Broadband Regulation 'Inevitable,' But Many Questions Remain, Analyst Writes

Regulation is a concern to cable ISPs, but the business has an advantage in broadband and cord cutting may not accelerate much, MoffettNathanson analyst Craig Moffett wrote investors in a 35-page note Wednesday. The analyst firm expects what it called the traditional pay-TV base to contract about 1.2 percent annually. On the "new bugaboo in the otherwise rosy Cable Story" -- regulation -- Moffett said many questions remain, as the FCC net neutrality order deemed broadband a Communications Act Title II service. "Despite the FCC's promises that Title II is not inherently price regulatory, the path to price regulation is straightforward enough from here," the firm wrote. "But we're getting way ahead of ourselves. There are a staggering number of questions that would have to be answered before one can jump to an end game of price regulation." The firm has for a decade or so called broadband regulation "inevitable," and "we still think regulation is the big concern, and we still think that if you look out far enough, regulation is inevitable," wrote the analyst. "But regulatory risk cannot be called a permanent rally killer" in cable stock prices, he said.