AT&T: drop net neutrality or U-verse gets it

Back when Google announced it was looking for cities to test its fiber-to-the-home trial network, we profiled a host of municipalities that tried every possible publicity stunt in the book to get the search engine giant’s attention. These included a North Carolina city council member who promised to name his offspring after Google’s co-founders, along with the mayor of Topeka… who tried to rename his town “Google, Kansas.”

But we missed a group of residents from the city of Ventura, California, whose website declares “Give Ventura the Google fiber or the puppy gets it!” in Hostage Situation Gothic font.

“You heard us,” the site adds. “And yes, we’re totally serious. Totally.”

They’re not—as evident from a Youtube video that shows the pooch in question, “Padme T. Dog,” happily barking “Goooogle” (sort of) every time it’s asked whether it wants high speed fiber.

AT&T, however, might be serious when it told the Wall Street Journal on Tuesday that if the Federal Communications Commission enacts new net neutrality rules, its U-verse IPTV/broadband service could “get it”—in the sense that the telco might downgrade investment in the offering.

“If this Title 2 regulation looks imminent, we have to re-evaluate whether we put shovels in the ground,” AT&T Chief Executive Randall Stephenson told the WSJ.

3-2 from the next guy

That “Title 2” business refers to FCC Chair Julius Genachowski’s proposal to partially reclassify broadband ISPs as common carriers under Title II of the Communications Act. At the same time, the agency would “forbear” from using many items in Title II’s toolbox, including the regulation of pricing and subscription rates.

Stephenson appears displeased by this plan. Sure, the government could forbear now, he suggests, but what if regulators later change their minds, reverse course, and add new rules? 

“I’m a 3-2 vote away from the next guy coming in and saying I disagree with that, I take it away,” Stephenson said, referring to the agency’s five Commissioner voting system. His comments come as the FCC prepares to release a Notice of Inquiry on its Open Internet proposals on Thursday.

U-verse has offered IP video and middling-speed Internet since June 2006, when it launched in San Antonio, Texas. In December of 2009, AT&T proudly announced U-verse’s two millionth TV customer across a service area of 22 states.

But it’s been a bumpy road, with AT&T either rolling back its forecast of the number of homes it would serve or telling U-verse broadband subscribers that AT&T reserved the right to temporarily reduce throughput speeds when “a customer is using other U-verse services in a manner that requires high bandwidth.” (Translation: watch HD television and your Internet bandwidth could tank.)

That leads to the question du jour: just how seriously the FCC should take Stephenson’s warning, given AT&T’s comments about U-verse in its 2009 Annual Report:

Capital expenditures in our Wireline segment, excluding interest during construction, which represented 64.3 percent of our capital expenditures, decreased 21 percent for 2009, reflecting decreased spending on U-verse services as the upgrades to our existing network become more mature. In addition, capital expenditures decreased due to less spending on wireline voice services, and lower DSL and High Capacity volumes.

As we were reading this paragraph, the reform group Free Press released a statement that raised the same obvious question. 

 “AT&T has already slowed down U-verse deployment under the current Title I regime,” declared the group’s S. Derek Turner, “so to blame the FCC for the company’s own investment decisions is simply disingenuous.” 

Title I is the portion of the Communications Act under which the Commission currently regulates ISPs—albeit weakly since a Federal court struck down the agency’s efforts to sanction Comcast’s P2P throttling antics under that section.

Indeed, it may be that AT&T is just holding U-verse hostage here, rhetorically speaking. That move gives credence to the small army of Democrats and Republicans in Congress who say they oppose net neutrality rules because of their supposed investment-discouraging effects.

Unable to determine

But it’s worth reading the rest of the AT&T report, which suggests that U-verse still has a big role to play in the telco’s future—especially as tens of thousands of consumers continue to drop traditional phone service. The company has already asked the FCC to prepare for the extinction of old-school copper wire line access, calling the network and its product “relics of a bygone era.”