Verizon, Sprint and many others have previously admitted to investors that net neutrality would likely have no affect on any future investment.

Writers

Lastly, it should be noted who is writing this so-called study. There is no way that the authors would be employed by the telecom companies wanting to push these anti-net neutrality policies, right?

Authors:

Robert Shapiro – Shapiro works for Sonecon, LLC, a D.C. lobbying firm whose clients, including AT&T.  Shapiro has quite the history of consumer-killing propaganda. Here we have Shapiro claiming that low data caps would “help” consumers. Here we have Shapiro blaming “heavy users” for all the broadband problems.

Kevin Hassett – Writes for the American Enterprise Institute. the same company accepting money from….AT&T/Verizon? Participating in studies funded by AT&T/Verizon themselves? Also, did AEI ever respond to the stories showing a significant financial connection between Comcast and AEI?

So, why did the Forbes writer, Steve Pociask, use these guys as so-called credible sources?

Steve Pociask – Pociask works for a bogus consumer group called the American Consumer Institute (ACI). Who is the ACI? The ACI uses op-ed pieces to try and scare the public into giving Verizon and AT&T whatever they want. Or as other places describe ACI:

  • Perhaps because ACI, like Broadband for America, is financed by an ISP lobby group. Annual tax returns show that a foundation controlled by lobbyists from the cell phone industry, called MyWireless.org, has contributed to ACI since 2010. – Vice
  • Except the American Consumer Institute isn’t actually a consumer group. It’s an amalgamation of think tank reps pushing for corporate deregulation under the guise of consumer advocacy. A quick WhoIS notes that the ACI website is registered to Stephen Pociask, a telecom consultant and former chief economist for Bell Atlantic, who via groups like the Competitive Enterprise Institute, works as a public relations apparatus for paying corporate clients. – DSLReports
  • “ACI masquerades as a pro-consumer group, but in fact is loaded with folks that have a long history of ties to special interests and lobbyists, though those details are often missing from the online “bios.” ACI also links to minor consumer groups, pro-industry websites, another well-known astroturfer — the Discovery Institute which helped promote the exaflood nonsense (the Internet is getting too full, log off), and even an insurance industry blog. Consumer Reports this isn’t.” – StopTheCap
  • “Such non-profits like Broadband for America and the American Consumer Institute (ACI), both of which claim to be “independent consumer advocacy groups” and have been fighting against classifying ISPs as a utility (a move that would make it easier to enact net neutrality rules in the future), have been shown to be heavily funded by the cable industry.” – ArsTechnica