
Why cable stocks surged after the FCC’s net neutrality proposal - Libertatea
http://www.washingtonpost.com/blogs/the-switch/wp/2015/02/05/why-cable-stocks-surged-after-the-fccs-net-neutrality-proposal/
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wcarss
I imagine there's a possibility that algorithmic-trading bots may have just
seen an uptick in news about these organizations and through a frenzy of
general "activity" drove the prices up. That signal might have led other, more
sane bots and people to make moves.

This would be similar to the idea raised in this Atlantic article[1], that
news of "Anne Hathaway" movie releases causes upticks in "Berkshire Hathaway"
stock. Perhaps there's also some sentiment analysis in there -- a lot of
people sounding happy and optimistic in articles about Comcast may be read as
a signal to buy.

1 -
[http://www.theatlantic.com/technology/archive/2011/03/does-a...](http://www.theatlantic.com/technology/archive/2011/03/does-
anne-hathaway-news-drive-berkshire-hathaways-stock/72661/)

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digi_owl
In other words, the reverse of a flash crash?

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dsr_
Huh. I thought the answer was obvious, so I'm wrong.

My explanation: private monopolies are subject to being broken apart by the
government. Government-regulated monopolies are not. Title II regulation means
that Comcast and ATT-Time-Warner-AOL-Prodigy-Verizon will survive forever, and
be profitable forever. Insanely profitable like a start-up? No, that's no
longer possible, but it wasn't before, either.

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AnthonyMouse
Pretty much, yes. The telecoms protestations to Title II have very much the
ring of "please Brer Fox, don't throw me into the briar patch."

What they want most of all is to be totally unregulated and have no
competition. But that isn't long-term stable. That's how you get everyone to
hate you with such a passion that it causes everyone to get together and do
something about it, and they have to know that. But if Title II and network
neutrality will keep the public's rage at a simmer rather than a rolling boil
then it means they don't have to worry about a stronger backlash like
widespread construction of municipal fiber.

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thirsteh
What, why? Google Fiber, municipal fiber, etc. will continue to exist and grow
regardless of how broadband is classified.

Title II doesn't mean "no competition."

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AnthonyMouse
Think what it does to Google's incentive to expand Google Fiber if the law
prohibits Verizon et al from doing the things Google is most afraid of them
doing. Imagine how much harder it would be to get voter support for a bond
issue to fund municipal fiber if the incumbent ISP can't (and there for
didn't) degrade performance of popular websites to favor their own competing
alternatives.

People fix things that are broken. If network neutrality makes Verizon's
network tolerable to everyone then support for expensive alternatives
disappears.

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sbov
Google has at least claimed net neutrality won't have any affect on their
current or future plans for fiber rollout.

Also, I think their incentives go beyond the throttling net neutrality is
meant to prevent. Google makes more money the faster our connections are.

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AnthonyMouse
> Google has at least claimed net neutrality won't have any affect on their
> current or future plans for fiber rollout.

We can distinguish between Google (the search engine) and Google Fiber (the
ISP). What Google Fiber is saying is that network neutrality won't make their
ISP business less profitable. That doesn't mean Google's search business is
going to have the same incentive to continue providing a de facto subsidy for
it in the form of new capital.

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zaroth
"What shareholders feared the most was the FCC swooping in to tell Internet
providers what prices they could and couldn't charge to consumers — and the
proposal currently doesn't call for that."

Well, currently we don't actually know what the proposal calls for. It would
be nice if we could read the full proposal, and not just the talking points in
an editorial. Personally, I'll wait till the document becomes public [1]
before drawing any conclusions.

[1] -
[https://twitter.com/AjitPaiFCC/status/563724099906568193](https://twitter.com/AjitPaiFCC/status/563724099906568193)

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wtallis
There's enough unambiguous information in the 4-page summary for it to
definitely be good news for incumbent ISPs provided it is at least a little
bit accurate. The summary makes it clear that there won't be unbundling or
rate approval, and there will be a QoS loophole of unknown severity. That's
enough news to justify investors taking action.

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maxsilver
It doesn't seem that complicated to me.

The stocks were down because people thought Title II might be happening. (rate
regulation, tariffs, last mile unbundling).

But it's not. Wheeler claims he's going to re-define (modernize) Title II, so
it's no longer contains the useful pieces (rate regulation, tariffs, last-mile
unbundling).

Since these monopolies are now being blessed by the Feds, there's almost-zero
risk that these providers will ever loose money. The stock jumped to reflect
this.

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sdfjkl
I bought some shares at an IPO as a long term investment a few years ago and
held onto them since. For shits and giggles I subscribed to the RSS feed for
this ticker on Google Finance. This feed contains a lot of stock ratings and
"buy/sell/hold" advice from various analysts. After comparing this to the
actual stock value for a few years in a completely unscientific process with a
far too small sample, I've come to the conclusion that either these guys don't
have a fucking clue about where stocks are going to go next or are
ineffectually trying to manipulate the market. I kept the RSS subscription to
remind me of this.

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eli
I would have assumed because the market dislikes uncertainty.

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CyberDildonics
If the proposal says nothing about video and decoupling it, then internet
companies can still sell you TV and internet, effectively selling you data
twice. But they will have competition they can't squash from netflix, youtube,
amazon, hulu, and many other places. I would think this would be a net loss.

What does it mean for competition between internet providers though?

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remarkEon
"In short, the markets are responding favorably because price regulation is
off the table, at least for now."

Has Wheeler ever seriously suggested this? This seems like needless
speculation. My understanding was that Wheeler's proposal specifically omits
that authority.

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rob_lh
I think the President's proposal specifically omitted that too. The larger
point made in the article about general misunderstanding of the implications
of net neutrality seems accurate but may prove specious. My fear is its a bet
on oligopoly.

Assuming investors are ignorant is convenient, but it may be a situation where
many investors were avoiding that industry because of the regulatory
uncertainty. Part of that uncertainty could be the possibility of the
government encouraging competition. In fact, this legislation defines how they
can operate the networks but does nothing to change the oligopoly of vendors
or the barriers to entry new competitors might face. An investor, then, could
reasonably view this as the entry point to an established oligopoly without
the fear of future government regulation disrupting that, at least over the
next decade or so.

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bjornsing
I can't help thinking of that for me most unexpected aspect of Wheeler's
announcement: that wireless will be subject to the same net neutrality rules
as wired. Could that have something to do with it?

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jader201
tldr can be found in the last sentence:

 _Which brings us back to Moffett 's original point: Nobody knows what the
heck is going on._

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datashovel
Anytime I see a stock surge in price with no explanation behind it, generally
I get the feeling it's big investors with alot of money in a stock who want to
exit. With a surge generally that's when "dumb money" enters, and precisely
when "smart money" is exiting.

Another explanation could be that the market is interpreting the move as "more
regulation == less competition".

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gweinberg
Doesn't make sense. Smart money getting out will drive prices down, not up. It
may be that dumb money is replacing smart money, but you have to be beyong
"dumb" to think smart moneyn getting out is a good reason to get in.

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datashovel
I guess everyone has their own theories. I'm happy to know you've been
successful with yours.

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tootie
Is this some sort of bizarro version of "buy on rumor, sell on news"?

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rhino369
Not even bizzaro IMO. Everyone knew this was coming and was priced in. When it
wasn't as bad as it could be the stock price went back up.

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bequanna
I think you're right.

The sentiment analysis trading bot explanation is more fun, but, I believe
that investors had priced in much more restrictive regulation and were simply
relieved to finally have clarity.

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rhino369
I think it was the possibility of more restrictive regulations.

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jMyles
I have feared throughout this 'discussion' that Title II designation will mean
more restrictions on the kinds of services that insurgent local networks
(especially mesh networks) might provide.

For example, it's not at all hard to imagine that this will mean that a local
mesh network must provide the same level of access to foxnews.com that they do
to local music content, despite the local content being far easier for the
network to deliver.

If anything, this might mean that this small number of large companies now
faces less plausible insurgent competition.

Although, for my part, I'm in favor of separation of network and state
generally.

