Netflix, Microsoft, Others Blast Suggestion That Net Neutrality Rules Harm Investment

When Federal Communications Commission Chairman Ajit Pai proposed revoking the net neutrality rules, he justified the move by arguing that the regulations were depressing investment in broadband networks.

Whether that's the case remains a point of contention. The FCC's formal proposal to revoke net neutrality referenced three studies that supposedly show a drop in investment. But others who have examined the numbers have reached different conclusions. The pro-neutrality advocacy group Free Press says investment by 13 major broadband providers actually increased in the two years after the FCC passed the net neutrality regulations.

Netflix, which also supports net neutrality, argues in comments filed this week with the FCC that the supposed evidence of depressed broadband investment is "a contrivance of cherry-picked data and analysis."

"Not only is there little evidence that investment by broadband providers has been harmed following the 2015 Open Internet Order, research indicates that some providers have increased investment since it took effect," Netflix writes, citing research by the Silicon Valley trade group Internet Association and Free Press.

The FCC's 2015 net neutrality order classified broadband as a utility service and imposed some common carrier rules on providers, including bans on blocking and throttling service, and on charging higher fees for prioritized delivery. Pai has proposed reversing the rules by reclassifying broadband as an "information" service -- which arguably would also invalidate the bans on blocking, throttling and paid prioritization.

This week, Pai testified at a Senate hearing that the FCC is still gathering evidence about whether net neutrality regulations actually affected broadband investment. “Some have suggested the FCC simply issue a declaratory ruling saying that the facts and the law are so and that’s the way it’s going to be, but we wanted to test this proposition in an open and public process," he reportedly stated.

For their part, some tech companies suggest that Pai's focus on investment by carriers is too narrow. Microsoft, for one, says that investment by Internet service providers is only one part of the big picture.

"While robust broadband internet access networks are critical in allowing consumers to gain access to edge services, the internet economy is much more than just those broadband internet access networks," Microsoft argues in its FCC comments. "The internet economy includes all the hardware, software, and network infrastructure of all participants in the internet economy, including all the applications, content, and services available through the internet."

The advocacy group Center for Democracy & Technology adds that it's too soon to know whether the 2015 regulations are having any impact on investment.

"Even if it were possible to demonstrate a causal, or even a correlative relationship between either classification under the Communications Act and capital expenditures on broadband infrastructure, the timescale upon which such investment decisions are made precludes making this showing," the CDT writes

The group also points out there are good reasons why investment may waver from year to year. "The initial investment costs of rolling out a new technology or physical installation may be significantly higher than the subsequent costs of improving that technology or extending the installation," the group adds. "This uneven spending rate can nonetheless produce a consistent trend in network improvement overall."

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