If there's one thing broadband investors want from the Federal Communications Commission, it's regulatory consistency. That was the message from panelists today at a FCC hearing on how best to attract private investment to expand availability of broadband.
The agency is due to unveil its broadband plan to Congress in 139 days (yes, they're counting) and has already held 25 workshops and received more than 20,000 written comments.
Today’s panelists focused on, as Phil Bronner of Novack Biddle Venture Partners put it, "How do we pay for the broadband roll-out?"
The FCC has said it may cost as much as $350 billion to bring universal high-speed Internet access to the entire country. The federal government’s stimulus package will cover just $7 billion of the cost. "We need partnership with the private sector," said FCC Chairman Julius Genachowski. "How do we make it attractive to capital … and balance consumer goals like lower prices with investment returns?"
Monish Kundra of Columbia Capital responded, "Consistency of policy is really important when making investments… It’s hard to make an investment if there’s potential for a significant change in policy down the road."
One question mark for investors is net neutrality, or rules that prohibit Internet service providers from blocking or filtering services or applications. Christopher King of Baltimore-based investment firm Stifel Nicolaus noted that the current debate over net neutrality "injects some amount of uncertainty which will not help the cost of capital until it’s resolved."
King also pointed out that broadband is currently available to roughly 90 percent of U.S. citizens, but has a 60 percent rate of penetration. "This points to some kind of universal service support mechanism in our view," he said.
Hughes Communications Inc. general counsel Dean Manson focused on the FCC’s role in spectrum allocation. Hughes provides broadband via satellite—potentially "available to anyone, anywhere," he said, including rural households not served by cable or DSL lines.
But the company must spend about $400 million upfront to build and launch each satellite. "We need assurances that the radio frequency spectrum will be available for the 15-to-20 year life of the satellite," Manson said. "We urge extreme caution in any reallocation of spectrum."
Thomas Aust, a senior analyst with GE Asset Management, urged the FCC to tread lightly. “Less regulation is better regulation,” he said. "I’m not saying no regulation at all, but regulatory minimalism. Ask yourselves, would government action be nice, or is it necessary? I would say nice is not enough."