US Cable Firms’ Venture Plunge After Net Neutrality Repeal

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US Cable

The reason for net neutrality repeal is to encourage Internet Service Providers, telecom, and cable companies to broaden their coverage through additional expenditures. 

Federal Communications Commission chairman Ajit Pai and his agency decided to abolish net neutrality in December 2017 and took effect in June 2018. His objective is to give US cable and telecom companies the chance to improve their services through spending on new technology to “close the digital divide.”

He defended that net neutrality rules were holding back broadband providers from investing and hindering them from bettering their networks. But that was opposed by net neutrality advocates claiming that the scheme was just for profit and not to better serve consumers especially those in rural areas.

The commission’s rationalization for net neutrality repeal was most totally established on Pai’s forecast that free competition will boost network infrastructure spending. The thing is, it did not happen to Comcast. It’s large-scale use of data caps, which wasn’t prohibited by the FCC, could have helped the US cable company to limit its expenditure on network capacity upgrades.

However, US cable companies like Comcast decreased their capital expenditures for its cable division last year which is contrary to what Pai is expecting. The company’s total investment shrunk by 3%, even though the rollback of net neutrality is expected to beef up broadband network investment.

The cable division of Comcast allocated $7.95 billion on capital expenditures all through the calendar year 2017. But the investments dropped to $7.72 billion in a year ending on December 31 last year.

“Cable Communications’ capital expenditures decreased 3.0 percent to $7.7 billion, reflecting decreased spending on customer premise equipment and support capital, partially offset by higher investment in scalable infrastructure and line extensions,” according to Comcast’s earnings announcement.

The US cable company’s network spending would have ascended last year if only the FCC and Comcast’s predictions were accurate. Pai asserted that the net neutrality repeal has boosted the broadband capital spending.

Not only Comcast lowered its investment. Charter and Verizon mentioned last year that they will also decrease their capital spending and will begin this year.

Significantly, the yearly network expenditure is not a reputable indicator if broadband is growing or getting better. Spending frequently decreases, as technology advances. Besides, network spending especially of a US cable company is likely to “cumbersome” soaring and declining in association with technology upgrade phases.

Still, the rollback of net neutrality has not sealed the broadband gaps in rural areas, It is where industry trade groups noted they won’t broaden service except that the government provides them more direct financial support.

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