The FCC voted to approve the first ever broad regulations of the Internet, but they were adopted reluctantly—the rules have been so adapted and compromised that people on both sides of the aisle are frustrated.
The general principles are straightforward: more transparency and disclosure, no discrimination against legal internet traffic. Wireless carriers are regulated far more loosely because their capacity is so much more constrained.
But here's the surprise: Internet Service Providers like Comcast, AT&T, Verizon and Time Warner Cable are treated far more favorably than in previous proposed regulation.
The headline: the rules allow them to "manage their networks," which opens the door to charging companies to deliver their content (like high def video or video games) faster. This provides Internet Providers key new leeway to pass on their broadband costs.
Miller Tabak analyst David Joyce upped his target price for Comcast $4 to $27 on today's news. Why the sudden vote of optimism? Not only does this remove a degree of uncertainty hanging over the stock, he says it enables Comcast to move toward Internet usage-based billing and "conceivably salvage margins."
This is a dramatic turnaround from the first round of Internet regulations proposed. The mere idea of regulating how Internet Providers transmit data was considered a negative for those carriers—regulation's a bad thing, right? And so-called "net neutrality" regulation was expected to be great for the likes of Netflix, Google's YouTube and Amazon, who stream content. The Open Internet Coalition, of which they're all members, praised efforts to ensure that their content wasn't discriminated against.
Yes, sure, they get reassurance that they won't face unfair discrimination, but they also could face new costs when Internet providers decide to charge more for certain, data-heavy content on the grounds that handling that traffic slows the network overall.
The group that gets off the easiest are wireless carriers like AT&T, Verizon Wireless and Sprint—the FCC regulates them far more loosely than hard line Internet providers. They are given permission to discriminate against particularly bandwidth heavy content because of their capacity constraints. This is good for the wireless carriers but not so good for streaming companies like Netflix and Google.
But this debate is far from over—we can expect lawsuits from both businesses and consumer groups, as well as major opposition from House Republicans come January.
*Comcast is waiting for government approval of its deal to buy NBC from GE. CNBC is part of the NBC network.
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