Senate Commerce Commitee Chairman Ted Stevens (R-Alaska) said that the committee would bear down and try to mark up a revise of the 1996 Telecommunications Act sometime after Easter (April 16).
That was during a hearing Tuesday with financial analysts, who were arguing for clarity ASAP. Their mantra: Regulatory certainty, regulatory certainty, regulatory certainty.
Issues like national video franchising, cable à la carte and network neutrality will need to be resolved to free up the capital markets, said financial analysts from companies including JP Morgan, Wachovia, UBS and Sanford Bernstein. "Especially video franchising," said Aryeh Bourkoff of UBS Investment Research.
Clarity and certainty, agreed Bourkoff and Kevin Moore of Wachovia Securities, with the caveat that what action Washington takes be guided by a "light regulatory touch" and the admonition: "First do no harm."
Mandating "network neutrality," not allowing cable and other networks to charge third parties more for faster Internet-access speeds, is not in the regulatory "light touch" category. Sanford Bernstein's Craig Moffett said that "network neutrality" would have the unintended consequence of further "souring Wall Street's taste for broadband-infrastructure investments."
"Does that mean if we try to protect the consumer, we are going to hurt investment?" asked Stevens.
No, said Moffet, but Congress has to be careful because protecting investors and consumers is often the same thing. Protecting consumer choice means fostering investment, the Wall Streeters asserted. "That doesn't assume no regulation," said Moffett, only that "the most unobtrusive path to consumer welfare is probably the best one."
Bourkoff pointed out that cable had spent $90 billion to upgrade its plant for digital video, interactivity and voice, thanks to the relative predictability of the market.
Since then, the competition has heated up. Cable's share of pay TV has gone from 95% in 1994 to 63% today and down to 50% in some places, he said. Still, he said, cable is potentially on the cusp of its most operationally successful period, with bundled voice, video and data penetration close to 20% in some markets, and his company seeing it rising to 50% by 2007.
But share prices remain near historical lows thanks to the increased competition and the possibility of higher acquisition costs and lower prices, but also thanks (though that is not the right word) to "regulatory uncertainty." At risk, Bourkoff said, is the $80 billion of industry debt waiting for a return.
"I believe it is too early to introduce regulation on key issues such as à la carte and net neutrality," said Bourkoff.
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