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McCain, Obama Wires Cross
On Telecom
By Reinhardt Krause |
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A Barack
Obama presidency would likely be bad news for large phone
companies such as AT&T and Verizon Communications, and
a mixed bag for cable TV firms, analysts say.
Republican John McCain sides with phone and cable companies
on a key Internet regulatory issue, network neutrality. These
broadband service providers say they should be able to prioritize
Internet traffic and charge different rates, depending on
how much bandwidth, or network capacity, users consume.
Democratic nominee Obama sides with legislation that would
prohibit broadband providers from favoring content or Internet
applications of some Web sites over others. “Large phone
companies would be better off under McCain,” said Paul
Gallant, an analyst at Stanford Washington Research Group.
“Obama opposes the ability of any (phone or cable company)
to receive money for preferential transport deals on broadband
lines. If McCain wins, carriers would have a greater ability
to test out revenue-generating streams. Obama would say every
(data) bit has to be treated the same, with no network discrimination.”
Internet firms such as Google and Microsoft have lobbied for
net neutrality rules, but Congress has been divided on the
issue.
AT&T and cable firm Comcast have stepped up their efforts
to monitor consumer Internet usage, which has put them under
regulatory scrutiny.
With an Obama win as well as Democratic gains in the House
and Senate, “Google would get a network neutrality rule
and policies would shift away from content distributors in
favor of content creators in Hollywood,” said Joe Lieber,
an analyst with Washington Analysis.
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The
Federal Communications Commission oversees the Internet,
as well as other media and telecom regulatory issues.
If elected, Obama or McCain would appoint new members
to the FCC. Under the Bush administration, the FCC has
three Republicans and two Democrats.
Historically, telecom stocks have underperformed the
general market under a Democratic administration, says
a Morgan Stanley report. With an Obama victory, phone
companies may face less-friendly regulation on a few
fronts, says the report. It says an Obama FCC would
likely take more consumer-friendly measures, such as
protecting wireless users from high fees when they terminate
contracts early. Small phone companies that focus on
business customers, called competitive local exchange
carriers, would fare better with a
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Democratic majority on the FCC, some analysts say.
CLECs would have a better chance of getting the FCC
to lower rates for “special access” lines
going to businesses, analysts say. AT&T and Verizon
charge CLECs for using their broadband lines to provide
business services.
“An Obama FCC would probably be more interested
in looking at special access,” said Blair Levin,
an analyst at Stifel, Nicolaus & Co.
Cable TV companies, meanwhile, wouldn't get a free ride
with an Obama administration, say analysts. It's unlikely
Obama would favour lifting merger rules that ban any
cable firm from serving more than 30% of the nation's
cable customers.
But cable TV firms would likely cheer changes at the
FCC. FCC |
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Chairman Kevin
Martin, a Republican, has been at odds with the cable
industry on many issues, including his plan to let consumers
buy channels a la carte instead of in packages.
The FCC chairman usually resigns at the end of presidential
terms. Martin isn't bound to do so, but might well leave
the FCC whether McCain or Obama wins. |
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“I
think no matter what, Washington gets a little better for cable
starting in January,” Gallant said. “How much better
depends on who's running the FCC.”
Obama's advisers on tech issues include former FCC Chairman
Reed Hundt, an advocate of “open” wireless networks
and co-founder of Frontline Wireless, a startup that sought
airwaves in a federal spectrum auction in 2007. Hundt sits on
the board of Intel and several other tech firms.
Another Obama tech adviser is Julius Genachowski, managing director
at Rock Creek Ventures, a Washington-based investment services
firm focused on new media.
McCain and Obama agree on some tech issues, such as the moratorium
on state taxes on Internet service charges. Both say they would
make the moratorium permanent.
One major difference, says a report by the Information Technology
and Innovation Foundation, is that Obama would create a new
cabinet-level position of “chief technology officer.”
The technology czar would work with federal agencies to ensure
they're using the best technology from the private sector. The
CTO would also oversee development of a long-delayed national
wireless network for emergency responders.
Among those said to be in the running for this post if Obama
is elected: Google's Vincent Cerf, Microsoft's Steve Ballmer
and Amazon's Jeff Bezos.
One reason investors may steer away from phone companies post-election,
analysts say, is that tax cuts on high-dividend yielding stocks,
such as telecom stocks, are set to expire in 2010. Even if McCain
is elected president, it's unlikely he would have the votes
in a Democratic-controlled Congress to extend the dividend tax
cuts beyond 2010, says the Morgan Stanley report.
Culled from http://www.investors.com |
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