Network Neutrality scares Wall Street

[David Farber <dave () farber net>]

Begin forwarded message:

From: Brett Glass <brett () lariat net>
Date: October 5, 2009 11:34:46 AM EDT
To: "Dave Farber" <dave () farber net>, "Ip ip" <ip () v2 listbox com>
Subject: Network Neutrality scares Wall Street

Net Neutrality Scares Wall Street

Multichannel News

As the Federal Communications Commission tries to encourage private  
investment to quicken the overhaul of the nation's broadband  
infrastructure, Wall Street reminded the agency of the only big speed  
bump that would discourage such investment: Regulatory surprises.

A number of high-powered investors representing more than $100 billion  
in collective buying power warned that overregulation or regulatory  
uncertainty would be a big turnoff to the capital investment needed   
an outlay the FCC has estimated at anywhere from $20 billion to $350  
billion.

FCC chairman Julius Genachowski acknowledged that such investment was  
a must. The agency needs to get a handle on the kind of regulatory  
environment that would spur investment by cable operators and telecom  
companies, he said.

But Genachowski turned the broadband capital hearing over to  
Republican commissioner Robert McDowell, who has long cautioned that  
the wrong regulation or regulatory arbitrage  the government picking  
winners and losers  could hurt the broadband rollout.

The chairman's announcement of his intention to expand and formalize  
network-neutrality principles came in for some criticism as one of the  
things that could hurt that investment.

Christopher King, a telecom and cable analyst at Stifel Nicolaus, put  
it bluntly: "When you look at the telecom sector or the cable sector,  
one of the things that scares them to death is network neutrality to  
the extent that could stifle investment down the road."

Extending network-neutrality rules to wireless carriers  as  
Genachowski proposes  is seen by investors as a "bait-and-switch"  
regulatory environment, said King, given that the FCC auctioned the  
700-Megahertz band for billions of dollars, without signaling that it  
might impose access conditions on the winners after the fact.

Thomas Aust, senior analyst with GE Asset Management  which controls  
over $110 billion in assets, including the GE pension fund  said  
another problem with network neutrality is that it could remove  
potential investor upside from a growing advertising sector. "Some of  
the more extreme discussions about network neutrality make me  
concerned about inhibitions on new services," said Aust.

Continued at the bottom of the page at

http://www.multichannel.com/article/356650-Cover_Story_More_Better_Faster.php





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