AT&T sees delays on fiber rollouts of 'two to three years'

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CEO Randall Stephenson refines earlier statements in reaction to Obama approach to net neutrality

AT&T CEO Randall Stephenson has stepped forward as the telecommunication industry's front man in opposition to President Obama's proposed net neutrality rules.

In an appearance today on Fox Business Network, Stephenson implied it could be two or three years before AT&T starts investing again in fiber optic network rollouts to potentially 100 cities.

Earlier in the week, he said the Obama proposals to the Federal Communications Commission (FCC) would cause AT&T to "pause" its planned rollouts so it could gain clarity on what actions might occur. Today's comments went further, putting a timeline of two to three years on the delay.

"We're making these investments [in fiber optic rollouts] that are long-term investments," Stephenson said. "And we have to ask under what rules will those be regulated in two or three years. Until we have some clarity, we'll have to slow ourselves down and we'll have to pause and have some idea of what these rules look like in two or three years."

Some supporters of Obama's rules -- the president wants ISPs regulated like utilities -- have criticized AT&T for suggesting the delays, especially since it isn't clear how many of the 100 proposed AT&T projects are far enough along in the planning cycle to be subject to a slowdown.

AT&T's North Carlina President Venessa Harrison seemed to contradict Stephenson this week when she said the company plans to continue a Next Generation Network based on AT&T fiber in that state. AT&T, which has signed contracts with several municipalities in N.C., didn't comment.

Stephenson said in the Fox interview that the delays apply to fiber optic rollouts except for those part of a pending agreement to buy DirecTV; that deal provides fiber optic broadband to a "number of homes." The DirecTV buy is expected to close in the second quarter of 2015, he said.

The AT&T position on Obama's proposal mirrors much of the wireless and telecommunications industry, where companies that operate as ISPs would be subject to strict regulation under Title II of the Telecommunications Act. Most opponents to the Obama plan want carriers given more regulatory leeway under Section 706 of the Act; it would permit the FCC to apply penalties and other steps if a carrier took anti-competitive steps, throttled content, or charged for preferential treatment on a network.

Stephenson noted that the FCC has for 20 years policed ISPs without the kind of oversight Obama wants. Title II would take carriers back to a time when telephones were regulated in the 1930s, well before the Internet was conceived, he said.

If the FCC invokes Obama's rules, they will be challenged in court by AT&T or somebody else, he added.

Here's what Stephenson said on Fox Business Network:

“This Internet is the engine for our economy now. It's a major driver of economic growth. And to take end-to-end this Internet capability and put it under regulations that truly were designed to regulate an AT&T monopoly in 1930, with black rotary dial tone phones--think about this. There weren't even data services. We weren't even carrying data across pipes. We were, but it was called the telegraph, right?

“And so to take this Internet, this massive ecosystem that is moving fast, the products are moving fast, the features are moving fast, and put them under that kind of regulatory framework, you can formulate your own opinion as to whether that's a good idea or not. Even if you believe it's a good idea to accomplish what the president has proposed [it] is going to be a very elongated process, because the law has been pretty clear for 20 years, starting with the FCC chairman under President Clinton, Bill Canard, and coming forward. For 20 years, the FCC has stated very clearly that these services do not belong under those rules. And then the Supreme Court has upheld those decisions time and again.

“And so for the president to accomplish what he wants is going to be a very long process by the FCC to get it done. And then the people can rest assured that somebody, whether it's AT&T or not, somebody will litigate that outcome. So we are two, three years down the road before you get any clarity to this. Now, the implication of that is without clarity. We're in long-term investment cycles in this industry. We invest billions of dollars in broadband and I don't think anything is going to change the next two or three years under this premise.”

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