U.S. Broadband Providers Made Strong Capital Expenditures in 2023

Capital expenditures by U.S. broadband providers totaled $94.7 billion in 2023, according to the 2023 USTelecom Capital Expenditure Report. USTelecom's report was released on October 18. 

According to USTelecom, the $94.7 billion figure is the second highest annual industry capex in 22 years. USTelecom's 2023 report indicates that U.S. broadband providers have invested over $2.2 trillion in network infrastructure since 1996. In reports for prior years, USTelecom has noted that its capex estimates likely are conservative because they have not included investment by small U.S. broadband providers or U.S. satellite broadband providers.

Continuing strong investment is a clear indicator of a competitive broadband market environment. On July 6 of this year, the Free State Foundation offered many other data points about the market's vibrancy in public comments it submitted in the FCC's 2024 Communications Marketplace Report proceeding. Additionally, on October 7, FSF submitted public comments to the FCC in the agency’s proceeding for the upcoming Eighteenth Section 706 Report. Those comments include data points supporting the conclusion that broadband service is being reasonably and timely deployed to all Americans. Sustaining that progress in deployment will depend on private market investment remaining high and undeterred by regulatory barriers. 

USTelecom Reports Record-Breaking Investment Broadband by Providers in 2022

Capital expenditures by U.S. broadband providers surged to $102.4 billion in 2022, according to USTelecom's "2022 Broadband Capex Report." USTelecom's snapshot report was released on September 8 of this year. 

The $102.4 billion annual capex total is up from $86 billion in 2021 and $79.4 billion in 2020. According to USTelecom's 2022 report, U.S. broadband providers have invested over $2.1 trillion in network infrastructure since 1996. In past reports, USTelecom has pointed out that these estimates likely are conservative because they exclude annual investment by small U.S. broadband providers as well as U.S. satellite broadband providers.

Strong private investment in next-generation networks is an intended result of the FCC's free market-friendly broadband policy that has been in place since early 2018. In its Restoring Internet Freedom Order (2018), the Commission recognized that "increased broadband deployment and subscribership require investment, and the regulatory climate affects investment." In that order, the Commission found that "reinstating the information service classification for broadband Internet access service is more likely to encourage broadband investment and innovation" than subjecting broadband Internet access services to public utility regulation." 

 

Following the Senate's confirmation of Anna Gomez to be the fifth Commissioner on September 7, it is widely anticipated that the FCC will be revisiting the statutory classification of broadband Internet access services. But the success of the Commission's existing market-oriented policy in promoting investment – including $102.4 billion in capital investment in broadband by private market providers in 2022 – deserves front-and-center attention when the debate over broadband regulatory policy ramps up. 

In the Face of Inflation, Prices Fall for Internet and Wireless Services

On October 13, the U.S. Bureau of Labor Statistics released Consumer Price Index (CPI) data for September 2022. The overall CPI for September 2022 showed a sharp year over year increase of 8.2%, as Americans continue to be battered by inflation. However, CPI data for September 2022 shows significantly smaller increases or even slight decreases for communications and multi-channel video programming distributor (MVPD) services. Residential landline services have risen 3.6% year over year, and satellite and cable TV subscription services have gone up just 2.2%. Meanwhile, prices for internet services actually decreased 0.01% year over year, and prices for wireless services decreased 1.1% over that same timespan. 

One cannot reasonably or honestly deny that Americans are facing serious hardships due to high inflation. But the fact that communications and MVPD services are outperforming the bad inflationary trends – and even holding the line in the face of those trends for Internet and wireless services – is a testament to the strong private network investment and the competition in those markets. As USTelecom has reported, broadband providers' capital expenditures reached $86 billion in 2021. And CTIA reported that wireless providers' capital expenditures totaled $35 billion last year. Those investments have increased fixed and wireless broadband network capacities and geographic reach, giving overwhelmingly most consumers competing choices across platforms.
 

To help ensure pro-consumer pricing trends continue in fixed and mobile broadband Internet access services, the FCC should continue adhering to the light-touch regulatory framework that it applies to those services under Title I of the Communications Act. The Commission should maintain its reforms that bar unreasonable local permitting process delays for constructing wirelines and wireline infrastructure facilities as well as for making minor modifications and upgrades. And the Commission should act as quickly as it reasonably can to repurpose more spectrum for licensed commercial wireless use, including in the lower 3 GHz band. Promoting market investment and competition offer the best practical means for the Commission to ensure broadband availability and affordability. 

 

P.S. For an examination of broadband pricing trends against a longer timeframe, see Free State Foundation Senior Fellow Andrew Long's June 30 blog post, "2022 USTelecom Broadband Pricing Report: Further Proof that Competition is Benefiting Consumers. 

Capital Expenditures by US Broadband Providers Surged in 2021

Capital expenditures by U.S. broadband providers surged to over $86 billion in 2021, according to US Telecom's 2021 Broadband Capex Report. US Telecom's report was released on July 18. 

The $86.1 billion annual capex total is particularly remarkable considering the economic difficulties that broadband providers faced in 2021, including microchip shortages, labor shortages, supply chain problems, and the ramping up of inflation. The $86.1 billion in capex for 2021 significantly exceeded the $79.4 annual expenditure total for broadband providers in 2020. (For more on that, see US Telecom's 2020 Broadband Capex Report.) According to US Telecom's 2021 report, U.S. broadband providers have invested over $2 trillion in network infrastructure since 1996. In past reports, US Telecom has pointed out that these estimates likely are conservative because they exclude annual investment by small U.S. broadband providers as well as U.S. satellite broadband providers.

Continuing strong investment is clear indicator of a healthy and competitive broadband services market. (On July 1 of this year, the Free State Foundation offered many other data points about the market's vibrancy in comments it filed in the FCC's 2022 Communications Marketplace Report proceeding.) Importantly, the massive capital expenditure reported by US Telecom is expanding access to next-generation broadband services and delivering faster and more reliable speeds to more Americans.  

US Beats the EU in Head-to-Head Comparison of Broadband Trends

On April 4, USTelecom released a report titled US vs. EU Broadband Trends: 2012-2020. The new report highlights several different metrics by which the broadband Internet services market in America is outperforming the market in European Union nations.

Among its contents, USTelecom's report includes these key findings:

• Deployment: US leads by 11 percentage points ≥30 Mbps; +25 pp ≥100 Mbps 
• Adoption: US leads by 10 pp ≥25 Mbps; +21 pp ≥100 Mbps 
• Competition: US benefits from nearly twice the fixed facilities-based competition of the EU overall; when comparing rural areas, the US lead extends to 7x. 

The US beats the EU by a particularly wide margin when it comes to high-speed fixed broadband in rural areas. USTelecom found that 91% of rural areas in America were covered with fixed broadband compared to 60% in the EU – a staggering 31% difference. Indeed, fixed broadband coverage in the US even exceeded fixed broadband coverage for all areas in the EU, 91% to 87%.

 

A critical reason for America's broadband advantage over the EU is the heavy investment in broadband infrastructure in the US, as seen in the following charts excerpted from the report:

 

(click to magnify)

For more on US versus EU comparisons on broadband, see USTelecom's report.

Strong Network Investment by U.S. Broadband Providers in Tumultuous 2020

Capital expenditures in networks and connectivity infrastructure by U.S. broadband providers totaled $79.4 billion in 2020, according to US Telecom's 2020 Broadband Capex Report. US Telecom's report was released on September 22.  

The $79.4 annual expenditure total is impressive considering the seismic economic disruptions and setbacks suffered by much of the U.S. economy in 2020. Last year's investment by U.S. broadband providers brings the total network capital investment by U.S. broadband providers since 1996 to a whopping $1.9 trillion. And as US Telecom's report points out, its estimates over the years likely are conservative since they exclude annual investment by small U.S. broadband providers as well as U.S. satellite broadband providers. Small providers and satellite providers made perhaps $2 billion in network investments in 2020. 

As I and other Free State Foundation scholars have pointed out in prior publications, continuing strong investment enabled U.S. broadband networks to successfully carry surging data traffic induced by COVID fears and government-imposed lockdowns in 2020. 

For more, see the 2020 Broadband Capex Report as well as a brief article about it by US Telecom's Mike Saperstein.  

Michigan Legislature Holds Hearing on Bills to Streamline Private Broadband Deployment

A bipartisan group of state representatives in Michigan introduced a package of bills that would limit fees, streamline permits, prohibit public funds from being spent on municipal broadband projects, and generally make it easier for private network providers to ensure high-speed Internet services.

The bills in the package are HB 5096, to cap the amount local government can charge broadband providers for rights-of-way; HB 5097, to cap the fee a county can charge a broadband provider for repair or maintenance in a right of way and also limit the bonding requirements that can be imposed; HB 5098, which would impose notification requirements for a local government or state agency that requires an Internet provider to temporarily move wires or other infrastructure due to roadwork or other projects, and prohibit charging the provider a permit fee to do the required work; and HB 5099, which would prevent local governments in the state from using public funds to pay for the cost of providing Internet service.

I had the opportunity to appear before the Michigan House Committee on Communications and Technology on October 24, 2017. I commend Committee Chair Michele Hoitenga for convening the hearing on the proposed bills. My testimony before the committee is available here.

Capital Investment in Mobile Broadband

Mobile Investment
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