AT&T decides (once again) to press ahead with broadband investment
If AT&T CEO Randall Stephenson spat the dummy in February when the FCC voted to regulate the Internet as a utility with its new Title II net neutrality rules and announced that the telco would suspend its multi-billion dollar broadband investment programme, then yesterday he reached down and picked it up off the floor.
Speaking to CNBC yesterday, Stephenson said he believes either the courts or the US Congress will overturn the FCC’s decision, and therefore it now makes sense to “unfreeze” the investment and move ahead with its $18 billion plans. Nice manoeuvre, Randall.
“We have seen the way the rules came out ... and as we read those rules we do believe they are subject to modification by the courts,” he said on CNBC's Squawk Box show, which you can view here. “So we've said we're going to invest around $18 billion this year. That will allow us to deploy a wireless broadband solution to 13 million homes around the US. That compares to about $22 billion last year.”
Yes well, all is not quite as it seems here. This is not the first time that AT&T has backtracked on its so-called investment freeze. Back in February, the FCC was perhaps understandably a little upset by Stephenson’s actions, and decided to call its bluff and demanded full details. AT&T’s SVP for Federal Regulatory matters, Robert Quinn, quickly responded by saying: “AT&T still plans to complete the major initiative we announced in April to expand our ultra-fast GigaPower fibre network in 25 major metropolitan areas nationwide.”
However, these gigabit deployments are largely aimed at a limited number of housing developments, for those with higher than average incomes. Exactly how many people receive this service is unknown, as the telco hasn’t revealed numbers. Yesterday AT&T launched its GigaPower service in Nashville, but reports suggests residents will be lucky to receive it.
There’s also a party political element at play here. The FCC’s ruling came off the back of support from President Obama, and was passed with a 3-2 vote along party lines, with the Democrats obviously succeeding. But there’s an election coming up, and every chance that a Republican could be in the White House, along with a newly appointed chairman at the FCC.
"There's just a lot of moving parts here,” acknowledged Stephenson. “We think it's unlikely the rules will stay in place like they are in the long term."
Another moving part concerns the acquisition of DirecTV, which is still pending regulatory approval a year after the $49 billion deal was first signed. This now looks like it will go through, which will mean AT&T can bolster its rather weak TV service. You only have to look at the UK market and BT to see that a strong TV offering can dramatically improve a telco’s fixed broadband business.