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AT&T's fiber Internet rollout will continue, kinda

The company tells the FCC that it will go forward with its current GigaPower fiber network plans but that it's still waiting to hear what happens with Net neutrality in Washington.

AT&T Chief Executive Randall Stephenson inspired a back-and-forth with regulators after comments made earlier this month. CNET

AT&T will not in fact halt the expansion of its fiber Internet service due to a lack of clarity around the US government's regulation of Internet service providers. It will, however, stop investment on newer fiber plans until the debate is settled.

That was the message in a new letter to the Federal Communications Commission. Until now, it was unclear how AT&T planned on handling its commitment to expand the service after its chief executive seemed to suggest two weeks ago that it would go back on commitments made earlier this year as the debate about regulation heats up.

"To the contrary, AT&T still plans to complete the major initiative we announced in April to expand our ultrafast GigaPower fiber network in 25 major metropolitan areas nationwide," Robert Quinn, AT&T's senior vice president for federal regulatory matters, said in the letter.

AT&T CEO Randall Stephenson said on November 12 that the company would go into "pause mode" on the network expansion of its speedy, 1-gigabit-per-second service, a competitor to Google's own Fiber service that is up and running in select US cities.

His comments came a day after President Obama suggested a method for keeping the Internet fair and open may be the reclassification of companies like AT&T as utility companies, which are subject to so-called Title II regulations. "We can't go out and invest in that kind of network without knowing the rules governing the network," Stephenson said at the time during a Wells Fargo conference.

In response, the FCC sent a letter asking for more information about the expansion, such as whether the effort would be unprofitable and how many homes AT&T plans to include. AT&T's most recent letter appears to be a measure to assure the FCC that it is not using the murkiness of the current regulatory atmosphere around the Internet as a leveraging tool, and that it's current commitments still stand.

The issue revolves around spending on investment. AT&T spends billions of dollars expanding its network each year, yet the future of its business is contingent, the company says, on how regulators address the issue of Net neutrality, or the unbiased handling of all Internet traffic by Internet service providers. These providers, including AT&T, Comcast and Verizon, are opposed to Title II reclassification as utilities because the companies think Internet service, unlike traditional utilities like water and heat, will be hampered by such regulation, stifling innovation and hurting the return on investments in projects like fiber Internet.

Net neutrality supporters, however, fear a tiered world of Internet service where large corporations receive favorable treatment -- such as Internet "fast lanes" to prioritize the delivery of traffic to consumers. That, they say, would leave smaller upstarts struggling to pay the fees, and eventually shut out competition. Title II reclassification, Net neutrality advocates say, is a solution.

It's important to note that AT&T's retreading in this case comes as its $48.5 billion deal to acquire DirectTV remains under review by the FCC. Part of the deal, announced in April, was the expansion of AT&T's GigaPower network to at least 2 million additional homes, yet AT&T said it would go further and bring its fiber network to as many as 100 cities across 25 major metropolitan areas. The service is currently only available in a small handful of cities such as Austin, Texas.

The FCC's primary concern was that AT&T, based on Stephenson's comments, would limit itself to the 2 million homes and not fully expand to the 100 cities it committed to in April. Yet the company said the FCC "incorrectly assumes that AT&T is limiting its deployment of fiber to 2 million homes." AT&T did not provide the FCC any of the documents it asked for, instead relying solely on today's letter to straighten out the dispute.

"Our letter to the FCC makes clear that we are keeping our DirectTV merger-related investment commitments, which includes our previously announced fiber deployment plans," AT&T said in a statement.

AT&T did say that future investments, including those in fiber networks, unrelated to its April commitment may be affected by the government's unclear direction in attempting to regulate Internet service providers.

"The letter notes that the president's proposal to regulate the entire Internet under rules from the 1930s designed for voice services injects significant uncertainty into the economics underlying our investment decisions," the company added. "As a result, we have paused consideration of any fiber deployment investments that would go beyond what we've already announced."