By David Meyer
February 7, 2019

When telecommunications operators successfully lobbied U.S. regulators to scrap net neutrality, one of their main claims was that the rules held them back from investing more in their networks. If they can’t charge online companies to make their services work faster, the argument went, then the network operators are less likely to invest in improving their infrastructure.

So, with net neutrality officially dead in the U.S., at least at the federal level, how’s that working out?

The carriers are in fact now investing less than when the Federal Communications Commission (FCC) rules were in place, the Financial Times figured out by looking at their most recent earnings reports.

The big four—Verizon, AT&T, Comcast and Charter—collectively spent $56.9 billion in capital expenditure during 2018, down from $57.1 billion the year before. That’s the first drop in three years, which also happens to roughly correspond with the period during which the Obama-era rules were in place.

The smaller Sprint did spend significantly more on capex last year—$3.8 billion rather than 2017’s $2.5 billion—but it told the FT that this had “nothing to do with net neutrality.”

In fairness, these are still early days for the new regime. The FCC may have decided to kill off net neutrality at the end of 2017, but the change only went into effect last June. And, as telecoms analyst Craig Moffett told the FT, the change in FCC policy is subject to a lot of “legal and politic volatility,” making it a less-than-great basis for long-term investment decisions.

Indeed, several states have introduced their own net neutrality mandates, leading the Justice Department to sue California over such a move.

It’s also a near certainty that, if the Democrats take control again in next year’s election, net neutrality will be restored as FCC policy. The lack of any demonstrable capex boost in the wake of the recent repeal will certainly not help the operators’ case if they try to fight that outcome.

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