FCC Asks AT&T To Explain Stephenson Fiber 'Pause' Remark

Wants Data on Why Fiber Buildout Would be Jeopardized
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The FCC wants AT&T to explain chairman Randall Stephenson's warning to Wall Street this week that fiber buildouts were on hold pending the resolution of the network neutrality rule revamp.

The President has called on the FCC to impose Title II regulations, which has AT&T and other ISP's pushing back hard.

In a letter to AT&T dated Friday (Nov. 14), Jamillia Ferris, a member of the FCC general counsel's office reviewing the transaction cited Stephenson's statement that "the Company would limit its fiber deployment to the '2 million additional homes' that are “commitments to the DirecTV announcement” and that any other fiber deployment would depend on the outcome of the Commission’s Open Internet Proceeding."

The FCC now wants to know what the company's current plans for fiber deployment are, including how many households it planned to get to before the decision to limit itself to the 2 million it promised as a condition of the FCC approving the DirecTV deal.

It also wants to know if AT&T's investment model shows that further fiber deployment beyond those 2 million is now unprofitable, whether those 2 million themselves would be unprofitable, and it wants all documents related to the company's decision "to limit AT&T’s deployment of fiber to 2 million homes following the acquisition of DirecTV."

“We are happy to respond to the questions posed by the FCC in its review of our merger with DIRECTV," AT&T said in a statement. "We made clear earlier this week, we remain committed to our DIRECTV merger-related build out plans.”

AT&T chairman Randall Stephenson warned at a Wells Fargo Securities analyst conference Wednesday that its plans to deploy fiber to 100 cities are in hold mode as the company figures out how broadband is going to be regulated.

"So, you're doing multi-billion-dollar investments and you really have no clarity in terms of how those investments will be regulated," he said. "That can have no effect other than to cause one to pause."

He said AT&T would deliver on its promise in the DirecTV merger proposal to build out fiber to 2 million additional homes if that deal is approved, but beyond that the picture was cloudier.

For the record and from the transcript of the call, here is what Stephenson said:

"What are the implications to the industry and as it relates to capital investment? When we initiate projects -- fiber projects, building new cellular infrastructure -- these are two- to three-year efforts. And while the [network neutrality] rules probably are not going to change in the two- to three-year time frame, we are now starting infrastructure projects that we don't have any clarity or line of sight in terms of what rules those will be governed under.

"So, you're doing multi-billion-dollar investments and you really have no clarity in terms of how those investments will be regulated. That can have no effect other than to cause one to pause. And I could give you examples. We made some commitments in the DirecTV announcement that we will build fiber to 2 million additional homes. We will obviously commit to that and once the DirecTV deal is done, we'll keep going. But what we have also announced on top of that is that we're going to deploy fiber to 100 cities. And we can't go out and just invest that kind of money, deploying fiber to 100 cities other than these two million, not knowing under what rules that investment will be governed. And so, we have to pause, and we have to just put a stop on those kind of investments that we're doing today."