AT&T Draws New Hard Line on Net Neutrality—Will It Work?

So far, the reaction from industry executives to President Obama’s call for Title II reclassification has been swift, vehement, and predictable.

Verizon Communications Inc. and AT&T Inc., two of the largest Internet service providers in the country, said they would sue the Federal Communications Commission if the agency ultimately did as the president “urged” and reclassified broadband Internet access service as a common carrier “telecommunications” service under Title II of the Communications Act, a law written in 1934 to give the FCC regulatory control of the then-telephone monopoly.

In a blog post, AT&T said that if the FCC were to reclassify broadband, the company would “expect to participate in a legal challenge to such action.”

Verizon added in a post of its own that “that course will likely also face strong legal challenges and would likely not stand up in court.” The company also warned: “For those who wish to see the FCC adopt enforceable net neutrality rules that will survive legal challenge, Title II is not the answer.”

Meanwhile, Comcast Corp., which is trying to obtain the FCC’s and the Department of Justice’s blessing to acquire Time Warner Cable Inc., offered a more muted response, underscoring the points of agreement, what the president defined as his “bright-line” rules. Comcast said there should be a “free and open Internet,” “no blocking,” “no throttling,” “increased transparency,” and “no paid prioritization.”

But, at the same time, Comcast also said the president’s policy would “jeopardize this engine for job creation and investment as well as the innovation cycle that the Internet has generated.”

“We unequivocally support rules that put in place the necessary protections of transparency, no blocking, non-discrimination rules, and no ‘fast lanes’—but there is no upside gained by imposing Title II reclassification as a way to put these protections in place, only substantial risk of harm,” the company wrote in a blog post.

But in a somewhat unpredictable move, AT&T has taken the battle one step further.

CEO Randall Stephenson said at an investor conference Wednesday that the company will delay installing broadband infrastructure in 100 U.S. cities until the issue is settled.

“We are now starting infrastructure projects that we don’t have any clarity or line of sight, in terms of what rules those will be governed under,” Stephenson said at a Wells Fargo & Co. investor conference in New York.

Among the cities being considered for AT&T’s fiber deployment are San Diego, Los Angeles, San Francisco, and Cleveland. The service is now available in three Texas cities: Dallas, where AT&T is based, as well as Fort Worth and San Antonio.

“We have to pause, we have to just put a stop on those kind of investments we are doing today.”

“That can have no effect other than to cause one to pause,” he added.

If Stephenson is being honest, and AT&T decides to hold off on building 100 percent fiber-optic network connections with speeds up to 1 gigabit per second to cities around the United States, then the president’s “Plan for a Free and Open Internet” has had the worst kind of unintended effect: Discouraging broadband deployment.

Section 706 of the Telecommunications Act of 1996, one of the only sections of any statute governing the FCC that actually mentions the Internet, talks of this very thing.

Section 706previous hit (a) of the Telecommunications Act directs the FCC to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans … by utilizing, in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.”

Interestingly, the U.S. Court of Appeals for the District of Columbia Circuit, when it vacated two of the FCC’s net neutrality rules in January, also held that section 706 of the Telecommunications Act can serve as a source of authority for the FCC to regulate “broadband providers’ treatment of Internet traffic.”

Of course, one of the reasons that the president is pushing for a Title II reclassification, rather than a new rulemaking approach using section 706, is to survive legal challenges. (The FCC’s first two attempts to enact net neutrality rules were challenged successfully by Comcast and Verizon.)

But in the aftermath of that D.C. Circuit’s decision, the FCC’s rules were gutted. All of a sudden, it had a net neutrality problem. Now it could have a deployment problem.   

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