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Wall Street Journal Upset Because Title II Didn't Hurt Stocks

While some ISPs have spent months complaining that Title II net neutrality rules would harm them in numerous and immeasurable ways, they've simultaneously been busy telling investors the rules aren't that big of a deal. Of course there's a number of ISPs, including Sonic, Sprint, Frontier and Cablevision, that have also publicly stated repeatedly they don't think the new rules change all that much.

Wall Street got that message loud and clear, and when the FCC yesterday announced tougher net neutrality rules (and its assault on protectionist state laws, for that matter), ISP valuations and Wall Street as a whole barely batted an eye. This apparently greatly annoyed Wall Street Journal author Miriam Gottfried, who demanded that Wall Street immediately become...more outraged:

quote:
After years of fearing it like the boogeyman, Wall Street may have gotten a bit too comfortable with the government’s latest version of net neutrality...Investors were cheering the chairman’s assurance that the commission wouldn’t invoke the Title II power to regulate prices. But investors, beware: Broadband’s new status opens the door to the possibility of a future that is far less lucrative and more uncertain for the companies that provide it.
Again, while ISPs insist that Title II is going to doom us all, that ignores the fact that Title II has been used to govern the voice component of wireless services for a decade (not to mention Verizon FioS) without so much of a hiccup. If there's one thing investors can legitimately worry about (assuming money is the only thing in the world that matters to them), it's that these rules will prevent some ISPs from making billions by engaging in anti-competitive behavior.

In fact, the lion's share of the scary stories about Title II are really just a useful public distraction from what this is really all about for the ISPs: protecting what they believe is a god-given right to abuse the uncompetitive last mile for additional profit.

Most recommended from 82 comments


mikesco8
join:2006-02-17
Southwick, MA

4 recommendations

mikesco8

Member

The comment that was really telling was this...

The wall street journal said this:
"The long-term bull case for cable relies on two main factors: The ability to grow market share of residential broadband and the ability to raise prices. The latter rests on the idea that broadband providers’ pricing power will increase over time, an assumption that could be called into question if the reclassification stands."

The author of this article misses the facts:

#1 the FCC is not regulating rates.

#2 Investors should be bullish because at the same time market penetration is growing, technology costs are dropping, and as investments are paid off profits will grow. The ISP's could keep the rates the same for many years and still have hefty profit increases every year.

That is another issue with the internet being controlled by only major corporate isp's that heavily dominate a market, investors are not just content with a good profit and a decent dividend anymore, their appetite is insatiable and they demand double digit returns even after most risk has evaporated and a company is well established.

Given this, if years from now true competition fails to materialize, eventually the public will demand that the internet is completely regulated as a utility.

IowaCowboy
Lost in the Supermarket
Premium Member
join:2010-10-16
Springfield, MA

2 recommendations

IowaCowboy

Premium Member

Profit should be earned not guaranteed

Companies should have to earn profit by having satisfied customers, hard work, and a decent product. Now profit seems to be earned by finding ways to separate customers from their money in the most predatory ways.

Government regulation in my views should ban monopolies (or at least enforce existing antitrust laws) and ban long term commitments so a customer can leave if they don't like the service.

Investments have the warning on them that say not FDIC insured, Not bank guaranteed, May lose value.