US spending on broadband dropped for the second year in a row in 2016, a new report from industry association USTelecom indicates.
Broadband investments from wireless and wireline companies totalled $76 billion in 2016, returning to a level last experienced in 2013. The 2016 figure marked the second year of declines from a ten-year peak of $78.4 billion in 2014: in 2015 broadband investment was $77.9 billion.
USTelecom noted many factors can impact broadband spending, including competition, financial markets, taxes, government mandates, project timelines and regulation. However, the association highlighted the timing of the recent drops in relation to the Federal Communications Commission’s (FCC) introduction of the Title II Open Internet Order, more commonly known as net neutrality, in mid 2015.
The association was one of several industry groups which opposed the order and took the FCC to court in an attempt to overturn the rules.
“USTelecom does not attempt to isolate and control for [sic] the various factors and therefore does not draw conclusions about the extent to which Title II may have caused the decline in capital investment,” the association wrote: “Nevertheless, the two-year investment decline clearly raises questions about the impact that the FCC’s open internet regulations may have had on overall industry broadband investment.”
Is Title II to blame?
Older figures from USTelecom show an ebb and flow in broadband investment levels over time. For instance, spending rose from $55.3 billion in 1996 to $118.1 billion in 2000 before dropping back down to $57 billion in 2003. Investment figures then rose slowly into the low-$70 billion range before slumping back into the upper $60 billion range during the 2008-2009 US recession.
FCC Commissioner Mignon Clyburn previously disputed the idea the Open Internet Order is to blame for the dip in broadband spending, noting the most recent slide began before the measure was implemented.
Responding to the release of the FCC’s mobile competition report in September, Clyburn noted the document left out data from previous iterations of the report which showed “investment from all commercial wireless companies declined from $33.1 billion in 2013 to $30.9 billion in 2015.”
“In case you missed it, those reports predated the 2015 Order. Also, despite my request, this report does not include CTIA’s investment data indicating that investment per consumer measurements declined from 2006 to 2009. Just in case you missed it again, that predates the 2015 and 2010 Open Internet Orders,” Clyburn argued.
“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 added.