Broadband Plan Winners And Losers

Analysts are already picking potential winners and losers in the National Broadband Plan based on key themes that have already been identified, such as mobile broadband networks and spectrum swaps.

Fast, new broadband networks will require cell towers, wireless routers and fiber optics. Equipment makers such as Juniper, Cisco and Ciena will likely benefit from the increased spending, says Rebecca Arbogast, a managing director at investment bank Stifel Nicolaus. RBC Capital Markets analyst David Coleman believes Florida-based tower operator SBA Communications will also profit, due to its "rural tower portfolio." A proposal as wide-ranging as the broadband plan also naturally creates losers. Players with "potential downside" include broadcasters, Cisco and Motorola, says Arbogast. Broadcasters may be asked to vacate wireless spectrum to make room for data networks. Cisco and Motorola, along with other companies that make cable set-top boxes, are worried the FCC will include new video-streaming standards in the broadband plan, says Arbogast. Such a move would help consumers share content between devices but could also disrupt a profitable market for manufacturers.

The FCC also wants to reform the universal service fund (USF), an $8 billion federal fund built from tolls paid by telecom companies. Historically, the USF has helped smaller carriers subsidize local phone service. To achieve its broadband goals, RBC's Coleman believes the FCC will create a separate USF for broadband service or redirect the existing fund to pay for broadband deployment in "high-cost areas." Tweaks to the USF would probably benefit the largest telcos, such as Verizon, AT&T and Sprint, since they typically pay the most to the fund, says Arbogast.