Wednesday, April 19, 2006
2 + 2 = 7
I think I surprised a few clients at the beginning of the year, when I doubled the RBOC exposure in my model portfolio. As I made clear at the time (as if I needed to given my usual outspokenness), this was not out of a sense of personal admiration, but rather a cynical way to exploit anxieties over net neutrality issues and some obvious shortcomings in the state of regulation Stateside. After all, there a lot of non-smoking, pacifist, environmentally conscious fund managers out there who own tobacco, arms and chemical companies. Now the naughty Europeans have gone and added fuel to my argument by shaming Uncle Sam with their dramatic broadband growth, and causing a lot of soul-searching as to the costs to America of broadband laggardship. Having effectively killed off facilities-based competition in the US, creating regional cable/RBOC duopolies, what would we expect the American broadband call to arms to look like? Maintaining my cynical stance, I couldn't imagine a better template than this policy piece, whose conclusions are are eerily close to the RBOC agenda (tax and regulatory relief on broadband investment, streamlined franchise processes), and very far from the mix which made Europe the somewhat debatable success story it is today.