Award Winning Blog

Friday, April 3, 2020

Lies, Damn Lies and Wall Street Journal Editorials

            By way of full disclosure, I should report that I subscribe to the Wall Street Journal and benefit from its news reporting.  However, my mental and emotional wellbeing also benefits if I ignore obvious mistruths in countless editorials and columns, particularly ones about telecommunications and the Internet.   I have wasted countless hours trying to set the record straight when some ideolog misrepresents the truth to make some intellectually dishonest point.

            Imagine that: fake news and untruths from the Wall Street Journal.

            Today’s mistruth, on pA16 (Faster Internet Is on the Way): “American’s working at home would be in a much worse position in this pandemic is the Obama [Network Neutrality] rules were still in place.”

            Editorial writers at business publications know—or should know—that variation in regulatory scope and even so-called regulatory uncertainty has limited, if any, impact on the need for capital expenditures and a venture’s decision to make the inevstment.  Put another way, whether the FCC does or does not impose Network Neutrality rules has no major impact on a carrier’s incentive and need to invest in infrastructure.

            Does anyone truly and honestly believe that wireless carriers in the U.S. would take a “pass” on 5G investment if the FCC still had open access requirements?  Let me restate something obvious: carriers invest out of competitive necessity and when technological innovations provide opportunities for more revenues and consumer satisfaction.  Network Neutrality rules might motivate carriers might try to grab spectrum at auction for less money, but doing so only provides evidence that the rules possibly might dampen profitability, not investment incentives. 

By the way, any profit dampening would have little impact on the incentive and ability of U.S. wireless carriers to make necessary investment.  For years, Sprint’s major investor, Japan’s  Softbank, and TMobile’s Deutsche Telekom made necessary investments.  Failing to do so would risk ruin, including the billions of dollars in “sunk investments.”

            I’m skeptical whether Network Neutrality would reduce carrier revenues and profitability.  Even FCC Chairman Ajit Pai never got around to explaining how Network Neutrality rules would deprive carriers of robust, revenue streams.  It was all about less incentives for investment, innovation and employment.

            Ironically, the fact that U.S. wireless carriers have managed to accommodate increased demand supports my premise.  The coronavirus would have stimulated demand regardless of whether “Obama rules” or “Trump Rules” were in effect.  The Journal editorial writers surely can make no credible argument that wireless carriers somehow would be unable or unwilling to satisfy wireless network demand.  A carrier either makes a network investment, or not, based on anticipated demand and expectations of growth in that demand.  No one believes that Network Neutrality rules would have stifled consumer demand for more bandwidth and greater transmission speeds.  The opposite seems more likely.

I have never been a Network Neutrality “true believer,” but some positive outcome seem crystal clear.  Wireless carriers have maneuvered through a rising tide of demand to the benefit of everyone, not just an exclusive group whose rate plan qualifies them for preferred access to scarce network resources.

Perhaps someday the Journal editorial writers will understand the difference between public access to a service akin to a basic necessity and a surcharge to jump the queue at a Disney theme park ride.