On February 10th 2009 Thomas J. Navin, Partner, Wiley Rein LLP and Former Chief, FFC’s Wireless Competition Bureau, sat down to be interviewed by Walt Sapronov, Partner, at Sapronov & Associates, P.C. The purpose of this interview for Navin was to discuss how regulatory developments in the industry will effect investment decisions.
Speaking first about the broadband stimulus, Navin noted that it is a positive sign for the telecommunications space due to the fact that the government is recognizing that broadband needs to be subsidized. “In this case, they’re making the determination to subsidize broadband through specific funding provided by the Congress, rather than through the FCC’s existing mechanism known as the Universal Service Fund. I think that’s extraordinarily positive.”
Moving on to the senate version of this legislation, Navin stated that it is more restrictive than the one that is coming out of the House. “The Senate bill restricts the money to either states or political subdivisions of states or organizations, non-profit organizations in partnership with states or political subdivisions of states.” On the other hand, Navin noted that the House legislation is more open with regard to entities that are open for broadband funding.
On the issue of how existing universal service subsidies will interrelate with the new initiative, Navin responded that, depending on how the money is reprioritized, there could be a substantial revenue stream flowing into broadband stimulus.
Later, Sapronov brought up the issue of network neutrality, and what becomes of the policy if large companies refuse to open their networks to all comers. Navin responded that network neutrality as it relates to internet openness has yet to be properly defined, adding that the FCC currently does not have rules relating to internet openness. “The question is, is the government going to come in after they’ve made these investments and tell them how they can price those networks or who they have to offer service to and where they have to offer service?”
Sapronov then asked Navin if he felt the FCC would pursue a wireless open platform, to which Navin replied that if the FCC goes down this road, they will likely do it in advance of the capital investment. “That is to say, if you take this grant money, here are the obligations that will apply to it.” Navin added that though this makes sense, he believes that there is considerable opposition to even this much government involvement.
To conclude the interview, Sapronov asked if there was anything else Navin was looking at in the regulatory arena that may affect investment decisions. Navin answered that because of the general instability in the markets, the FCC will take the approach of bringing additional money to the problems. “So if they just bring additional money, particularly to the extent that it’s through general appropriations, I think that the telecom space should be fairly stable.” Navin added that the FCC faces the same slowing problem that affects the rest of the economy, but expressed his belief that this will not be terribly disruptive.