Tuesday, December 8, 2015
The Regulatory Uncertainty Red Herring
I wish I had a dollar every time I see and hear regulatory uncertainty vilified. In telecommunications regulation and policy, stakeholders involve RU as the reason for any ailment. RU prevents capital investment; RU stifles innovation; RU kills jobs; RU hurts national competitiveness. RU causes the common cold.
Here’s a news flash: unless one operates in a market completely free of regulation, there always will be some degree of uncertainty what the future regulatory climate will be. Speaking of uncertainty, who knows what the cost of capital will be in a year, what law suits will confound a particular company; what technological innovation will challenge the status quo?
Regulation constitutes one of very many variables for which a commercial venture cannot control. Companies have to deal with it, but in this day telecom executives speak in complete opposites depending on the audience. To Congress, the FCC and the court of public opinion corporate executives trout out RU as a terrible scourge. To buy side analysis and in commercial practice the very same executives accept RU as one of many variables in business.
Has RU prevented wireless companies from making substantial sunk investments in next generation network spectrum and plant? If RU is such an abomination how can AT&T CEO Randall Stephenson tell one constituency AT&T has had to curb capex investment while at the same time the company pays 45 billion dollars to acquire DirecTV and may offer its own mobile video streaming service?
So let me get this straight: RU curbs innovation and investment even as billions of dollars in mergers, acquisitions and new ventures continue to sprout.