Work is currently underway at the US Federal Communications Commission (FCC) to roll back Title II regulation, which serves as the underpinning for the commission’s 2015 net neutrality rules.

The FCC’s Republican majority and operators alike claim Title II has led to an industry-wide slowdown in spending and hampers innovation. But is Title II really the investment killer they claim it to be?

Until 2015, internet service providers including Verizon, AT&T and Comcast were regulated as Title I information services. But two years ago the FCC moved to change their classification to Title II common carriers, treating them essentially as utilities and subjecting them to tougher regulation.

In a recent filing with the FCC, US operator Verizon decried Title II regulation of broadband services as “harmful to investment and innovation”. Indeed, some financial analyses – such as a recent report from known Title II opponent USTelecom – have marked a cumulative decline in capital investments from US broadband providers in the years since Title II reclassification was implemented. However, such a close up view fails to note a broader ebb and flow in investment levels over time.

What the data shows
USTelecom’s own data shows cumulative broadband spending reached its peak in 2000, with a total of $118.1 billion invested. In the two years that followed, the figure plummeted to $57 billion in 2003 before recovering to the low $70 billion range between 2006 and 2008. During the US recession in 2009, spending fell again before recovering to a new peak of $78.4 billion in 2014. In 2016, USTelecom tallied broadband investments at $76 billion.

Zooming in to look at investment figures from a handful of the largest broadband providers – AT&T, Comcast, and Verizon – shows a fluctuating picture (seen in Mobile World Live‘s chart below).

At AT&T, capital spending totaled $21.4 billion in 2014, before dropping to $20 billion in 2015. However, even after Title II’s implementation, capital investments grew to $22.4 billion in 2016. Comcast similarly reported an increase in capital spending after the Title II order, with expenditure growing 7.5 per cent year-over-year to $9.1 billion in 2016.

The spending pattern at Verizon is slightly different, with investments rising from $17.2 billion in 2014 to $17.8 billion in 2015 before dipping to $17.1 billion in 2016.

Other factors?
Dissenting from the approval of the FCC’s 20th annual Mobile Competition Report, commissioner Mignon Clyburn called the allegations surrounding  Title II and the net neutrality order a “false narrative”. Clyburn cited data from three past competition reports showing the dip in wireless investment spending in particular predated the FCC’s action, with expenditures declining from $33.1 billion in 2013 to $30.9 billion in 2015.

“These statistics demonstrate that there must be other factors, other than the Open Internet Orders, that account for why wireless carriers decreased their investment in their networks,” she wrote.

It’s true equipment vendors like Ericsson have faced weak demand for mobile broadband infrastructure in recent months. However, Ericsson noted in its second quarter earnings report that mobile broadband demand stabilised, and a representative told Mobile World Live none of Ericsson’s North American customers explicitly mentioned net neutrality when discussing orders with the company.

USTelecom itself acknowledges many factors – including competition, financial markets, taxes, government mandates, project timelines and regulation – can impact broadband spending.

Given the data and the fact a variety of influences play into operator spending decisions, it seems a bit of a stretch to pin the blame on Title II alone.

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.