Trivatech Group. Telecom and Data Consulting. Election day affect on Telecom and Tech.

“In this world of technological convergence, in which companies offering internet, video, and traditional communications services are merging (some quite literally and others through expanding their business lines), investors should know that there are some critical decisions on the horizon regarding regulation in these markets. Those decisions will impact whether companies invest robustly, whether distributors of content will have the right incentives to continue innovation in that space, and many other issues.

 Watching the returns on Election Day will be important, but also watch those critical appointments in regulatory agencies over the coming year to get a fuller flavor of the impact of government regulation on markets.

Washington now enters the final stretch of an unusually-stressful election season. Ending the uncertainty may be good news for business in a sense, but what will the next president do?

 A new President, after all, appoints not only important cabinet posts, but also, just as important, the new chairs of regulatory bodies such as the FCC, FERC and, of course, the SEC and CFTC. As we’ve seen in the last eight years, these regulatory agencies can exercise a powerful influence on shaping key economic decisions, not only for the regulated companies but also for consumers and investors. Those personnel decisions impact the economy and jobs very directly.

It’s especially important in tech, media and telecom. According to one estimate, communications technologies account for about one-sixth of the economy, with a regulator (the Federal Communications Commission) that is constantly seeking to expand its scope and mission, sometimes even without adequate Congressional authority or legal justification.

Not long ago, there was a bipartisan consensus that the country needed more communications technology and that private investment was the best way to make this happen quickly. The subsequent torrent of infrastructure investment that followed deregulation enabled the Internet economy to take off, empowered consumers and extended benefits to virtually all companies that use advanced broadband technologies, in terms of productivity effects and other benefits.

 In recent years, though, we’ve seen a change. Given a choice between encouraging the private sector to invest to build new facilities or to lobby to gain access to the facilities already built by others, it seems that the FCC has chosen “lobby” every time. Such short-sighted policies sell out necessary investments for our future in exchange for instant gratification for some rent-seekers today.

To take a current example, in the continuing debate over “special access” lines (now called business data services) used by big businesses, schools, hospitals, and other large institutions, the FCC is pushing hard for new price controls that will not permit companies to recover their full investments in these broadband deployments. Rather than regulating only in areas where an incumbent has clear market power, the agency wants to regulate in areas in which three or four companies compete, in essence picking winners and losers and favoring the business models of a few companies that free-ride on the prior investments of others. Needless to say, this type of direct interference in functioning, competitive markets — in which faster technologies are being deployed all the time – has a sharply negative effect on investment.

On a happier note, the FCC has also been engaged in a long and complex auction process to make more wireless spectrum available for business and consumer use. If this auction is successful, with more spectrum, we should expect another boom in wireless and more businesses will be able to increase their productivity through faster wireless broadband.”

Interesting read.

Please get out and Vote.

Trivatech Group.

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