Anti-regulatory sentiment, when it comes to network neutrality and pulling broadband into the Title II category, might not be quite as fervent among the investors as it is among the MVPDs they hold stock in.
The analysts at McQuarrie Capital polled approximately 50 investors and in a report circulated today said they discovered something they considered counterintuitive: “Title II with forbearance has become the consensus view.”
There are two possible explanations for that.
FCC Chairman Tom Wheeler has set February 26 as the date for an announcement, and the expectation is that he will use the occasion to introduce rules for applying Title II to broadband.
Then there’s the American Cable Association (ACA), which has a knack for evaluating which way the wind is blowing at any given moment. Yesterday the ACA petitioned the FCC to include forbearance for smaller operators – its constituency.
“The FCC should forbear from all Title II regulation for smaller ISPs in the event it decides to reclassify broadband Internet access service. Were the FCC to decline to forbear as a general matter, the industry – and consumers – would be burdened with new costs and potentially tremendous uncertainty related to the unanticipated consequences of Title II regulation, and with no offsetting benefit,” ACA president Matthew Polka wrote.
The largest MVPDs remain firmly against Title II reclassification, claiming it would force them to reconsider investment in their networks and would squash innovation.
If anyone should be alarmed at such claims, it should be investors, but in McQarrie’s estimation, they don’t seem to be that concerned. “Investors are either discounting signs of increased regulation or the ability for the FCC to ultimately enforce rate regulation on residential broadband,” the firm said.
So either investors don’t consider the effects of Title II regulation to be that dire, or they are confident that even if Wheeler proposes it, the industry will challenge the attempt and win.
But that begs the question of uncertainty. MVPDs claim that an attempt by the FCC to reclassify broadband will create uncertainty – or, to be more accurate, the MVPDs themselves will create uncertainty by introducing legal challenges guaranteed to drag on for a year or two.
But that brings up the final possible outcome, McQuarrie notes. Congress, as currently constituted, is philosophically opposed to regulation, and today stepped in with legislation to minimize any regulation, which would serve to cut Wheeler off at the knees.
