NNSquad - Network Neutrality Squad
[ NNSquad ] Re: [IP] Network Neutrality scares Wall Street
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This rhetoric about Net Neutrality discouraging investment
is just a general outgrowth of the reflexive belief held by some that any and
all regulation discourages investment. This theory has little basis in reality.
In network industries, regulations have only a minor influence over investment
decisions. More important are considerations about future growth potential and
fear of competition eroding profits. In fact, fear of potential regulations can
actually encourage capital investment and counteract the most important factor
discouraging investment: short-term shareholder concerns. Look at the evidence from the past 13 years — a
period that saw the imposition of substantial regulation followed by equally
substantial deregulation. During the years following the implementation of the
1996 Telecom Act, incumbent phone companies’ capital expenditures as a
percentage of revenues rose dramatically. However, investment declined in the
period following the FCC’s dismantling of this regulatory regime. In the final days of 2006, the FCC approved the merger of
AT&T and Bell South only after the company agreed to operate a neutral
network (by adhering to the four principles of the FCC’s Internet Policy
Statement as well as a fifth principle of nondiscrimination) for two years
following the transaction. A review of AT&T’s investments over those
two years shows quite clearly that a strict Net Neutrality rule did not in any
way act as a deterrent to capital spending. AT&T’s gross capital
investment increased immediately following the imposition of the Net Neutrality
merger condition and continued to rise over the following two years.
Interestingly — though it did coincide with the destabilization of
capital markets — when the neutrality condition expired on Dec. 29, 2008,
there was a sharp decrease in the company’s capital investment. The absence of nondiscrimination protections will have a
substantial negative impact on investments made in the application and content
markets. Currently, the Internet is an open platform that provides online
innovators with a high degree of predictability about a major segment of their
business. An innovator knows that she can develop a new idea or application,
and that it will work on any end-user’s Internet-connected device.
Without Net Neutrality, this certainty is lost. Losing Net Neutrality could
badly undercut the current investment in applications and services — a
sector of our economy much larger than the network infrastructure itself. = = = = = Timothy Karr Campaign Director Free Press :: www.freepress.net SavetheInternet.com :: www.savetheinternet.com FreeMyPhone :: www.freepress.net/FreeMyPhone 201.533.8838 reform media. transform democracy. -----Original Message----- ----- Forwarded message from David Farber
<dave@farber.net> ----- Date: Mon, 5 Oct 2009 12:33:47 -0400 From: David Farber <dave@farber.net> Subject: [IP] Network Neutrality scares Wall Street Reply-To: dave@farber.net To: ip <ip@v2.listbox.com> 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 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 ------------------------------------------- Archives: https://www.listbox.com/member/archive/247/=now RSS Feed: https://www.listbox.com/member/archive/rss/247/ Powered by Listbox: http://www.listbox.com ----- End forwarded message ----- |