What I had alluded to earlier:
In 2006 AT&T and BellSouth combined made $11.8 billion in gross
capital expenditures. The merger of AT&T and BellSouth consummated on
December 29th 2006, with the imposition of 2 years of 4 principles PLUS 5th
principle of non-discrimination conditions. In 2007 AT&T's gross capital
expenditures was $17.7 billion. In 2008 AT&T's gross capital
expenditures was $19.7 billion. Thus, under two years of Net Neutrality,
AT&T's investment increased 67% from the period where it wasn't operating
under the fifth principle.
POINT: AT&T's gross capital expenditures grew
more (in percentage increase terms) while under Net Neutrality than any other
ISP in America!
SHOW ME THE MONEY: DOES
NET NEUTRALITY HURT OR HELP INVESTMENTS?
http://voices.washingtonpost.com/posttech/2009/10/show_me_the_money_does_net_neu.html
Will net neutrality hurt or help the economy? Amid a stubborn recession, that
question will take center stage as critics and proponents debate how new rules
at the Federal Communications Commission would impact investments in the Web.
At a high level, the arguments are straight forward. But the details supporting
those views -- which will likely be debated for months at the FCC -- become
vastly more complicated.
FCC Chairman Julius Genachowski and proponents of new rules say the next Google
or Amazon being cooked up in some garage may not see the light of day if a
policy isn't put in place that ensure they'll make it on the Web.
"There are hundreds of thousands of Americans whose small businesses rely
upon the free and open Internet," Genachowski said in a Q&A last week.
"The rules I am proposing seek to preserve the Internet as unparalleled
engine for economic growth and prosperity."
Next week (Oct. 22), the FCC will vote on Genachowski's proposal that would
codify and broaden guidelines for how Internet service providers like AT&T,
Comcast, Verizon and Sprint Nextel treat content on their networks. The rules
would prevent those companies from acting as gatekeeper, ensuring consumers and
businesses get any legal content or services of their choice.
Opponents of his plan, say ISPs need flexibility to manage their network
traffic and keep down costs. They want to make sure some bandwidth hogs aren't
ruining the experience for other consumers. And shareholders need to be assured
they will get a return on their investments without the uncertainty of new
regulations.
Is such, net neutrality proponents like Google want "for us not to be able
to differentiate but set a standard that would shift all costs of building a
network to us and so that we are treated as the lowest denominator common
carrier," Ivan Seidenberg, CEO of Verizon Communications said during a
visit with Post reporters and editorial board members last spring. "So if
you listen to the west coast crowd, they are trying to effectively quarantine
what our permissible activities are," he said.
The proposal is expected to pass next week, which will launch a months- long
review process at the FCC before final rules are drafted. Both sides of the
debate are gearing up for a battle on the economics of broadband in a net
neutrality world.
US
Telecom, a trade group representing the telecommunications carriers, says
growth in broadband networks has boomed over the last several years, so don't mess
around with something that isn't broken.
Since 2003, when the FCC began deregulating communications markets, broadband
has increased (In 2008, investments were 30 percent higher than in 2003), the
group wrote in a paper last MayBrogan, SPRING 2009,
"While we do not claim direct causation, it is reasonable to conclude that
the correlation is driven by more than mere coincidence and policies that
encourage and facilitate facilities-based competition play a significant role
in encouraging investment in facilities,"
Patrick Brogan, vice president of industry analysis at USTelecom wrote in an
email as a caveat.
To show how rules can deter investment, the major carriers didn't apply for
stimulus grants set aside for broadband networks because, some industry
insiders said, because the grants were saddled with net neutrality conditions.
Derek Turner, the director of
research for public interest group, Free Press, argues against those claims. He
says AT&T increased its investments in broadband after its merger with Bell
South in late 2006 (Gross capital expenditures were $11.8 billion in 2006,
$17.7 billion in 2007, and $19.7 billion in 2008, Turner says) even though the
merger forced the company to abide by net neutrality conditions. The conditions
would prohibit the company from discriminately blocking content or applications
on their networks. His research also shows that after the 1996 Telecom Act was
approved, capital expenditures as a percentage of revenues reach about 30
percent. Following deregulation around 2003, those investments began to taper
and are currently around 18 percent of revenues today.
"Investment decisions are incredibly complicated with so many other
factors that go into them -- expectations about demand, competition, supply
costs, interest rates, etc." said Turner. "Regulations factor in too,
but not any more than any one of those other things, especially a light
regulation like what the chairman is proposing."
He says competition has a bigger impact on investment decisions.
That's an opinion voiced also by Blair Levin, a former Wall Street analyst who
is now heading the FCC's creation of a plan to bring broadband to all U.S. homes.
Levin, who also worked with Genachowski as a technology advisor to Pres. Obama
during the transition, said at a 2006 Senate Judiciary Committee hearing on
telecommunications competition that regulation doesn't move the needle on
investments.
"In my view, this is like believing that a piece of a puzzle is the entire
puzzle," Levin wrote.
The promise of a competitive marketplace, however, can be a bigger incentive
for investment, he said.
"Ultimately, to serve the goal of stimulating a rising standard of living
for Americans, the challenge for government is to assure a broadband
environment characterized by survival of the fittest, as selected by the
market, rather than survival of the friendliest, as selected by the network
owners or government," he said.
= = = = =
Timothy Karr
Campaign Director
Free Press :: www.freepress.net
SavetheInternet.com :: www.savetheinternet.com
FreeMyPhone :: www.freepress.net/FreeMyPhone
201.533.8838
reform media. transform democracy.