Broadband services

AT&T, Verizon CFOs Predict Title II Litigation

Verizon and AT&T are both still reeling from the FCC's recent decision to classify US fixed and mobile broadband as telecom services under Title II of the Communications Act, and both of the carriers' financial chiefs are predicting litigation as a result.

Speaking this week at a Deutsche Bank conference, AT&T Inc. (NYSE: T) CFO John Stephens and Verizon Communications Inc. (NYSE: VZ) CFO Fran Shammo both said they expect litigation spanning several years, and costing lots of money, to arise as a result of the decision. (See Verizon CFO Slams Title II Regs for ISPs .)

The Federal Communications Commission (FCC) voted last month to impose net neutrality regulation on both fixed and mobile broadband providers under Title II, part of a communications law passed in 1934 aimed at common carriers. Commission Chairman Tom Wheeler said it is only intended to ban traffic blocking, throttling and paid prioritization, but with a "light touch" and on a "case-by-case" basis. (See The Title II Ruling: A 'Wow' Moment and Wheeler: We'll Enforce Title II 'Case-By-Case'.)

Even with these reassurances, the US's two largest wireless operators aren't convinced it will play out as such. Verizon's Shammo said Tuesday that no Internet service provider has ever blocked or prioritized traffic, rendering the regulation unnecessary. Stephens echoed his comments, calling Title II a solution in search of a problem. Both also expressed concerns that they haven't yet seen the 317-page document outlining the decision. (See FCC Vote Shows Net Neutrality Strains.)

"We don't know what the 300-plus pages say yet, but I have to assume there will be a lot of litigation around it," Shammo said, adding that the process would cost taxpayers a lot of money.

For more on net neutrality, peruse the broadband content channel here on Light Reading.

Stephens' sentiments were largely the same, although he wasn't as defensive as Shammo seemed. He noted that he needs to see the order, but any kind of uncertainty is not good for investment. He fears the new rules will stymie investment and innovation not just for the "guys putting in fiber and towers," but also for the Silicon Valley types -- who were largely in favor of net neutrality -- that are thinking about building services that ride on the network. (See Internet Pioneers Decry Title II Rules and Net Neutrality Arguments Have Historical Echo.)

"We expect litigation over the matter," he said. "We'll see what the documents say, but it will probably go on for a few years and cost more dollars."

When the CFOs say they expect litigation, it's safe to assume they'll be the ones bringing the charges. Verizon threatened to sue last year if the federal government went ahead with the proposed Title II reclassification, and AT&T said -- then later took back -- that treating broadband as a utility might force it to stop expanding its fiber network. (See Sprint CTO Blesses a Light Touch of Title II and AT&T to FCC: We Haven't Killed Broadband Rollout.)

These concerns have been echoed by others, including many Republicans and those opposed to the new regulation. The documents are to be shared soon, at which time there will be more clarity on what the new regulation actually entails. Either way, the fight is clearly far from over. (See US Telecom: FCC's Move Has Global Implications and ACA Doesn't Buy FCC's Rate Reg Reassurances.)

— Sarah Thomas, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, Editorial Operations Director, Light Reading

MikeP688 6/28/2015 | 11:58:14 AM
Re: Litigation costs (Brief Thoughts..) The battle will ensue...although I was on the FCC Website recently and for now, they need to apparently continue to live with it as the litigation ensues...and briefly read through AT&T's "opening salvo" not so long ago which I wanted to note here for the Community: 



Never a dull moment..that' for certain....

kaikun 3/17/2015 | 12:34:21 AM
Re: Litigation costs... Great post. Thank you for sharing this important information. Very useful with me. Thank again.
mhhf1ve 3/11/2015 | 7:17:09 PM
Litigation costs... The 300+ pages will be interesting to read, actually... I wonder if it will just add fuel to the fire or if there is anything in those hundreds of pages that might obviate some litigation. It would be genius if pages were specifically geared towards heading off litigation. Then all this noise will be for nothing, and ISPs can resume their real business of delivering bits and stop worrying about protecting their natural monopoly from regulations that they're already well accustomed to since 1934.
fastpc2 3/11/2015 | 3:24:48 PM
AT&T, Verizon CFOs Predict Title II Litigation LOOKS like Verizon & ATT are denile about the FCC's recent decision to classify US fixed and mobile broadband as telecom services under Title II of the Communications Act. what they should be worried about is WHY the market seem to be PRICE fixed, why comcast will not go into charter markets ETC.. ETC.. their seems to be no competition rather a Racketeering colabertive and why hasn't the FCC gone in and started to investigate and charge these ISP's with this yet??
MordyK 3/11/2015 | 3:19:53 PM
Re: from bad to worse? My favorite part was their sudden concern for the costs to the taxpayer, but when the taxpayer funds go to them they never say "no thanks, return it to the taxpayer".
sarahthomas1011 3/11/2015 | 2:27:28 PM
from bad to worse? It's fairly easy to predict litigation if you're the one who is going to be bringing the suit! I wonder if it'll really make a difference what those 317 pages say -- it certainly could make it worse, but I can't imagine it will make the operators any more comfortable with the regulation. It's more about the potential of thwarting their business at this point.
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