Net Neutrality, Google Fiber Plans Pound Cable StocksComcast, Time Warner Cable Take Biggest Hits 2/19/2014 4:45 PM Eastern
Cable distribution stocks took a pounding on Wednesday after the Federal Communications Commission said it would seek to restore Net Neutrality rules, followed by an announcement by online giant Google intends to expand its ultra-high-speed Internet service Google Fiber to another nine new metro markets.
FCC chairman Tom Wheeler said Wednesday that he planned to restore Net Neutrality, the regulation that prevented Internet Service Providers from unfair blocking of and discrimination against Internet content.
Later Wednesday, in a blog posting, VP of Google Access Services Milo Medin wrote that the online giant intends to expand its Google Fiber project to nine new metro markets, eventually expanding its reach to 34 cities across the country. While Google gave no details as to when it would launch the new areas – which include cities like Atlanta; Nashville, Tenn.; Phoenix; and San Antonio, Texas – it said it had contacted officials in those areas to “work with us to explore what it would take to bring them Google Fiber.”
Cable distributors took a beating in the wake of the announcements, which could adversely impact one of their most profitable products – broadband service.
Comcast took the biggest hit, falling 3.7% ($1.96 each) to $51.57 per share, followed closely by its future merger partner Time Warner Cable, down 2.75% ($3.98 per share) to $141 each.
Elevation Partners media analyst Steve Sweeney said the FCC Net Neutrality efforts could point to an even more stringent Comcast/TWC merger approval process.
“It’s logical to assume that the FCC is going to extract whatever they can from Comcast with regards to Net Neutrality to get this deal approved,” Sweeney said.
Other distribution stocks fell as well – Charter, which lost out in the bidding for TWC, fell $1.81 each (1%) to $130.44 per share and Cablevision Systems dipped 2% (34 cents) to $16.12 per share.
Sweeney said while Google Fiber didn’t announce specific details – the blog post said the company has contacted government officials in the nine markets to determine what it would take to bring Google Fiber to their areas – it proves that the high-speed offering is not just an experiment for the online giant.
“It seems like it’s for real now,” Sweeney said.