Back in 2015 the Federal Communications Commission set out strong rules for what’s called “net neutrality.” The rules prevented Internet service providers like cable company Comcast (CMCSA) and phone company Verizon (VZ) from charging companies that use the Internet to provide content a fee to provide access at higher speeds. The decision was a big deal for companies like Amazon (AMZN) and Netflix (NFLX) that live and die with the speed of Internet downloads for video.
But now President-elect Donald Trump has named two advisors, Jeff Eisenach and Mark Jamison, to help set his administration’s telecommunications agenda at the FCC who are adamant opponents of net neutrality. Eisenach, who signed on as an advisor during the campaign advocated against net neutrality while the rules were being drawn up. He has worked as a paid consultant for Verizon. Jamison has worked as a lobbyist for Sprint. Eisenach works at the American Enterprise Institute and Jamison is a professor at the University if Florida.
Not too hard to tell where these guys come down on the issue. Nor is it surprising that Trump picked two opponents of a policy that he has publicly opposed as part of his transition team.
Winners if a Trump FCC kills net neutrality and lets Internet Service providers charge more to content companies for access to their networks at higher speeds? Verizon, AT&T (T), Comcast, Charter Communications (CHTR), and Sprint (S) among others.
Losers? The biggest loser is Netflix, which currently accounts for 35% of North American Internet traffic. Others in this group include any content company with big video business–Amazon, Alphabet (GOOG), Disney (DIS) and the like.
There are limits to how big a price increase Internet service providers might impose since many of them are in or are getting into the content business themselves. (AT&T, Comcast, and Verizon, for instance.)
Of course, those limits might well depend on how rigorously a Trump administration FCC polices the prices that Internet service providers charge to internal businesses and external companies.
I think you can also count on a Trump FCC being less intrusive in looking at mergers of big communications companies such as the pending acquisition of Time Warner (TWX) by AT&T.
Verizon is a member of my Dividend portfolio. Softbank Group (SFTBY), the majority owner of Sprint, is a member of my Jubak Picks portfolio. Amazon, Alphabet, and Facebook are members of my long-term 50 Stocks portfolio.
