Title II kills investment? Comcast and other ISPs are now spending more | Hacker News Reader

Title II kills investment? Comcast and other ISPs are now spending more

arstechnica.com

53 pointsDeinos22 comments

why is "investment" the primary benchmark? if the costs of deploying services dropped (hardware costs dropped a lot, reliability improvements meant fewer replacements, etc), and someone's spending just remained the same for a year, is that 'reduced investment'? And is that bad? It's far too simplistic a measure. Are they serving more customers, and is customer satisfaction improving? Those seem like much better metrics to track than 'investment'.

Agreed - I think this article is highlighting monetary investment, since that was a metric the telecom industry claimed Title II net neutrality would reduce.

> why is "investment" the primary benchmark?

I agree that dollar amount is probably not the best metric, but it was one of the metrics that companies argued would be reduced as a result of common-carrier regulation. So, I suspect this article is a direct response to that. Despite the likely existence of better metrics, since the companies claimed investment would be hurt, it's useful to actually examine their claim directly.

> why is "investment" the primary benchmark?

Because consumers want faster speeds, lower latency, and/or expansion of coverage (to areas that currently don't have fast speeds - or even broadband internet at all).

That all qualifies as investment. If we were talking about something that is a pure commodity utility with pretty much no ongoing technological improvement, like water[0], then investment is less important than ongoing maintenance.

But our Internet is a piece of infrastructure that's constantly evolving, and keeping up with increasing expectations requires investment.

> Are they serving more customers, and is customer satisfaction improving?

Serving more customers almost certainly requires investment. Customer satisfaction probably does too.

Yes, there are other factors which affect those two metrics besides investment, but investment is one that is very easy to measure and is a leading indicator (whereas those two are both lagging - the results are only observed long after the actual work has taken place).

[0] There are plenty of technologies associated with better and/or more environmentally friendly ways to supply and deliver water, but the point is that to the consumer they're all the same. Nobody is clamoring that they want water 2.0, which is wetter than water 1.0.

There's absolutely no incentive to ever cut costs then, because any reduction in cost would be counted as 'non-investment', and be taken as a sign that things are moving backwards.

How did you arrive at that conclusion? You could make an investment now in infrastructure to reduce your long term costs. It's not about the cost of delivering service, it's about how much service is expanding, as measured by purchases of networking infrastructure.

I'm still a firm believer that when these companies can't rely on artificial limitations to service speed, their only choice is to improve their actual service compared to their (sorry for using this dirty word...) competitors.

Why is "competitors" a dirty word?

Because competition requires capital investment to be better than the competition. Capital investment reduces what can be taken as profit. Profit should be above all else, so therefore huge corporations have an incentive to encourage regulations that prevent competition. It's pretty much the exact opposite of what Ayn Rand thought would happen, despite the fact that it's a glaringly obvious conclusion.

Government regulations and business are both part of an ecosystem we call "the economy." In order for that ecosystem to be healthy, we must balance regulation and business, because when one is too powerful, the economy stagnates causing problems like we had in the Great Recession. We let banks get too big, and they fell on us. Water monopolies always fail. Always.

Because in this context it's a bit dishonest. In most markets, cable companies don't face any direct competition to their higher tiers of service. The only pressures they're subject to are the threats of customers leaving them geographically or an upstart like Google Fiber moving in. Cable companies aren't completely insulated, but they still operate in a highly dysfunctional market where most of what you'd be tempted to call the competition shouldn't properly be regarded as such. And they like it that way.

The article links to the 3rd Quarter Financial Results report from Comcast. It is far more informative than the actual article is.

Comcast appears to be spending more because they had a good quarter.

    Revenue for Cable Communications increased 6.3% to $11.7 billion in the third quarter of 2015 compared to $11.0 billion in the third quarter of 2014, driven by increases of 10.2% in high-speed Internet, 19.5% in business services and 3.3% in video.

6.3% is pretty great.

    The increase in Cable revenue reflects increased customer relationships (see below), customers receiving higher levels of service and customers taking additional services, as well as rate adjustments.

"Higher levels of service" refers to customers opting for faster connection speeds. Consumers appeared to be willing to purchase better plans from Comcast despite whatever regulations have been put into place recently.

"Increased customer relationships" refers to the number of people they've been successful at roping back into their cable TV ecosystem. How? By putting streaming video onto college campuses.

The report later states:

    Video net losses improved 40.6% year-over-year to 48,000 and were the best result for a third quarter in nine years

Why?

    The improvement in video customer net losses in the third quarter of 2015 includes an 11,000 increase in net additions, compared to the third quarter of 2014, related to schools participating in our Xfinity On Campus service.

OK -- so Comcast has had a huge spike in high speed internet sales thanks to customers wanting upgrades, and they have had a huge decrease in losses in their cable television market thanks to customers leveraging their new streaming TV service. Given that some of their services have seen 20% revenue increases year-over-year, an 11% increase in expenses is not exactly what I'd call absurd.

And I don't really want to pour through this document any further, but we shouldn't forget that debt payments and all sorts of corporate nonsense can cause spikes in operating costs, investments, expenses, etc., which may tell part of the story.

Overall, I for one am a bit disappointed that Ars Technica would stoop so low towards the territory of populist journalism. They have misrepresented and editorialized cold-hard facts in an offensively blatant fashion. Let me point out that I fucking hate Comcast as a service, a company, and a concept. So I am not shilling for them. But come on, Ars Technica is really losing face by posting this kind of nonsense.

Don't forget opportunity cost. Sure they may be investing, but if government weren't imposing a distortion, they could be investing better.

better from the point of view of their shareholders/board, not nessisarily better from the point of view of the public.

That sort of 'logic' can be used to argue against any decision that someone doesn't like, that can't be fully controlled for. "Oh, sure, ever since X happened Y has occurred, but you never know what >Y might have happened if only X hadn't, despite all historical data to the contrary!"

Their logic is faulty, but opportunity costs are very real and routinely analyzed in many domains, ranging from systems engineering to advertising.

Yes, but such analysis involves formal models, so in the absence of such models we can safely shout "quackery!".

Or at least -some- sort of suggested mechanism by which that opportunity could and would have been exercised.

"They could have invested better" - sure, they probably could have. However, there is no reason to believe they -would- have invested in a way that better serves their customers (or whatever 'better' means, that isn't just maintain the status quo), given they never have shown any inkling to do so in the past. Given no proposed catalyst to cause a change on their part, there is no reason to believe they would have changed; ergo, this particular change's leading to 'better' results equals a better outcome than this change not having occurred.

It's not general X and Y in play here. It's government overriding the efficiency that normally results from competitive allocation of resources.

You have missed lostcolony's point. This sub-thread [0] should make it clear to you.

[0] https://news.ycombinator.com/item?id=10482564

> ...if government weren't imposing a distortion...

Interesting change of tune from our last conversation about a tremendously similar sort of thing. ;)

You would do well to learn about the dirty details of telecom subsidies, tax breaks, dirty tricks, and broken promises over the past several decades.

It sounds like the same tune to me.

I'm unsurprised to hear you say that.

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