• FCC Begins Series of Broadband Capital Formation Hearings
  • October 20, 2009 | Authors: Jennifer L. Richter; Carly T. Didden; Jennifer A. Cetta
  • Law Firm: Patton Boggs LLP - Washington Office
  • As part of its National Broadband Plan, the FCC will hold a series of hearings over the next several months about investment and capital formation in the broadband sector. The FCC plans to address the following issues in the hearings:

    • what steps will help make the telecom, media and broadband sectors attractive for capital investment;
    • what are the appropriate levels of return on capital investment in broadband ventures;
    • how to balance consumer-oriented goals for broadband deployment with investment-oriented goals;
    • how to best leverage private capital with public capital for broadband projects; and
    • what steps to take to unleash market forces or fix market failures to encourage capital investment in broadband.

    At the first hearing held on Oct. 1, all the panelists urged the FCC to create regulatory certainty in order for the capital markets to respond with investment. Most of the panelists agreed that regulatory certainty is also needed with respect to net neutrality and a quick resolution is appropriate. The panelists agreed that regulatory certainty and consistent policy is good for capital markets, with a preference for a light regulatory touch. General Partner of Novak Biddle Venture Partners, Phil Bronner, said broadband could have a dramatic impact on the economy and, at Novak Biddle, they “bet on innovation” including WiMAX. Bonner seemed concerned, however, that national ubiquitous broadband will not be achieved in the near future because “the cost of capital is quite frankly too high to roll a lot of these things out.” Dean Manson, Senior Vice President, General Counsel and Secretary of Hughes Communications, Inc., stated that “truly national broadband coverage cannot exist without satellite systems.” Monish Kundra, a Venture Partner at Columbia Capital, echoed Chairman Genachowski belief that broadband creates a large multiplier for the rest of the economy. He also noted that investors are concerned about continuing operation of broadband and broadband infrastructure, and that broadband stimulus funds do not really alleviate investors concerns. Kundra said investors have their eye on 4G technology and future-proofing broadband networks.