AT&T Tries to Strong-arm the Feds

As regulators dive deep into broadband politics, AT&T (s T) has turned not only to lobbyists, but to threats. Ma Bell today issued a ho-hum press release saying it’s chosen Ciena (s cien) as its optical equipment provider for upgrades to “maintain and expand” its metropolitan and long-haul network infrastructure. It’s a pretty standard release, noting, for example, that AT&T has delivered 18.7 petabytes of information over said backbone and that this investment will be part of a planned capital upgrade to its IP network for businesses. But the last line has me thinking the folks at AT&T have seen too many episodes of “The Sopranos:”

AT&T in January announced total 2010 capital expenditures are expected to be between $18 billion and $19 billion, a level framed by the expectation that regulatory and legislative decisions relating to the telecom sector will continue to be sensitive to investment.

It doesn’t take much reading between the lines to see that AT&T is suggesting it could hold its billions of dollars in capital spending as some kind of hostage as it negotiates with Congress and the FCC on issues such as network neutrality and reclassifying broadband (GigaOM Pro sub req’d) as a transport service rather than an information service. It’s done this before through lobbying efforts and in FCC filings, but in a random press release, it’s just too much.
When asked about that section of the release, an AT&T spokesman said, “We always have a cautionary language statement in materials such as this.” And this particular language is in its fourth-quarter earnings, although it’s nowhere to found it in AT&T’s most recent capex-themed releases. But while yes, cautionary language statements are standard practice in the press releases of publicly traded companies, this language doesn’t read as cautionary so much as it reads like AT&T is saying, We’ve built a nice telecommunications network infrastructure here — sure would be a shame if anything were to happen to it.
Really, Ma Bell? You’re going to stop maintaining and expanding your network if the FCC doesn’t allow you to discriminate against certain types of network traffic by implementing network neutrality regulations — something you’re keen to say you’d never do anyhow? Or maybe it’s the idea that DSL might end up more directly under FCC authority through a reclassification process, something that already affects those copper lines since they’re already delivering voice traffic? Can you even afford to stop investing in your network, especially the wireless one?
AT&T’s not-so-veiled threats leave me boiling with rage, especially given how its late-to-the-party attitude toward network upgrades has made the iPhone (s aapl) experience so crappy for so long. To basically threaten that its 85 million cell-phone subscribers, 2.1 million U-verse TV subscribers, 24.6 million voice subscribers and 17.2 million high-speed Internet subscribers would get degraded service because it won’t maintain or expand its network if the government enacts regulations “that aren’t sensitive to network investment” is reprehensible — and an open admission that AT&T thinks it can stop investing in its network and still make money off of it (possibly because there’s not a lot of competition). Even worse, many of those regulations would help protect consumers from anticompetitive practices and pricing.
Plus, AT&T’s reaction to the FCC’s relatively benign policy efforts (the network neutrality clause leaves room for reasonable network management, which could be interpreted in pro-ISP ways) is so out of proportion as to be ridiculous. I could understand such posturing if the FCC, like some telecom agencies around the world, was considering a way to open up AT&T’s network for competitive services to travel over it, but the FCC in its National Broadband Plan steers very clear of that issue, instead deciding that data and possibly wireless access would have to be the stick to keep network providers such as AT&T in line. Threatening to halt several billion dollars of necessary capital investment over reclassification or network neutrality is like threatening to burn down your own house because you don’t like your home owner association’s rules.
Image courtesy of Flickr user Eddie~S