[IP] Wall St on Bell investments and Net Neutrality
Begin forwarded message:
From: Dewayne Hendricks <dewayne@xxxxxxxxxxxxx>
Date: March 15, 2006 10:19:00 AM EST
To: Dewayne-Net Technology List <dewayne-net@xxxxxxxxxxxxx>
Subject: [Dewayne-Net] Wall St on Bell investments and Net Neutrality
Reply-To: dewayne@xxxxxxxxxxxxx
[Note: This item comes from reader Matt Oristano. DLH]
From: Matt Oristano <matt@xxxxxxxxxxxx>
Date: March 15, 2006 6:58:58 AM PST
To: dewayne@xxxxxxxxxxxxx
Subject: Wall St on Bell investments and Net Neutrality
Dewayne:
Looks like Wall St analysts are getting behind the idea that websites
should pay for a "fast lane" from Bells and Cable ops.
Matt
Analysts Question Bell Investments
By Ted Hearn 3/14/2006 7:54:00 PM
Multichannel News
Wall Street analysts told a Senate committee Tuesday that the
billions of dollars being spent by AT&T Inc. and Verizon
Communications Inc. to compete with cable might not produce a profit.
"There is a high degree of skepticism that the substantial investment
underway at the [phone companies] to deliver broadband networks to
the home will deliver a satisfactory return on the incremental
investment," said Luke Szymczak, vice president of JPMorgan Asset
Management.
AT&T and Verizon are installing high-capacity fiber lines to rapidly
deliver voice, video and data in a high-stakes battle with cable.
"The costs of these networks are far beyond what the returns of the
new services can provide," said Craig Moffett, VP and senior analyst
of U.S. cable and satellite broadcasting at Sanford C. Bernstein & Co.
The two analysts appeared before the Senate Commerce Committee, which
is expected to vote on a bill next month that would ease phone-
company entry into cable markets and perhaps include network-
neutrality safeguards.
The battle between cable and the phone giants has put sharp pressure
on the stocks of both industries.
Aryeh Bourkoff, managing director at UBS Warburg LLC, expressed
concern about the regulatory climate facing cable after the industry
invested more than $90 billion on network upgrades to roll out
digital TV and high-speed-Internet access.
He referred to possible network-neutrality and a la carte programming
mandates, as well as less burdensome franchising requirements on
phone companies, as negatives for cable.
"As media consumption over the Internet develops at a rapid pace, I
believe it is too early to introduce regulation on key issues such as
a la carte pricing and packaging and on net neutrality, as the market
is still in its early stages," Bourkoff said.
Moffett, an opponent of network-neutrality mandates by government,
warned that if network owners were barred from creating a "fast lane"
on the Internet to generate more revenue to cover capital
expenditures, they would have to recover much, if not all, of their
cost from subscribers, whose monthly bills would likely rise
substantially.
"Mandated net neutrality would further sour Wall Street's taste for
broadband-infrastructure investments, making it increasingly
difficult to sustain necessary capital returns, and it would likely
mean that consumers alone would be required to foot the entire bill
for whatever network investments do get made," Moffett said.
Investors dislike policy upheavals in Washington that distract them
from focusing on market fundamentals, said Kevin Moore, wireline
telecom analyst at Wachovia Securities.
"We have enough to worry about in considering the rapidly changing
competitive and technological environment. In other words, we want
regulatory stability and certainty," Moore said.
Weblog at: <http://weblog.warpspeed.com>
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