One day after noted cable industry analyst Craig Moffett downgraded the stocks of Comcast (NASDAQ: CMCSA), Time Warner Cable (NYSE: TWC) and Charter Communications (NASDAQ: CHTR) to neutral on fears of cord-cutting and price-regulation tied to Title II Internet reform, analyst Jonathan Chaplin stepped forward with a dissenting viewpoint.
"In our view, concerns over cord cutting and regulation are overblown and cable assets are among the most compelling opportunities we see globally," wrote Chaplin in an email Wednesday, introducing a new report compiled by his firm New Street Research.
Despite claims by FCC Chairman Tom Wheeler that the agency won't seek to regulate pricing of ISPs, Moffett believes such regulation will occur anyway, and that MSOs won't be able to offset video business declines with price increases for broadband services.
Chaplin, however, believes price regulation is a long way off. He notes that recent comments by FCC Commissioner Ajit Pai's chief of staff, Matthew Berry, indicate that Wheeler's Title II-oriented vision has a long way to go before it becomes the law of the land.
Republican Pai is one of two commissioners on the FCC's five member commission body opposed to the regulation.
"We are likely to prevail in our long-run effort to preserve our nation's successful and bi-partisan light-touch regulatory approach to the Internet," said Berry in a speech delivered earlier this month. "There are at least three routes to success. First, the commission's Title II order could be vacated in court. Second, Congress could pass legislation overturning the commission's Title II regulation and replacing it with compromise language for protecting the Open Internet. Or third, after the 2016 elections, a new FCC majority could reverse the commission's decision. Notably, Title II opponents need to win only one of these fights while Title II supporters must prevail in all three."
Adds Chaplin: "We think such price regulation is unlikely."
Related links:
Comcast, TWC and Charter downgraded to neutral on analyst concerns over Title II, cord-cutting
Analyst cuts Netflix estimates in half, says keeping up with HBO won't be cheap
FCC's new broadband definition further imperils Comcast-TWC deal
Update: MoffettNathanson retracts Q4 commercial volume report