Investors send cable provider shares up after new details emerge about net neutrality proposal

Economic IndicatorsAssociated Press

Share of cable providers jumped on Wednesday, before giving up some of the gains, after the Federal Communications Commission Chairman Tom Wheeler outlined his proposal for "net neutrality" regulations in the greatest detail yet.

The plan calls for dramatically expanding the government's power to oversee Internet service providers and establishing new rules that would prohibit companies from blocking or slowing data. The FCC will vote on the issue Feb. 26.

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The cable industry is fighting the regulations, which treat Internet service more like a public utility, because it says it's only a matter of time before the rules grow more stringent and the FCC regulates how much Internet providers can charge.

Still, in an op-ed piece in "Wired" magazine Wheeler said he would not use the new regulations to tell broadband providers how much to charge customers, as the law would allow.

Shares of cable companies jumped on the news but then gave up some gains, as cable companies and investors alike sifted through the news.

Comcast Corp. shares rose $1.49, or 2.7 percent, to $56.90, after earlier jumping nearly 5 percent when Wheeler's piece was published. The stock has been down about 5 percent since the beginning of the year.

Time Warner Cable Inc. shares rose $2.87, or 2 percent, to $145.68, after earlier rising 5 percent on the news. The stock had been down 6 percent since the beginning of the year.

Charter Communications Inc. shares rose $5, or 3.2 percent to $162.97. The stock had been down about 5 percent on the year.

Cablevision Systems Corp. shares rose 23 cents to $19.83 after earlier rising about 3 percent. The stock is down about 5 percent since the beginning of the year.

Cable companies declined to comment. Time Warner Cable referred to the National Cable & Telecommunications Association, which made a statement that the proposal goes "far beyond" establishing net neutrality protections and will "result in a backward-looking new regulatory regime."

Citi Investment Research analyst Michael Rollins said there are still unreleased details that are important to assessing the proposal. It's not clear whether the rules will prohibit a broadband internet service provider to manage its own streaming service differently than how an independent streaming service like Netflix would travel over its same network. That would make a difference if a broadband service provider is trying to sell that service on higher-quality video service.

"We believe the unintended consequences of regulation (such as state involvement), ability to manage quality of vertically integrated services, sponsored data programs, and interconnection remain important topics that need to get addressed," he said in a client note.