The Federal Communications Commission (FCC) once again entered the land of unintended consequences with its proposed net-neutrality ruling for broadband communications.
With this move, the regulator accedes to President Barack Obama’s pressure to declare wireless and wireline broadband a public utility service, subjecting these businesses to Title II regulation.
This proposal would outlaw network owners from granting preferential treatment to one content provider over another, prevent them from slowing down bandwidth hogs that download large amounts of data and do away with plans where customers pay extra for faster service.
Rest assured that this proposal will face challenges in court and from the Republican majority in both houses of Congress. A Republican president could also overturn the net-neutrality rule by appointing industry-friendly commissioners.
And if net neutrality survives these challenges, enforcement will require yet another layer of record-keeping on the part of the industry. For the telecom industry’s biggest players, this paperwork represents another task for their massive legal and regulatory teams to handle.
But this burden would put a nail in the coffin of the handful of smaller US telecoms fighting desperately to survive another.
Net neutrality would also likely discourage new players such as DISH Network Corp (NSDQ: DISH) from developing their own networks to take advantage of the wireless spectrum that the firm won in the FCC’s most recent auction. (See Sector Rotation and Deals, Deals, Deals.)
Of course, curbing the big telecoms’ dominance isn’t easy in an industry where scale is critical.
“Better Networks, Better Customers” lists how much each of the US-based telecoms that we cover in our Utility Report Card spent on their networks last year and their fourth-quarter churn rate, or the percentage of their contract customers who dropped their wireless service.
AT&T (NYSE: T) and Verizon Communications (NYSE: VZ) continue to outspend their rivals and account for 57.5 percent of the capital expenditures in our table. Exclude companies that don’t offer wireless service, and the big dogs account for 79 percent of industry spending.
These massive investments in network quality and coverage help to ensure that AT&T and Verizon Communications boast the lowest churn rates in our table.
Although T-Mobile US (NYSE:
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