With the caveat that in many ways lower capital investment in communications networks sometimes can be viewed as a positive, utility regulation of internet access had a negative $10 billion to $13 billion impact on capital investment by U.S. internet service providers, according to Dr. George Ford, Phoenix Center for Advanced Legal and Economic Public Policy Analysis chief economist.
“I find that while the decline in capital spending rose in 2015 and 2016 stopped in 2017, investment in the telecommunications sector is materially compressed, being about $10-to-$13 billion (or 12-to-15 percent) below expectations,” says Ford.
Since 2015, some $24-to-$30 billion in investment has been lost because of Title II regulation, Ford argues.
“Capital spending is a cost, not a benefit,” Ford says. The point is that “higher capex” is not important in and of itself, but only as it delivers consumer benefits. “If the same level of benefits could be obtained at a lower level of capital spending, then society would be better off,” Ford notes.
That might well be the case in coming years, in part because 5G might be able to supply end user benefits at lower costs than fixed networks. Others might point out that increasing use of open source technology, unlicensed or shared spectrum, spectrum aggregation and other tools might also help moderate capital investment requirements.
“Analysis of recent capital spending trends suggests many of the larger providers of broadband services— including AT&T, Comcast and Charter—are not spending as much as expected in 2018, and Verizon has indicated it will materially reduce capital spending for 2018 and 2019,” Ford notes.
The main point is that internet service provider capital investment during the 2015 to 2017 period of common carrier regulation reduced capital investment by $24 billion to $30 billion. Continued uncertainty about a possible return of such regulation might also be depressing investment n 2018, Ford suggests.
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