Earlier this year, the Trump administration appointed Ajit Pai as the FCC’s (Federal Communications Commission) chair. On January 24, the Wall Street Journal reported that Pai may steer the FCC towards a deregulatory environment. The report also stated that Pai is likely to roll back some of predecessor Tom Wheeler’s rules and regulations such as net neutrality.
Last month, the FCC also stopped its investigation of telecommunication companies’ zero-rating policies. Under these policies, telecommunication companies like AT&T (T) and T-Mobile (TMUS) allow subscribers to stream videos from streaming services like Netflix (NFLX) without using up data from their data plans.
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Comcast (CMCSA) was asked at the Morgan Stanley Technology, Media & Telecom Conference late last month about how it expected the changed regulatory environment to impact its business. The company stated that it expected less regulation to have a positive impact on business.
Comcast made it clear that while it did support net neutrality, it didn’t favor the classification of net neutrality under Title II of the Communications Act. The classification of net neutrality under Title II has meant that broadband was expected to be regulated like any other utility service. Comcast also expects corporate tax reforms under the Trump administration.
A rollback in net neutrality rules under Trump could bode well for Comcast. It could mean that Comcast wouldn’t have to worry about third-party claims from streaming services for damages due to slowing down Internet traffic. It could also result in Comcast promoting its IP (Internet protocol) streaming service, Stream, on its broadband network. There is also the possibility that Comcast could charge Netflix a higher interconnection fee, which could boost Comcast’s revenue.
As the chart above shows, Comcast had 24.7 million high-speed Internet customers at the end of fiscal 4Q16.
Comcast makes up 0.82% of the SPDR S&P 500 ETF (SPY). SPY invests 3.4% of its holdings in the computer sector.