THE CABLE PIPELINE

While it is tempting for Cable Executives to listen and be led by Wall Street to take advantage of actions that may have a short-term positive effect on shareholder value; the true course of action has to sit with the CEO’s ability to steer the organization in long-term strategy, and ignore the blustering of short-sited manipulators out for a “grab and run”.

 By that I mean the so called Wall Street analysts, which can manipulate stocks in the short-term, while eyeing to take advantage of any scenario that could turn a profit. This type of manipulating is nothing new. Take for instance the history of insider trading that has mauled Wall Street for the last two decades, including Levine, Siegel, Boesky and Milken: The Precognition Rat Pack ; R. Foster Winans: The Corruptible Columnist; and Martha Stewart: The Homemaking Hoaxer; not to mention the last attack which almost drove our economy over the precipice with the collapse of Fannie Mae, Freddie Mac, Bear Stearns, Merrill Lynch, Lehman Brothers, AIG and the rest didn’t happen overnight.

These debacles have all been orchestrated as the result of market deregulation, in essence, giving a free hand to those who wish to manipulate markets and company stocks while taking advantage to make themselves rich. What; isn’t this capitalism at its best; not hardly? So, while I have written that the FCC should tread lightly in considering rules that would harness the ISP networks (see Private Investment: FCC Should Tread Carefully On Broadband Rules ); Cable Executives should think about the implications of cordoning off their pipelines in an effort to capture the large and growing market of ISP users.

The current climate of (a call for more regulation of the internet) is not just rhetoric; it is the culmination of scary abuses by Wall Street and companies wanting to take advantage of their large networks to become another (Standard Oil) or (AT&T) of old. Since the industry has enjoyed a largely deregulated market, which I might add they lobbied heavily to obtain; why invite more scrutiny from regulators due to ill thought out business plans? Do not be fooled into believing that Congress will not pass legislation to curb abuses; it has happened in the past and will certainly come around again, if the industry invites it.

There is difference in servicing a large market to take advantage of the size and scope of those services, and offering the innovation to what customers want out of those services. This is the key to long-term success; not controlling the pipeline.

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The Federal Communications Commission recently led discussions on proposed Net Neutrality Rules including, broadband speeds to be adopted for those companies using federal dollars to upgrade their networks. This comes at the same time the FCC is proposing to provide the underpinnings of a governmental mandate to; serve the underserved.

 This is yet another dangerous road the FCC is attempting to navigate from a top-down regulatory standpoint, and could simply derail the original efforts to have success in the broadband investment philosophy it generated.

 Here are the perilous implications:

• Mandating ISP speeds on the front end of legislation could impede private investment from taking on the challenges of serving sparsely populated or lower demographic areas

• Creating an open and share all approach for content access will again scare off potential investors who will be suspect of  reaching respectable returns on their money

• The burgeoning internet advertising market will be hampered, or even stopped, from   investing in the very sector the FCC is attempting to help grow and prosper

 These are the important issues related to recent discussions on Net Neutrality to be addressed, but need to be considered while proposing to regulate an industry on the verge of creating just the applications and services that consumers want with internet connections.  My message to the FCC is; do not blow the very opportunity to let private investment create the infrastructure, content and applications which you have incented them to accomplish, by over regulating those companies into inaction.

 It continues to be evident that the best incentive would be to take a hands-off approach to regulation while providing the capital incentive for the networks to build out their infrastructures. What scares Wall Street more than anything is the prospect of heavy regulation that will stifle investment opportunities. This has a negative effect on company stocks, shareholders, and the willingness of private investment to flourish, and in essence, get the job done.

 The FCC should be promoting a healthy investment and competition environment rather than a heavy-handed regulatory approach for the future of Internet access. This would create the (win-win) situation the government agency is looking for, whether it realizes the implications, or not.

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