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The heads of AT&T, Verizon and Time Warner Cable all warn that the imposition of a common carrier regulatory regime could chill US broadband investment.
February 2, 2015
With the threat of a switch to a common carrier regulatory regime looming over the US broadband industry, leaders of the major broadband providers are not exactly happy campers these days.
Take AT&T Inc. (NYSE: T) Chairman and CEO Randall Stephenson. Speaking on the company's fourth-quarter earnings call last week, Stephenson indicated that he's worried sick about the potential impact of reclassifying ISPs as common carriers under the Title II section of the Communications Act. Specifically, he's concerned that the move could disrupt AT&T's plans to "obsolete" its aging copper plant by 2020 and move all its customers and services over to its new fiber networks.
"With any new investments, we're up in the air now," Stephenson told financial analysts on the call. Although AT&T supports the four basic principles of net neutrality spelled out by President Obama, he explained, "what gives us pause" is the prospect of "really strident, heavy-handed regulations."
Unlike in the past, though, Stephenson did not come right out and threaten that AT&T would stop upgrading its networks if the Federal Communications Commission (FCC) decides to reclassify ISPs as Title II common carriers. After all, Stephenson still has his company's proposed purchase of DirecTV Group Inc. (NYSE: DTV) to shepherd through the agency's lengthy approval process.
Time Warner Cable Inc. (NYSE: TWC) Chairman and CEO Ron Marcus sounded a similarly worried theme on his company's earnings call last week. Asked about the potential impact of Title II on his company's network upgrade plans, Marcus said much depends upon the details of the implementation, including how much the FCC decided to forbear from imposing actual Title II regulations. But, he noted, "It almost goes without saying that, to the extent it creates uncertainty, it will be likely to chill our enthusiasm for investment."
Keeping his comments short and clipped on the call, Marcus declined to say any more about Title II and net neutrality. After all, he also has a big deal to help shepherd through the FCC with his friends at Comcast Corp. (Nasdaq: CMCSA, CMCSK).
For the latest on broadband networks, visit Light Reading's dedicated Gigabit Cities content channel. And watch for forthcoming details on Light Reading's Gigabit Cities Live event, to be held in May 2015 in Atlanta.
Unlike his counterparts at AT&T and TWC, Verizon Communications Inc. (NYSE: VZ) CFO Fran Shammo has no such worries about major pending deals that need US government approval. So don't even get him started on Title II.
Speaking on his company's earnings call last week, Shammo slammed the proposed switch to a Title II regulatory regime as "an extremely risky path that will jeopardize" the future of broadband in the US. He argued that the adoption of Title II regulations would "completely change the way we view our investments in our networks," as well as the way other broadband providers view theirs. "This will absolutely affect us and the rest of the industry," he stated. (See Verizon CFO Slams Title II Regs for ISPs .)
Going further than either Stephenson or Marcus, Shammo also warned that any attempt to impose Title II rules would "tie up the industry" in prolonged regulatory battles and prompt more lawsuits against the feds. In the last regulatory fight over net neutrality rules for the Internet, Verizon led the legal charge against the FCC's mandate, eventually overturning those rules in the federal courts.
So, with FCC Chairman Tom Wheeler preparing to present his latest net neutrality proposal to the Commission for a vote on February 26, two of the four biggest US broadband providers have now come out squarely against Title II, with the third (TWC) cautiously hedging its bets. Now let's see what Comcast Chairman and CEO Brian Roberts has to say on his company's earnings call on February 24. Stay tuned for more.
— Alan Breznick, Cable/Video Practice Leader, Light Reading
Cable/Video Practice Leader, Light Reading
Alan Breznick is a business editor and research analyst who has tracked the cable, broadband and video markets like an over-bred bloodhound for more than 20 years.
As a senior analyst at Light Reading's research arm, Heavy Reading, for six years, Alan authored numerous reports, columns, white papers and case studies, moderated dozens of webinars, and organized and hosted more than 15 -- count 'em --regional conferences on cable, broadband and IPTV technology topics. And all this while maintaining a summer job as an ostrich wrangler.
Before that, he was the founding editor of Light Reading Cable, transforming a monthly newsletter into a daily website. Prior to joining Light Reading, Alan was a broadband analyst for Kinetic Strategies and a contributing analyst for One Touch Intelligence.
He is based in the Toronto area, though is New York born and bred. Just ask, and he will take you on a power-walking tour of Manhattan, pointing out the tourist hotspots and the places that make up his personal timeline: The bench where he smoked his first pipe; the alley where he won his first fist fight. That kind of thing.
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