Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

ETF Winners & Losers If FCC Repeals Net Neutrality

Published 11/27/2017, 02:36 AM
Updated 07/09/2023, 06:31 AM

In a move to bolster deregulation in the telecom space, Federal Communications Commission (FCC) unveiled a draft to repeal the Net Neutrality regulation undertaken in the Obama era. The FCC is slated to vote on the proposed changes at its next monthly meeting on Dec 14.

The rules so far have prevented high-speed Internet service providers (I.S.P), from stopping or slowing down the delivery of websites. They also inhibited the companies from charging customers additional fees for high-quality streaming and other services, as per the source.

Below we highlight a few ETF winners and losers if the FCC rule is passed.

Winners

All ISPs along with several cable TV and telecommunications industry behemoths have been fervently opposing Net Neutrality. The Obama era move proved to be less profitable for these companies thanks to a deluge of prohibitions.

Abandoning of the discriminatory policy in turn results in lower investments in the high-speed broadband sector. In any case, “per a recent study by USTelecom, investment in broadband infrastructure declined from its peak at $78.4 billion in 2014 to $77.9 billion in 2015 and $76 billion in 2016.”

Needless to say, such prohibition will make telecom ETFs winners.

Vanguard Telecommunications Services ETF (MU:VOX)

The fund gives exposure to the telecom industry. Verizon Communications (NYSE:VZ), AT&T (NYSE:T) and Level 3 Communications are the top three holdings of the fund. It holds 27 stocks in total and charges 10 bps in fees (read: ETFs to Watch on Telecom Earnings).

Fidelity MSCI Telecommunication Services Index ETF FCOM

The fund represents the performance of the telecommunication services sector in the U.S. equity market. Verizon Communications takes about 23.3% of the fund followed by AT&T (22.2%) and T-Mobile US (4.65%). The fund charges 8 bps in fees.

Losers

The announcement and the likely repeal of the rule is likely to put pressure on Internet-based companies like Google (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN) . Higher broadband prices and tolls for content could be imminent outcomes, as per an article published on usatoday.com. This is because content developers might have to pay higher sums to ISPs for high-speed data transfer.

Christian Dawson, executive director of i2Coalition, a group of Net infrastructure companies which includes Amazon and Google went on to explain that "this vote will negatively impact small and medium-sized Internet business, and has the potential to decrease jobs and economic growth system-wide”, to the benefit of a very few large organization, quoted on usatoday.

Side by side, consumers may also be negatively impacted by this move as they might end up paying high charges.

So, a few Internet and consumer ETFs need to be watched out.

PowerShares NASDAQ Internet Portfolio PNQI

The underlying index looks to track the performance of the largest & most liquid U.S.-listed companies engaged in Internet-related businesses and that are listed on one of the three major U.S. stock exchanges. The fund charges 60 bps in fees. Internet software and services companies account for about 56.1% of the fund. Amazon.com, Netflix (NASDAQ:NFLX), Alphabet and Facebook (NASDAQ:FB) are the top four holdings of the fund (read: Top-Ranked Tech ETFs to Buy on Facebook's Robust Q3).

Global X Social Media Index ETF (CM:SOCL)

The fund looks to track the Solactive Social Media Total Return Index. Tencent Holdings (11.3%), Twitter (10.3%) and Facebook (9.8%) are top three holdings of the fund.

iShares US Consumer Services ETF IYC

The fund looks to track the price and yield performance of the Dow Jones U.S. Consumer Services Index. Retailing (40.2%), Media (21.6%), Consumer Services (17.3%) and Food & Staples Retailing (12.79%) are the top four industries here (read: Amazon ETFs to Buy on Q3 Blowout Results).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>



Amazon.com, Inc. (AMZN): Free Stock Analysis Report

Alphabet Inc. (GOOGL): Free Stock Analysis Report

PWRSH-ND INTRNT (PNQI): ETF Research Reports

GLBL-X SOCL MDA (SOCL): ETF Research Reports

FID-TELECOM (FCOM): ETF Research Reports

VIPERS-TELE SVC (VOX): ETF Research Reports

ISHARS-US CN CY (IYC): ETF Research Reports

Original post

Zacks Investment Research

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.