Pai justifies his NN choice with the claim, "The impact has been particularly serious for smaller Internet service providers." #wrong (Actually, NN has minimal effects on investment, up or down, I’m convinced. Competition, new technology, customer demand and similar are far more important.)

The two largest suppliers to “smaller ISPs” saw sales go up. Adtran's sales the most recent nine months were $540M, up from $473M the year before. 2016 was $636M, 2015 $600M. Calix the last nine months sold $372M, up from $327M. The full year 2016 was $459M, up from $407M in 2015. Clearfield, a supplier of fiber optic gear, was up 8% in sales in the smaller ISPs.

There is nothing in the data from others that suggests an alternate trend.

The results in larger companies are ambiguous. I can "prove" capex went up or went down by selecting the right data.

Anyone could have found this data in a few minutes from the company quarterly reports. Pai offered no numbers to back that up. He based that claim on what he heard from fewer than 5% of the smaller service providers. They provided no figures. Pai strongly opposed Net Neutrality. It's reasonable to assume the handful of people he's citing wanted to say something he would agree with.

It's also reasonable to assume that his "confirmation bias" would make it hard for him to hear contrary evidence, such as the clear comments of the biggest suppliers in this space. I constantly have to fight a similar problem.

For example, I've spent over a decade reporting DSL and landline broadband. It was hard for me to see how important mobile broadband is becoming. Eventually, I've come to recognize the impact, probably two years later than I should have seen it. Landlines are still important - AT&T is extending 3M/year - but wireless is now good enough for many people.

Japan has fiber almost everywhere, but Softbank reports ~3M have chosen to use mobile broadband instead. The convenience of connecting 15 minutes after you bring a modem home was more important to them than the greater performance of wireless. Most were young people who could take the modem with them if they moved. (I was surprised by this, so I doublechecked.)

Actually, whether capex went up or down in 2016 tells us almost nothing about the choice on neutrality. Everyone knows a single datapoint could be random or due to other causes.

Even if he had enough data to have some hypothesis, any statistician would require he eliminate "confounding variables" - other reasons to explain the effects he sees. In this case, many are well-known. AT&T, the largest spender, had told Wall Street before Title II was considered likely that it intended to cut capital spending. They were finishing a large project of bringing LTE to 97% of the U.S. and would now reduce capex. This was well-known. Less discussed was that they also had finished a very large project of extending fiber to a million business locations.

In addition, 5G technology was not ready to deploy in 2015-2017. At the time, that was expected to be the next big telco investment. 5G will be modest in 2018 but likely will pick up in 2019 and 2020 at AT&T. In the last two months, Verizon has said the reach is better than expected so the spending bump won't be necessary.

Other factors loom large in carrier investment. In over 15 years of listening to CFO's and CTO's explaining capex decisions, I've nearly never heard investment attributed to any government action  They are fat more likely to cite competition worries, better technology, and customer demand.

Competition often inspires investment. Verizon President Larry Babbio told me they built Fios, the largest fiber network in the western world, because "We have to get cable out of the house." Cablevision was taking away too many customers. More recently, Verizon's successful first in the world large LTE network was killing AT&T, which was upgrading more slowly. AT&T added several billion dollars to capex after 2011 to catch up.

Cecilia Kang at the Times and the other D.C. reporters knew the decision was coming. Pai made this claim in the past, so they should have found the data. "The usual sources" in D.C. are typically unreliable about the telecom world outside Washington. Both left and right suffer from Beltway Blindness. 

The results in larger companies are ambiguous. I can "prove" capex went up or down.

The results in the larger companies were more ambiguous. "

The four largest companies' capex - two/thirds of the total - went up from $52.7B in 2015 to $55.7B in 2016, an increase in line with sales. The result remains positive after making sensible adjustments for mergers and acquisitions. That's as close to "proving" that NN led to increased spending as the facts chosen to prove the opposite.

I could also find data that shows spending going down. To get meaningful results, you have to choose the right data set.

Pai cites a paper by Bob Hahn here. Hahn happens to be a strong opponent of Neutrality. The telcos are important clients to him. That doesn't mean he's wrong, but it's irresponsible not to look at the assumptions in his work. In fact, a Neutrality proponent has done that. Making different assumptions, he came to the opposite conclusion. Both points of view are totally unproven because of inadequate data.

Probably, the effect of NN on investment is minimal in either direction, but even I don't have enough data to be certain.

 

For the record: I have supported Net Neutrality since 1999. It's my job to report accurately no matter what my personal opinion. I have written, "The claims from some people who agree with me are ridiculous.  According to former FCC commissioner Michael Copps, ending net neutrality will end the Internet as we know it. http://bit.ly/2it1FkY Michael knows I respect him, but this is ridiculous.

The world needs a good news source on Internet and telecom policy. I hope to create one. Catch a mistake? Email me please.  Dave Burstein

Latest

Professor Noam's "Many Internets" http://bit.ly/ManyNets

Until about 2010, everyone agreed the Net was a "network of networks," not a monolithic entity. There was a central authority, ICANN, keeping track of domain names, but that was a minor administrative function.
Columbia Professor Noam suggests we might be better off accepting that some nations or groups might want to organize their networks differently. It's easy to see demand for an Internet with much more effective filters against material some think harmful to children. (Any 10 year old can easily find porn today. Many do.)
Internet translation is getting better very quickly. You might want an "Internet" that translates everything into your language. Google Chrome translation isn't perfect but I was able to research most of this story on Russian language sites. With a few more years progress, I might welcome an alternate that brings me everything in English, including caching for better performance.
De facto, Internet news is already split, as hundreds of millions only get their news from Facebook. Google AMP pages, including for news, also favor selected parts of the net
Centralizing the DNS doesn't prevent censorship, as the Chinese have demonstrated. There are many Jewish and Muslim fundamentalists who want to block what they consider blasphemy and limit free speech. See http://www.nytimes.com/2012/05/21/nyregion/ultra-orthodox-jews-hold-rally-on-internet-at-citi-field.html . More from Noam http://bit.ly/ManyNets

Russia Orders Alternate Root Internet System http://bit.ly/RussiaDNS
It's actually practical and not necessarily a problem.The Security Council of the Russian Federation, headed by Vladimir Putin, has ordered the "government to develop an independent internet infrastructure for BRICS nations, which would continue to work in the event of global internet malfunctions ... This system would be used by countries of the BRICS bloc – Brazil, Russia, India, China and South Africa." RT
Columbia University Professor Eli Noam and then ICANN CEO Fadi Chehadé have both said such a system is perfectly practical as long as there is robust interconnection.
Actually, the battle over ICANN and domain names is essentially symbolic. Managing the DNS is a relatively insignificant task, more clerical than governing. ICANN Chair Steve Crocker pointed out they had very little to do with policy.
Some will claim this is about blocking free speech but that's rhetoric. Russia doesn't need to fiddle with the DNS for censorship, as the Chinese have demonstrated. The wonders of the Internet will continue so long as the resulting nets" are robustly connected. The ICANN and U.S. policy goal should be to help create that system for interconnection.
I expect contentions that “The Russians are taking over our Internet” and “They are splitting the Internet.” The Internet is a “Network of Networks.” It is not a monolith so what would “splitting” it mean or do?
After the WCIT, China realized that ICANN and the DNS are side issues not worth bothering about. They have been building alternate institutions including the World Internet Summit in Wuzhan and the BRICs conferences.  The Chinese have put their main work where decisions that matter are made. Wireless standards are set by 3GPP, where nothing can be approved without China's consent.
The American battle at ITU is proving to be a historic mistake.
Why does Russia want an independent Internet?
They fear that Western sanctions on Russia could cripple the Russian Net. Communications minister, Nikolay Nikiforov, worries about, "a scenario where our esteemed partners would suddenly decide to disconnect us from the internet." I think that's highly unlikely but Nikiforov points out, “Recently, Russia is being addressed in a language of unilateral sanctions: first, our credit cards are being cut off; then the European Parliament says that they’ll disconnect us from SWIFT."
It makes sense for the Russians to be prepared for such a contingency as the Cold War has been warming up on both sides. "Britain's top military chief Air Chief Marshal Sir Stuart Peach just made headlines warning Russian subs "could CRIPPLE Britain by cutting undefended undersea internet cables." Much more http://bit.ly/RussiaDNS

ICANN Continues Excluding Russia & China From the Board http://bit.ly/CEOPromises
No wonder Russia wants an alternate root. Three years ago, ICANN CEO Fadi Chehadé promised "a seat at the table" to Chinese Premier Li. ICANN welched and this year added two more Americans.
Almost all the ICANN board is from the U.S. and close allies; only about 4 of the 18 board members are from countries on the other side of the North/South divide in Internet policy.  Claiming ICANN represents the Global Internet is inappropriate. China is 1/3rd of the Internet but has no representation on the board.
I know many of the board members. They are all basically honorable but generally share a strong opinion on North-South issues.
Larry Strickling of the U.S. government knew just what he was doing with the IANA transition. He handed over to a board with similar positions as the U.S. government.
"The system is unsustainable while it excludes half the world," I have been saying since 2012. More, including the transcript of Fadi's statements,http://bit.ly/CEOPromises

Sorry, Ajit Pai: Smaller Telcos Did Not Reduce Investment After NN Ruling http://bit.ly/SorryPai
Pai justifies his NN choice with the claim, "The impact has been particularly serious for smaller Internet service providers." #wrong (Actually, NN has minimal effects on investment, up or down, I’m convinced. Competition, new technology, customer demand and similar are far more important.)
The two largest suppliers to “smaller ISPs” saw sales go up. Adtran's sales the most recent nine months were $540M, up from $473M the year before. 2016 was $636M, 2015 $600M. Calix the last nine months sold $372M, up from $327M. The full year 2016 was $459M, up from $407M in 2015. Clearfield, a supplier of fiber optic gear, was up 8% in sales in the smaller ISPs.
There is nothing in the data from others that suggests an alternate trend. Anyone could have found this data in a few minutes from the company quarterly reports.
The results in larger companies are ambiguous. I can "prove" capex went up or went down by selecting the right data. The four largest companies' capex - two/thirds of the total - went up from $52.7B in 2015 to $55.7B in 2016. The result remains positive after making sensible adjustments for mergers and acquisitions. That's as close to "proving" that NN led to increased spending as the facts chosen to prove the opposite.
Actually, whether capex went up or down in 2016 tells us almost nothing about the choice on neutrality. Everyone knows a single datapoint could be random or due to other causes. Much more, including the source of the errors http://bit.ly/SorryPai

Elders Bearing Witness: Vint, Timbl, & Many More http://bit.ly/VintTim
Vint Cerf, Tim Berners-Lee, Steve Wozniak and more than a dozen true Internet pioneers wrote Congress to protect Neutrality. The best Congress money can buy didn't listen but I wanted to reproduce their letter.
I hope they are wrong believing "is an imminent threat to the Internet we worked so hard to create." My take is the impact will be moderate in the short run.
From the letter:
We are the pioneers and technologists who created and now operate the Internet, and some of the innovators and business people who, like many others, depend on it for our livelihood. ... The FCC’s proposed Order is based on a flawed and factually inaccurate understanding of Internet technology. These flaws and inaccuracies were documented in detail in a 43-page-long joint comment signed by over 200 of the most prominent Internet pioneers and engineers and submitted to the FCC on July 17, 2017.
Despite this comment, the FCC did not correct its misunderstandings, but instead premised the proposed Order on the very technical flaws the comment explained. The technically-incorrect proposed Order ... More, including the full list, http://bit.ly/VintTim