AT&T said this week that it will "pause" its gigabit Internet rollout until it has a better idea of what the government will do regarding net neutrality.
In April, AT&T committed to expanding its ultra-fast fiber network to cover up to 100 cities nationwide, including 21 major metropolitan areas.
But on Monday, President Obama urged the Federal Communications Commission to reclassify broadband as a telecom service rather than an information service in its upcoming net neutrality rules. The move would give the FCC more power to regulate ISPs (like AT&T) and wireless carriers.
Not surprisingly, the industry had a fit. But AT&T is apparently doing more than complaining — it's pausing the rollout of gigabit Internet."
We can't go out and just invest that kind of money, deploying fiber to 100 cities other than these two million (covered by the DirecTV deal), not knowing under what rules that investment will be governed," AT&T Chief Randall Stephenson said during an appearance at a Wells Fargo conference, according to a transcript provided by AT&T. "And so, we have to pause, and we have to just put a stop on those kind of investments that we're doing today."
By reclassifying broadband — a move known in DC-speak as Title II — "it becomes unclear even how those kind of services would be regulated," Stephenson said. "And so, we just think it's prudent to just pause. Let's pause; let's make sure that we have line of sight and understanding as to what this process looks like, where these rules can conceivably land, what those rules would look like, and then let's reevaluate. But we're in a pause moment right now on those kind of investments."
AT&T U-verse with GigaPower is already available in Austin and Dallas-Fort Worth, Texas. It also had plans to expand to Cupertino, Nashville, Raleigh, and more.
AT&T declined to comment on specifics of the pause. But Stephenson said "I hope we're not sitting here on pause for an extended period of time until we have line of sight."
As for what that line of sight should include, Title II is the wrong approach, Stephenson said. For 20 years now, established rules have said that telecom and wireless is an information service, not a telecom service, he argued.
"Twenty years, multiple administrations, multiple chairmen and FCCs have supported that ruling, and then that has been actually upheld by the Supreme Court of the United States," he said. "So, if you want to go down this path and allow the FCC to make this determination, that these are in fact regulated services, there is a mechanism at the FCC to do that."
But if they do it, Stephenson warned, the FCC will probably get sued. "There is no doubt whatever happens here, either way, is going to be litigated," he said.
The road to classifying broadband as an information service made its way to the Supreme Court via the Brand X case, so he probably has a point.
It's not a guarantee that the FCC will take the approach suggested by Obama. As the president pointed out, "the FCC is an independent agency, and ultimately this decision is theirs alone."
According to The Washington Post, FCC Chairman Tom Wheeler told industry officials that he was "moving in a different direction" from the president's proposal."
What you want is what everyone wants: an open Internet that doesn't affect your business," Wheeler told reps from major tech firms, according to the Post. "What I've got to figure out is how to split the baby."
According to Stephenson, Wheeler has been "diligent" in trying to craft rules on which all sides can agree. But the president's proposal is "effective end-to-end regulation of the Internet," and that's not something AT&T can support.
Wheeler said publicly this week that he would take the president's proposal into consideration, but that whatever happens, he was going to take his time, so don't expect a resolution before year's end.
AT&T's pause, meanwhile, is perhaps Google's gain. Its Google Fiber rollout continues, and it recently announced plans for a business version of the service in Kansas City.
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