Peter Kafka

Recent Posts by Peter Kafka

Why the Cable Guys Should Stop Worrying and Learn to Love the FCC

Hey, cable guys (and cable investors): No need to freak out about the Federal Communications Commission. At least, not yet.

That’s the counsel from Barclays analyst James Ratcliffe, who thinks concern about FCC head Julius Genachowski’s “third way” proposal is overblown.

Genachowski’s plan–in short, he wants the power to regulate broadband, but promises not to really regulate broadband–shouldn’t have surprised the market. Because that’s basically what he’s been saying for some time. But yesterday cable stocks like Comcast (CMCSA) and Time Warner Cable (TWC) tanked (before everything else tanked) on his most recent pronouncements.

Relax, says Ratcliffe. He thinks the “network neutrality” framework Genachowski wants to install won’t “limit broadband providers from doing anything they reasonably could have expected to do anyway.”

And he spells out exactly what Genachowski wants the power to enforce:

Section 201: Prohibits carriers from unreasonably denying service and requires that pricing for service be “just and reasonable.” In addition, the section requires carriers to connect with other carriers when the Commission finds that connection to be in the public interest.

Section 202: Prohibits carriers from engaging in “unjust or unreasonable” discrimination among customers or localities when it comes to providing or pricing services.

Section 208: Allows individuals or municipalities to complain to the FCC if the terms of the Act are violated, and requires carriers to either correct the violation or respond in writing arguing that the Act is not being violated. Importantly, the section expressly states that the lack of direct damage to the complainant is not grounds for dismissal of the complaint (in other words, there is no requirement that the complainant establish standing in order to complain).

Section 222: Requires carriers to keep customer information and customer usage information confidential. In the telecom world, this applies to call volumes and destinations, primarily. In the broadband world, it would apply to browsing habits, contents and destinations of emails, etc.

Section 254: Would expressly classify broadband as a service for which the FCC is empowered to work toward universal service, and, potentially, enable the FCC to include broadband service in the pool of services which are taxed to contribute to universal service deployment.

Section 255: Requires carriers to make their services usable by people with disabilities, if “readily achievable.”

Sure, the cable guys would like to see less of this, not more. But the cable guys have always had to work with government regulation–the only question is how much and what kind. Most important in Ratcliffe’s eyes is that, “just and reasonable” pricing clause aside, Genachowski is specifically not looking for the ability to regulate rates.

The cable guys’ worry: What if Genachowski changes his mind–or if one of his successors does?

Maybe Genachowski can allay some fears next month when he’s onstage at the D8 conference.


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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work