AT&T next to seek business broadband deregulation

A divided FCC on Monday exempted Verizon from scores of regulations for business customers, including requirements that it connect to other networks, negotiate deals with competitors, and pay into the Universal Service Fund.

AT&T Chief Executive Officer Ed Whitacre said his company, the biggest U.S. telecommunications company, would seek similar relief.

"I think it will be pretty close to what Verizon did," Whitacre said, referring to his plans to file a petition like the one by Verizon that sought deregulation. "I'm sure if Verizon has it, we'll get it too." He spoke to reporters after delivering a keynote address at TelecomNext, a telecommunications conference being held here this week.

Verizon is the No. 2 U.S. telecommunications carrier and competes with AT&T to offer services to lucrative business clients. Analysts have valued the market for business telecommunications at roughly $150 billion.

Whitacre appeared to get quick support from FCC Chairman Kevin Martin, who was also at the conference.

Martin told reporters he wanted to offer regulatory relief to further investment and deployment of broadband networks. "I'd be supportive of others who want to have the same kinds of opportunities to invest in their networks," Martin said.

On Monday, the FCC's two Democratic commissioners criticized the agency's decision to free Verizon from the regulations, saying it could result in higher prices and fewer choices for customers.

Industry analysts said Verizon's competitors are likely to mount a legal challenge to the FCC's deregulation of high-capacity networks like Ethernet and Internet-based virtual private networks. However, the FCC action could pave the way for other dominant local telephone companies like BellSouth to seek similar deregulation.

In asking the FCC to lift the regulations, Verizon offered to continue contributing to the Universal Service Fund, which subsidizes communications services for schools, libraries, rural areas and poor households. Whitacre said AT&T would be willing to do the same. "I'm sure we would, sure," he said.

Consequences of delay
One analyst said that AT&T and other telephone carriers could suffer if the FCC was slow to act on similar requests.

"If there is a delay, Verizon could gain a temporary regulatory advantage, which could be particularly important in the traditional enterprise competition between AT&T and Verizon in the latter's region," Blair Levin, an analyst with Stifel, Nicolaus & Co, said in a note to investors.

The FCC is now evenly split with two Republican and two Democratic commissioners and one Republican vacancy.

For the agency to act quickly, the FCC chairman would likely need the support of that third Republican since the Democrats oppose granting broad relief. Verizon won deregulation by filing a petition, which was automatically granted after a 15-month waiting period.

AT&T could face a similar waiting period unless the Senate confirmed FCC nominee Robert McDowell, a telecommunications lawyer, which could allow the FCC to act sooner.

McDowell is a lawyer for Comptel, an association representing Verizon's competitors. At his Senate confirmation hearing, he said he would not prejudge issues that come before the FCC despite having worked for one side of the industry.

AT&T shares were down 20 cents to $26.62 and Verizon's were up 4 cents to $34.26 in late afternoon trading on the New York Stock Exchange.