Some people, who really should know better, have combined
one questionable statistic with an absolutely unreasonable inference. Ostensibly to bolster their argument that the
FCC’s Open Internet Order will either enslave or impoverish carriers, sponsored
researchers and one or two easily-persuaded FCC Commissioners make this
unsustainable leap of faith:
Wireline broadband providers have reduced plant
investment following the FCC’s Open Internet Order. Therefore, the entire cause of this diminution
investment results from the Order.
Might there be alternative statistics that identify where
the money is going and what, if anything, has caused this sudden conservation
of capital?
First, when considering capital expenditure by companies
such as Verizon, converging markets and technologies, surely require an
examination of the many places money might go.
Verizon might perceive no competitive necessity to invest in wireline
broadband. Additionally the company
might prioritize investments in wireless plant, as part of a major strategy to
migrate from wired to wireless content distribution technologies. Verizon is aggressively jettisoning its
wireline plant and state franchises.
Speaking of content, didn’t Verizon recently come up with
a cool $4.4. billion to buy AOL whose major assets are content-based? Would Verizon skimp on all content
distribution technology after having just made a significant investment in
content? Didn’t AT&T just get
conditional approval to spend over $45 billion to acquire DirecTV, whose major
asset combines access to content and broadband distribution of it?
On the issue of incentive to invest, just today I read
how Verizon already wants to commit substantial funds for next generation, 5G
wireless broadband distribution technology. See http://www.verizon.com/about/news/verizon-sets-roadmap-5g-technology-us-field-trials-start-2016.
Bear in mind that Verizon Wireless
operates under the Title II, common carrier, telecommunications service
provider “public utility” regulatory model that some consider such an
investment buzz kill. Verizon seems to well
tolerate this regulatory burden and still manage to invest billion in plant.
It bears repeating time after time: competitive necessity
constitutes the major catalyst for capital expenditures, including next
generation network plant.
Verizon knows it has to enhance the value proposition for
wireless broadband. And it surely knows
the lack of competition means it does not have to extend its FiOS plant, or
rush to add funds to wireline technologies about which it does not care.