The New York Stock Exchange Tech-Media-Telecom Index fell 101.46 points or 1.35%, partly on news that the European economy was worse for wear. Equity investors ran for the debt-income hills choosing to move their stash into government bonds.
I don’t think the fall in the tech, media, telecom sector had much to do with comments made today by panelists participating in a Federal Communications Commission forum on the law and economics of net neutrality. The takeaway from that panel for most was that no matter what net neutrality rules the FCC comes up with, whether based on Title II, section 706, or some ungodly pairing of the two, there will be blood in the form of litigation.
The other takeaway in my opinion is how so far the FCC has completely ignored the opportunity to describe how regulation, especially under a Title II regime, is supposed to help maintain optimum performance of a globally competitive interconnection of 67,000 networks when a significant portion of the globe is experiencing an inept economic performance.
If economic performance stays this sluggish worldwide, information services companies will have to really emphasize to consumers the value of their content and information products if they are to stay afloat. But when the FCC is seriously contemplating codifying a policy that would give equal treatment of a video of a dancing cat with life-saving online medical services, it is difficult to see capital and investment moving freely to activity that brings the most value.
Morningstar notes that the FCC’s tough stand on competition and net neutrality has deflated the value of wireless Internet access platform providers, casts doubt on pending acquisitions of DirecTV and Time Warner Cable, and lessens the chances of Sprint and T-Mobile walking hand-in-hand down the mergers and acquisitions aisle. According to Morningstar, the inability to consolidate may make Sprint and T-Mobile’s ability to garner additional spectrum or eek out a profit all the more difficult.
If the FCC wants to maintain its economic regulation focus on the providers of broadband access platforms while positively impacting the end-to-end global nature of the Internet, it may want to ease up on the “consolidation is bad” mantra and either stick to a broadband policy based on section 706 or better yet abandon rulemaking on the Open Internet altogether.