Pai: Title II Has Depressed Broadband Investment

Says Warnings About Reclassification Proving True

WASHINGTON -- FCC commissioner Ajit Pai said that the "facts and evidence" suggest the agency's decision to impose Title II regulations on broadband -- he still calls the move the "Obama decision" -- has indeed slowed infrastructure investment and deployment, as he and ISPs had predicted.

Commission chairman Tom Wheeler and other Title II backers had dismissed arguments that classifying broadband as a common-carrier service would depress investment, and Pai said in a speech to the American Enterprise Institute Wednesday (Sept. 9) that he had no doubt they "desperately hoped for their forecast to come true."

But Pai, leaning on the kind of historical reference that Wheeler is noted for, said that "as John Adams warned over two centuries ago, 'Whatever may be our wishes, our inclinations or the dictates of our passions, they cannot alter the state of facts and evidence.'”

As evidence, Pai pointed to research that showed a 12% decline in capital expenditures by the major wireless carriers in the first half of 2015 compared with the same time period in 2014, when the FCC was still expected to restore Open Internet rules without reclassifying broadband.

"Only twice before have broadband service providers’ capital expenditures fallen on a year-over-year basis: following the bust in 2001 and the Great Recession in 2008," Pai said.

"In my statement dissenting from the commission’s Title II decision, I warned that '[b]roadband networks don’t have to be built; capital doesn’t have to be invested here,'" Pai said. "'Risks don’t have to be taken. The more difficult the FCC makes the business case for deployment — and micromanaging everything from interconnection to service plans makes it difficult indeed — the less likely it is that broadband providers big and small will connect Americans with digital opportunities.'  And that, I fear, is what we are now witnessing."

Pai suggested noone should be surprised at that outcome. "When the FCC makes it less attractive for broadband providers to invest in networks serving the American people, they will find other places to put their money,:" he said.

The Republican commissioner did not lay all the blame at the feet of Title II, though he was placing it at the FCC and what he said were decisions to slow the IP transition by making it harder for carriers to retire legacy copper networks. "These regulatory roadblocks are bad for consumers, bad for infrastructure investment and bad for our nation’s economic competitiveness," he said.

Pai's speech came only days before the FCC's Sept. 14 deadline for its brief defending Title II reclassification against lawsuits filed by cable and telco ISPs, VoIP pioneers and others.