Broadband Investors Should Wake Up to Net Neutrality

[Commentary] After years of fearing it like the boogeyman, Wall Street may have gotten a bit too comfortable with the government’s latest version of network neutrality. But investors, beware: Broadband’s new status opens the door to the possibility of a future that is far less lucrative and more uncertain for the companies that provide it.

The long-term bull case for cable relies on two main factors: The ability to grow market share of residential broadband and the ability to raise prices. The latter rests on the idea that broadband providers’ pricing power will increase over time, an assumption that could be called into question if the reclassification stands. While the FCC will “forbear” from parts of Title II that would call for companies to get approval for specific pricing in advance, it will still be able to weigh in on whether providers’ prices are “just and reasonable.” The agency will also have the power to determine whether any of their business practices constitute “unreasonable discrimination.”