Now that Donald Trump has won the presidential election and Republicans will control Congress, many investors may be wondering how a new communications and technology policy in Washington may affect investment opportunities. Below, I review several related topics.
Spectrum policy
Demand for spectrum grows far more rapidly than the economy putting substantial upward pressure on the prices for spectrum. For the past several years, no additional federal spectrum has been made available for auction by the FCC. The Upper C-Band and the Upper 12 GHz band hold the most promise for transfer, but even these band would likely take several years to coordinate and clear for terrestrial commercial use. Secondary market transactions for spectrum, such as the Echostar portfolio, should be easier to execute in the new Trump Administration and should lead to greater allocation efficiency. Don’t expect upward price pressure on spectrum from increased demand to subside soon.
Space policy
The United States is at the center of global space innovation, particularly with low-earth-orbit constellations and space-based communications networks. Space technologies are increasingly at the center of national security interests with anti-satellite technologies developed by our military adversaries. The challenge for the new Trump Administration is to keep the United States at the forefront of space technologies and services. It is difficult to see a scenario where satellite services are less important four years from now than today, and many satellite companies are privately held with possible IPOs in the near future. Consequently, investments in broad portfolios of space technologies and services should be profitable.
Drone policy
Drone technology advances rapidly. Warfare in Ukraine and in the Middle East is increasingly influenced if not dominated by drones. Countless businesses are developing non-military applications for drones. Unlike space technology, drone technology is not dominated by the United States, and current regulations complicate the development of many drone services. Drones will be more important four years from now. As with space technologies and services, many drone companies are privately held, and an investment in a portfolio of drone companies could be profitable.
Mergers and acquisitions
Transactional work in the communications and technology sector was limited during the Biden Administration in part because the Administration was often viewed as skeptical of such transactions, particularly involving large corporations. The new Trump Administration should be more accommodating of such transactions. Pent-up demand for transactions should be relaxed with more transactional activity over the next two years.
Antitrust investigations
Under the Biden Administration, the Antitrust Division of the Justice Department and the Federal Trade Commission launched investigations and complaints against Big Tech companies such as Google and Amazon. New heads of antitrust agencies will likely review the ongoing investigations and complaints. No one knows yet whether the Trump antitrust chiefs will continue some “hipster” antitrust theories advanced by current FTC Chair Lena Kahn or will instead revert to the market framework of antitrust law that prevailed for the preceding decades.
Online content
President-elect Trump and his allies have been troubled that government officials in some instances in the past may have coerced some online sites into promoting certain content and blocking other content. President-elect Trump has announced that his Administration will not allow government employees to tell online sites what content to allow or to block. On the other hand, the new Administration may take a critical review of the possible legal limitations of Section 230 that has thus far provided a safe harbor to online sites for liability for uploaded content.
Broadcast political content
The new Trump Administration may take a critical review of broadcast political content with FCC licenses. Several instances during the recent political campaign raised questions about whether licensees were adhering to FCC rules.
Cybersecurity
National security is increasingly tied to cybersecurity. All recent administrations have been equally incapable of stopping bad actors from harmful conduct on the Internet including the following: stealing personal information from practically every American; demonstrating a capability to infiltrate sensitive military, intelligence, financial, commercial, and infrastructure networks; engaging in unbounded criminal activities; and using the Internet to plan and to coordinate terrorist activities around the world. Practically every agency in the new Administration will have an interest in improving cybersecurity, although no single agency is specifically responsible.
Privacy policy
Several states, the European Union, and many countries around the world have privacy laws aimed at that Internet. There is no reason to expect the new Trump Administration to adopt the privacy policies of individual states, much less those of other countries. The United States, the effective center of the Internet, has no federal privacy law. While several privacy bills have been introduced in Congress in recent years, none has progressed very far. While practically every federal agency has privacy officer and privacy rules, no single agency is specifically responsible.
Communications equipment
Relatively little communications equipment that American consumers purchase is manufactured in the United States. Instead, much is manufactured in China and other countries. For national security and economic reasons, President-elect Trump has threatened to impose sweeping tariffs on imports. While the threats have been painted with a broad brushstroke, the real challenge is to craft an effective tariff policy for communications equipment that meets national security purposes without undermining the substantial economic benefits of trade to the American consumer. Economic realities mean that government intervention with undisciplined tariffs or manufacturing subsidies—such as the tens of billions of dollars spent on the CHIPS Act—do not necessarily benefit American manufacturers or workers.
General regulatory underbrush
Businesses in every sector of the economy, including the communications and technology sectors, face substantial regulatory challenges from limitations on commercial activities, to restrictions on hiring and firing employees, and to unending paperwork. The new Trump Administration will be sympathetic to cutting away some of the regulatory underbrush.
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