After Net Neutrality

TWO
THE BROADBAND CARTEL

Some of the most important
innovations in business in the
last three decades have centered
not on making the economy more
efficient but on how better to
ensure monopoly power or how
better to circumvent government
regulations intended to align social
returns and private rewards.

Joseph Stiglitz

After selecting Al Gore to be his running mate in the summer of 1992, presidential candidate Bill Clinton incorporated much of Gore’s technology policy agenda into his platform. Based on one of Gore’s most ambitious ideas, Clinton called for building an “information superhighway” through a massive New Deal–style public works program. The information superhighway was conceived of as a public network that would be constructed by the government and operated by the private sector, with substantial regulation and oversight by the public sector.1 Initially, this was a Keynesian social democratic program designed to stimulate demand during a time of economic malaise in the early 1990s, while also providing an important public good. However, after encountering vociferous opposition from Wall Street—particularly long-distance telephone companies—the administration quickly changed course and dropped references to public works and public investment in its subsequent proposals. The Clinton administration ultimately argued that “the private sector should lead” in the development of America’s internet infrastructure and that “innovation, expanded services, broader participation, and lower prices will arise in a market-driven arena, not in an environment that operates as a regulated industry.”2

This episode is emblematic of a shift from a Keynesian to a neoliberal or corporate libertarian public policy paradigm that privileges the interests of media corporations over the public good. This chapter shows how this commercial logic has been instrumental to the growth of monopoly power in the broadband industry over the last twenty years. We argue that the repeal of net neutrality is a symptom of the monopolistic structure of the broadband industry, particularly the immense market power wielded by the likes of Comcast, Verizon, and Charter.

Access Denied

In the 1990s, many commentators eagerly prophesied that the arrival of the internet signaled the imminent death of legacy telephone and cable companies. They speculated that internet-based applications such as VoIP (voice over IP) would replace the need for wired telephone service and that streaming online video would replace cable television amid an endless cycle of creative destruction that would be unleashed by the internet. “The rise of Skype and other VoIP services means nothing less than the death of the traditional telephone business, established over a century ago,” an article in the Economist confidently declared.3 What these prognostications did not account for, however, was that the digital revolution would transpire over the wires and cables of the very industries that were supposed to be disrupted: the internet itself was laid over the existing telecommunications infrastructure. The cable and telephone monopolies of the twentieth century would survive, and eventually thrive, in the digital era through their ownership of the networks that bring internet connectivity to home and business subscribers.

Though incumbent telephone and cable companies ran lines into most homes in the United States, it took a significant political struggle for these companies to become the country’s dominant internet service providers. The 1996 Telecommunications Act’s open-access requirement led to a brief period of fierce competition between incumbent telephone companies and independent internet service providers. By forcing telephone monopolies to lease their lines to independent ISPs, open access undermined the ability of telephone monopolies to conquer the market for internet access by closing their lines to potential competitors. As former FCC chairman William Kennard noted, “Introducing competition in monopoly markets requires consistent pro-competition intervention by the government.… This thought that if the government gets out of the way, competition will somehow spontaneously bloom, I just don’t get it.”4

Indeed, active government policy created the conditions necessary for a vibrant, competitive market for internet access to succeed by placing restraints on the private property rights of the telcos. Thousands of new independent ISPs, such as AOL and Earthlink, were established and competed by offering dial-up or DSL internet service over incumbent telephone companies’ copper telephone networks. By 1998, 92 percent of the U.S. population had the ability to choose between seven or more internet service providers just through their telephone line.5 Net neutrality advocates valued this burgeoning competition in the ISP market not only for its effect on quality of service and prices but also for its ability to prevent discrimination and other forms of predatory behavior by the incumbents. In a robust market for internet service, open-access advocates reasoned, consumers can punish ISPs that engage in discriminatory activity simply by switching providers. The FCC’s own research confirmed that open access networks deliver cheaper, better service courtesy of competition.6

However, this competitive market for internet service did not last long. Big telephone companies like AT&T and Sprint were loath to rent out their wires to independent ISPs at government-regulated rates that, they argued, were below what they would demand in commercial negotiations. Large cable companies like Comcast and Time Warner feared that they too would be reclassified as Title II common carriers and forced to allow independent ISPs to use their infrastructure. In the aftermath of the 1996 Telecommunications Act, telephone and cable corporations spent millions of dollars lobbying and litigating to repeal open access while perpetually underinvesting in their network infrastructure. As telecommunications scholar Rob Frieden observes, network operators “appeared more intent on competing in the courtroom than in the marketplace.”7

Eventually, as a result of the Supreme Court’s Brand X decision, most independent ISPs went out of business. Incumbent ISPs either closed their wires to the independents or imposed draconian conditions for leasing access to their networks that effectively prevented independent ISPs from competing against them. Time Warner, for instance, demanded that any independent ISP that wanted to continue to provide internet service over its network had to give Time Warner 75 percent of its subscriber revenues and 25 percent of any ancillary revenues.8 Whereas dozens of ISPs could provide internet access over a single copper telephone line in the 1990s, today most telephone, cable, or fiber-optic lines are exclusive to one ISP.

The defeat of open access created enormous barriers to competitive entry in the broadband market.9 In the absence of open access, independent ISPs that wish to challenge the broadband oligopoly are often forced to expend large amounts of capital to “overbuild”—that is, build new, redundant physical networks in cities and towns that are already served by a highspeed internet provider. Potential challengers to incumbent ISPs thus face enormous up-front construction costs that are only slowly recouped over a long period, provided they can outcompete the incumbent ISP for customers. Google’s failure in 2016 to make Google Fiber into a nationwide internet service demonstrates just how hard it is even for the most deeppocketed, long-term-oriented companies to break into the broadband market by building new facilities rather than by sharing existing ones.

Invoking phrases such as “forced access,” “forced entry,” and “infrastructure socialism,” opponents of open access framed their opposition in libertarian terms, as an unwarranted intrusion on the private property rights of internet service providers.10 In 2003, Republican FCC commissioner Michael Powell inveighed: “When someone advocates regulatory regimes for broadband that look like, smell like, feel like common carriage, scream at them! They will almost always suggest that it is just a ‘light touch.’ Demand to see the size of the hand that is going to lay its finger on the market. Insist on knowing where it all stops.”11 In a more measured critique of open access, in the Supreme Court’s 2004 Verizon Communications v. Trinko decision—a case in which independent ISPs accused Verizon of denying them access to Verizon’s network—conservative justice Antonin Scalia admonished that “enforced sharing also requires antitrust courts to act as central planners, identifying the proper price, quantity, and other terms of dealing—a role for which they are ill-suited.”12

In the libertarian discourse of “forced access,” the market is the fount of liberty and the state is an instrument of unjust hierarchy, centralization, and coercion. The irony here is that open access created a much more competitive, decentralized market for internet service in the United States than the closed access model has. By insisting that the property rights of incumbent ISPs were inviolable and that they had no obligation to share their infrastructure with independent ISPs, corporate libertarians sanctioned the development of an oligopolistic market for internet access. Moreover, although opposition to open access was often registered in anti-statist terms, as heavyhanded legislation imposed by “central planners,” the dominance of corporations like Comcast, Verizon, and AT&T is due in part to the historic role played by the government in shaping cable and telecommunications markets throughout the twentieth century. Indeed, today’s ISP empires are the offspring either of government-granted monopoly licenses for cable television systems or the state-protected Bell system of the twentieth century, which legally enshrined limits on competitive entry in the telecommunications market.

The erasure of the government’s critical role in the development of telecommunications technologies and markets implicitly positions large corporations as the lone engine of technological progress and miscasts the American state as an impediment to economic development. In fact, beyond the massive subsidies that we discussed earlier, the internet itself would have never developed during the dial-up era without common carrier laws. This was true for at least two reasons. First, Title II open access provisions created a vibrant market for internet access across the Unites States, which greatly aided in broadening internet adoption in the late 1990s and early 2000s. Second, common carrier rules forced telecom providers to allow their customers to use equipment and attach devices of their choice—including answering machines and fax machines—to their networks. The FCC’s landmark Carterfone decision in 1968 further established this protection by requiring AT&T and other telcos to allow interconnection of third-party equipment to their telephone network as long as it did not interfere with network operations.13 The Carterfone decision paved the way for the widespread adoption of a particularly important device: the modem. Prior to the ruling, AT&T was able to leverage its ownership of the nation’s telephone networks into a near monopoly in the telephone equipment market by preventing equipment manufactured by other companies from connecting to its network.14 While the policy roots of the internet’s ascendance are often omitted in popular origin narratives, they demonstrate that it was government—and not only the so-called free market—that drove the internet’s creation and expansion.

The War That Was Not Waged

In neoclassical economic thought, power is, by definition, absent from free market economies. As the Chicago School economist George J. Stigler says: “The essence of perfect competition is … the utter dispersion of power.” Stigler adds that power is “annihilated … just as a gallon of water is effectively annihilated if it is spread over a thousand acres.”15 Although contemporary adherents of neoclassical economics fetishize the virtue of unfettered markets, the deregulation of the telecommunication and cable industries in the name of boosting competition has, in practice, led to oligopoly and conglomeration.

The 1996 Telecommunications Act was supposed to unleash a Hobbesian “war of all against all” throughout the entire telecommunications industry.16 Over a decade in the making, the legislation was the handiwork of the “Gingrich class” of Republicans that were swept into power during the 1994 midterm elections, key members of the Clinton administration including Vice President Al Gore, and the thousands of industry lobbyists who were privately invited by policymakers to help craft the bill.17 Relaxing ownership restrictions and other regulations, policymakers argued, would result in local telephone companies (such as Verizon and Bell Atlantic), long-distance providers (such as AT&T and MCI), and cable companies all using their respective infrastructure to invade one another’s traditional bailiwicks and compete for market share. The hype was that the cable and telephone incumbents would be joined by satellite, wireless, and even electric companies (“broadband over powerline”) in offering internet access to consumers.

However, the 1996 Telecommunications Act spawned not cutthroat competition between telecommunications firms but a genteel détente between the largest cable and telephone companies. Instead of promoting ubiquitous competition, the Telecommunications Act precipitated what Schwartzman, Leanza, and Feld describe as “the greatest wave of media consolidation in history.”18 Given the opportunity to compete on one another’s turf, the eight regional Baby Bells that were created from the breakup of Ma Bell in 1984 instead opted to merge back together. Southwestern Bell Corporation (SBC) bought Pacific Telesis in 1997, Ameritech in 1999, AT&T in 2005 (Southwestern subsequently changed its name to AT&T and took on its branding), and Bell South in 2006. In 1997, Bell Atlantic and NYNEX merged in what was at the time the second-largest merger in American corporate history, changing the company’s name to Verizon in 2000 after acquiring GTE. Under the guise of liberalization, the horizontal integration of the former Baby Bells into AT&T and Verizon has created a highly concentrated wireless broadband market: together, these two companies account for more than two-thirds of the mobile wireless subscriptions in the United States.19 As Susan Crawford notes, “Instead of the twentieth century’s Ma Bell, we now have Ma Cell.”20 Though both exert considerable market power, the main difference is that “Ma Cell” is exempt from the common carrier regulations that had applied to Ma Bell for decades.

Like the telephone industry, the cable industry has consolidated from dozens of regional players to just a handful of giants. Two decades of mergers and acquisitions have left Comcast and Charter as the two largest broadband providers in the country. Together, these two companies account for more than threequarters of the cable internet market and over half of the total wired broadband market.21 The duopolies’ share of the broadband internet market is increasing as customers transition away from the slower DSL services provided by Verizon, AT&T, and other incumbent telephone companies to faster, more reliable cable internet. Thus, horizontal integration in both the telephone and cable industries has led to a highly concentrated broadband market in which a dwindling number of firms exercise an increasingly large amount of control over the provision of internet services.

Yet, horizontal mergers have proceeded apace, in part because many pro-industry regulators came to embrace a hollowed-out standard of “competition” that is quite compatible with monopoly. Competition is conceived of principally as a competition between different technologies—cable, DSL, wireless, and so forth—rather than as a competition between companies. The presence of oligopolistic power in the market for cable broadband is tolerated on the basis that Comcast’s and Charter’s reign is only transitory and that the next technological breakthrough will introduce new competition to the broadband market. Thus, the theoretical possibility of competition in the future suffices as a reason to tolerate the lack of actual competition in the present. As Tim Wu puts it, the George W. Bush administration’s approach to internet policy “tended to agree that competition didn’t necessarily require that there be any extant competitors.”22

Corporate libertarian approaches to internet policy therefore obscure the market power of dominant internet service providers, turning a normative political question about the control that these companies wield over our nation’s communications infrastructure into a technological one. Market concentration is a problem that can be solved not through political means—by passing antitrust legislation, implementing more aggressive ownership caps, and so forth—but through technological innovation. FCC chairman Ajit Pai reasons, “I want all of these technologies to compete, but you won’t have a fair chance of getting those smaller competitive entrants in if you heavily regulate this marketplace to begin with.”23

As we shall see, there are many contradictions within this discourse. Oftentimes, it is the very policymakers espousing such libertarian positions who seek to institute regulations that benefit market incumbents. They are quite comfortable with regulations that help large corporations maximize profits (for example, intellectual property law). Even the very notion of regulation itself is flawed. Why is it that throwing out net neutrality amounts to “deregulation”? In many ways, such policy changes are actually a form of re-regulation—regulation along corporate libertarian lines that determines what sites we are allowed to visit and on what terms. To call this deregulation is a gross misnomer.

From Oligopoly to Cartel

When Adam Smith wrote that “people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices,” he was referring to the collusive practices between industrial capitalists in the late eighteenth century, but he might as well have been describing the machinations of the telecommunications industry today.24 In a competitive market for internet access, ISPs would have to drop their prices, spend more money to upgrade their infrastructure, and improve their services in order to retain or attract customers. Instead, over the last twenty years, Comcast, Charter, Verizon, and AT&T have worked together to parcel the broadband market into private fiefdoms that are liberated from both the discipline of the market and government oversight.

According to the economist William Shephard, a “tight oligopoly” exists when the four leading firms in an industry capture 60 percent to 100 percent of a market: Comcast, Charter, Verizon, and AT&T currently account for 76 percent of the internet subscriptions in the United States (see table 1).25 However, collaboration between these companies makes the broadband market even less competitive than might be expected within a highly concentrated, oligopolistic market. Indeed, Comcast, Charter, Verizon, and AT&T work together to assert their collective control over the broadband internet market, operating more as a cartel than as competitors.26 In the economics literature, a cartel generally refers to collusive agreements between nominally independent firms within an industry to coordinate production and distribution. Like the cartels of the railroad industry during the late nineteenth century and the Organization of the Petroleum Exporting Countries (OPEC) today, the broadband cartel drives prices up by restricting output, deterring competition emanating from outside the cartel, and granting members control over different geographic markets.

Comcast, Charter, Verizon, and AT&T all have a considerable share of the wired broadband market at the national level but deliberately avoid competing with one another for customers at the point of sale. During Comcast’s failed acquisition of Time Warner Cable in 2014, Comcast’s vice president David Cohen attempted to assuage public concerns that the merger would reduce competition: “Despite claims by certain commenters, Comcast and TWC have never had plans to expand into each other’s territory … no incumbent cable operator ever has.”27 In other words, the proposed merger would not reduce competition because competition between the big cable ISPs was already scarce to begin with. Comcast and Charter (which bought Time Warner Cable in 2016) have a combined territory covering about 211 million people across the country. Yet the companies’ over-lapping service territory covers only 1.5 million people.28 In effect, the cable duopoly has agreed to a nonaggression pact.

Table 1. Market share of major broadband ISPs, Q2 2018

Broadband provider	Number of household subscriptions (in millions)	Percent of total
Comcast	26.5	27.3
Charter	24.6	25.4
AT&T	15.8	16.2
Verizon	7	7.2
All other major ISPs	23.2	23.9

The members of the broadband cartel have also worked together to minimize their exposure to market pressures through a process called “clustering.” Clustering involves creating regional monopolies through the acquisition of smaller companies within the regional monopolist’s sphere of control (such as Comcast’s partial purchase of the Pennsylvania-based Adelphia cable company in 2006) and “swapping” customers with one another to carve out larger, more geographically contiguous, and less competitive markets. The most notorious wave of clustering occurred in the summer of 1997, during which the main cable operators pursued customer swaps and partnerships that put all but four markets in the hands of a single operator. Leo Hindery Jr., the former president of Tele-Communications, Inc., affectionately referred to this period as the “summer of love.”29 More recently, in 2014 Comcast swapped 1.6 million of its customers in southern and midwestern states to Charter for 1.6 million of the latter’s subscribers in Boston, Atlanta, and parts of California.30

While clustering has been a financial boon for the big cable and telecommunications companies over the years, it has been a burden for everyone else. Potential overbuilders have a much harder time breaking into highly protected clustered markets. Without the threat of independent overbuilders to act as a constraint on Big Cable and Big Telecom, customers living in clustered markets encounter much higher rates for internet service.31

For their part, AT&T and Verizon have largely ceded the wired broadband market to the cable companies. In 2004, Verizon embarked on an ambitious (and expensive) plan to roll out highspeed fiber-optic lines across the country. Although Verizon FiOS is faster and more reliable than cable internet, in 2010 Verizon announced that it was suspending the build-out of FiOS into new cities and towns.32 Digging up and replacing their old copper telephone wires with high-speed fiber-optic cables involved hefty capital expenditures that Wall Street despised. Instead of competing with the cable firms in the wired broadband market, Verizon and AT&T decided to collaborate with them. The major development occurred in 2011 when Verizon bought $3.6 billion worth of wireless spectrum from Comcast and Time Warner Cable. As part of this complex deal, Verizon, Time Warner Cable, and Comcast agreed to cross-promote and sell one another’s services. Even as Verizon maintained its FiOS internet network, its own website boasted that Comcast offered “the fastest Internet service in the nation.”33 These are the actions not of fierce competitors but of a cartel intent on abusing its market power.

Because of the extensive coordination between Comcast, Charter, Verizon, and AT&T, Americans are left with little choice when it comes to selecting an internet service provider. According to the FCC’s most recent “Internet Access Services” report—and these reports are notorious for overstating the amount of competition in the residential broadband market—42 percent of Americans have access to one or fewer broadband providers. These are effectively captive markets in which customers are not able to “vote with their wallets” if they are dissatisfied with their ISP. Of the remaining internet users who do not live in a captive market, most have a choice between just two ISPs, often one cable and one phone provider.34

If the FCC implemented the Democrat-appointed commissioner Jessica Rosenworcel’s proposal to raise the agency’s broadband speed standard from twenty-five to one hundred megabits per second (Mbps), only 15 percent of the country would have access to more than one provider. Twenty-five Mbps is scarcely enough bandwidth to sustain even current levels of data usage, let alone the bandwidth that will be needed in the near future as applications become even more data intensive. For example, a single high-definition Netflix stream can eat a twenty-five Mbps connection by itself. The demand for bandwidth is further strained by the growing number of devices that internet users connect to their network. In 2017, Pew Research found that a regular household in the United States has five devices connected to its home network, and that 18 percent of households have more than ten, including computers, smartphones, gaming devices, tablets, streaming media players such as Roku, and smart-home technologies.35

Net Neutrality as an Oligopoly Problem

The broadband internet access market has failed consumers but handsomely rewarded the broadband cartel. Most Americans pay more money to their internet service provider for slower connections than their global counterparts. Nationwide, the average cost for broadband internet is $61.07 a month.36 By comparison, a one-hundred Mbps broadband connection in Sweden and Norway costs between $10 and $20 less than a much slower internet plan in the United States.37 Residents of South Korea, Japan, Singapore, and Hong Kong can subscribe to a gigabit (one thousand Mbps) internet connection for between $30 and $50 a month.38

Some argue that Americans pay more for internet service because ISPs have to serve a population that is spread out over a vast geographic area. However, the cost of internet access is high even in densely populated urban areas of the United States. The average monthly price for an internet plan ranging in speed from twenty-five to fifty Mbps is $64.95 in New York City, $66.66 in Washington, DC, and $69.98 in Los Angeles. (These figures actually understate how much Americans pay for broadband internet, as they do not include the hidden fees and spurious surcharges that are tacked onto customers’ bills.) Meanwhile, a twenty-five-to fifty-Mbps internet connection costs $24.77 in London, $35.50 in Paris, and $39.48 in Tokyo.39 In fact, broadband internet access is more expensive in the United States than it is in every other country that belongs to the Organisation for Economic Co-operation and Development (OECD), with the lone exception of Mexico.40 What these countries have in common is that they have implemented some form of open access. What makes America exceptional is that it has not. In stark contrast to the United States, since 2001 the European Union has mandated that incumbents share their network infrastructure with competitors, which has largely kept internet prices in check.41 Most other OECD countries outside of the European Union have implemented open access policies as well.

The premium that American consumers pay for internet access has been siphoned off into the coffers of Comcast, Verizon, and Wall Street. In the absence of robust policy to encourage competition or strong government price regulation, the broadband cartel is able to command “monopoly rents,” super-profits from their customers that are well in excess of what competitive market conditions would otherwise tolerate. The desire of the broadband cartel to repeal net neutrality is an effort to capture yet another source of monopoly rents: by privileging certain kinds of internet traffic over others, ISPs can pressure internet users and content providers to hand over even more money.

High prices, slow speeds, and the segregation of internet traffic into fast and slow lanes are all consequences of the immense market power of the broadband cartel. Constrained neither by competition nor government oversight, the cartel has established enormous leverage over internet users and online content providers, which it fully intends to use. During oral arguments in Verizon v. FCC in 2013, the presiding judges asked Verizon counsel Helgi Walker whether Verizon would favor some preferred services, content, or websites in the absence of net neutrality. Walker responded: “I’m authorized to state from my client today that but for these rules we would be exploring those types of arrangements.”42

Sans net neutrality, it is now legally possible for ISPs to charge their customers to get high-quality Netflix or Hulu video streaming or to access popular social media platforms such as Facebook. However, it is far more likely that ISPs will demand their pound of flesh directly from the websites themselves. In this “pay-to-play” post–net neutrality digital landscape, some of the costs of paid prioritization will be borne by particular websites and services—at least the ones that are willing and able to pay for a fast lane—but some of the costs will eventually be passed on to internet users. Internet users will pay their broadband providers monopoly rent twice: first directly, in the form of an inflated monthly bill for their internet subscription, and second indirectly, through the higher prices certain websites will charge consumers to access their content, which will then be routed back to the ISPs.

The vertical integration of the broadband cartel into internet content and applications has further increased the incentive for ISPs to engage in traffic discrimination. Indeed, Comcast owns NBCUniversal and DreamWorks Pictures and has made large investments in online content companies such as Vox Media and BuzzFeed; Verizon owns Yahoo!, AOL, Tumblr, and the Huffington Post; and AT&T owns HBO, Warner Bros., and DirecTV and has a stake in Hulu. This sets up a major conflict of interest: these media empires both operate as a conduit of data, information, and content and are the owners of much of the content that flows over the wires in their market area. The broadband cartel has every financial motivation to undermine rival content producers by deprioritizing their traffic.

Trickle-Down Broadband

From Bill Clinton to Ajit Pai, America’s internet policy over the last twenty-five years has been guided by an abiding faith that free markets, private sector innovation, and “light-touch” government regulation will deliver us from our contentious analog past to our high-tech, seamless digital future. Of course, this disposition is not unique to debates about internet policy; it springs from the broader ideological environment within which these debates are ensconced. Indeed, this approach to internet policy is consistent with a neoliberal framework, redolent of the “trickle-down” economic theory espoused by Ronald Reagan and his adviser Arthur Laffer during the 1980s. The Reagan administration invoked trickle-down economics to justify all manner of legislation benefiting the wealthy and powerful on the basis that the economic gains accrued by the 1 percent would, eventually, reach far and wide in society.

Contemporary opposition to net neutrality is similarly premised on reducing the public interest to the welfare of big internet service providers. In the corporate libertarian paradigm, net neutrality is seen as a barrier to corporate investment in broadband deployment and technological innovation. The argument implies that the public will ultimately be better off by allowing the broadband cartel to turn the open internet into a tiered, pay-to-play service. According to opponents of net neutrality, the extra profits that ISPs harvest from a non-neutral internet will “trickle down” to internet users as ISPs lower their cost of service and invest more money into modernizing their network infrastructure.

By its own logic, the trickle-down theory of broadband deployment does not withstand serious scrutiny. The broadband cartel does not lack money for infrastructure investment; its members have been reaping monopoly profits for decades and are more than capable of paying for necessary infrastructure upgrades several times over. Indeed, experts estimate that America’s major ISPs generate comically high profit margins, upwards of 80 percent a year on high-speed internet services.43

These monopoly profits have not led to a deluge of spending on next-generation broadband infrastructure: comparative capital investments in telecommunication networks in the United States and European Union currently stand at similar levels.44 Instead, the broadband cartel uses its largesse to line the pockets of corporate executives and large institutional investors on Wall Street. In 2017, Charter spent $13.2 billion on stock buybacks—a scheme that enriches a company’s shareholders by artificially inflating the value of their stock.45 That same year, Comcast also announced $5 billion in stock buybacks in addition to a massive 21 percent increase in its annual dividend worth another $5 billion.46

America’s internet infrastructure suffers because giant ISPs tend to hoard their wealth rather than invest it, not because they are overburdened by public interest regulations such as net neutrality. In fact, under oligopolistic market conditions, repealing net neutrality creates a perverse incentive for ISPs not to invest in network upgrades. Instead of spending money on modernizing their network to meet the ever-growing demand for bandwidth, paid prioritization allows ISPs to auction off the scarce amount of bandwidth made available by their existing, aging infrastructure to those willing to pay the most for it.