This morning Georgetown University sponsored a panel on regulation and the transition to Internet Protocol networks. The panel zeroed in on the role an all IP network can play in economic development. What I found of interest was how the capital markets were digesting all the policy talk; the regulatory environment in the broadband space and how it may impact the flow of capital.
There may be an opportunity to educate investors on how the policy initiatives at the Federal Communications Commission may impact their returns to capital. At least that is the impression I got from remarks made by Jennifer Fritzsche, a managing director and top flight telecommunications analyst for Wells Fargo Securities. According to Ms. Fritzsche regulatory changes are restrictive and could result in declines in broadband business. Not a good sign for investors.
Wall Street is bottom line minded, I gathered from Ms. Fritzsche. Traders and investors want to know if AT&T, for example, is going to hit their numbers. Concepts like net neutrality can result in that eyes glazed over look. It would take a real savvy telecommunications investor to be able to digest policy concepts like net neutrality and special access.
The FCC should take note of one thing, especially if they want to be true to their word about fostering economic growth, innovation, and employment: equity investors look at IP investment as a positive and are surprised that AT&T has not invested more especially at the low rates in the market. (And Ben Bernanke and friends at the Federal Reserve are still keeping rates low.)
Again, the take away for the FCC: the greater the level of regulation, the less the incentive to invest.