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March 20, 2017 by Tom Cohen

Unleashing Broadband Providers

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FCC Chairman Pai has been on the job for less than two months, and he is already acting to “unleash” broadband providers. Restrictions on usage-based pricing are going out the door. So, too are restrictions on zero-rating plans. And, the handwriting is clear that broadband providers will be able to collect and use their customers’ information within more reasonable bounds to better target current offerings and create new ones. At some point, I expect the heavy handed open Internet rules will be gone and replaced by light-touch transparency requirements and principles about “no blocking or throttling” not dissimilar from those adopted in 2005. This opens the door for providers to enhance their network capabilities and roll out new services.

Broadband providers, however, should understand that Chairman Pai – along with the federal antitrust authorities -- will seek to apply his market-oriented approach across the board. That means that all but the most egregious horizontal mergers will be permitted -- few deals will be “unthinkable” – and this will encourage more transactions.  In the end, the big will get bigger as they seek additional scale and scope to battle with each other. And, as these deals are consummated, smaller providers may be collateral damage, as the bigger players squeeze wherever possible.

In a very real sense, Chairman Pai’s hands-off approach is telling providers you will have more freedom operate, but you need to take control of your own destiny. Your businesses are already highly competitive, and they will only become more so. Yet, consumer demand continues to grow, interest rates are still low, and markets value providers with robust infrastructure more than ever. All of these indicate, you need to speed up investments in your future. Standing still will only get you run over.