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AT&T says it may be forced to "lay down the shovels" and stop investment in its wired cable offerings if they are reclassified by the FCC.  (Source: Garden Network)
The FCC won't let AT&T be

AT&T's Uverse broadband television and internet bundle is growing in popularity around the country.  It had 2.3 million subscribers at the end of March, up 231,000 from a year earlier.  And it is available to 24 million homes.  

AT&T hopes to reach 30 million households by the end of 2011.  But a change in Federal Communication Commission's (FCC) classification of broadband providers could cause AT&T to decrease funding to Uverse, its executive indicated in recent remarks according to the
Wall Street Journal.

The FCC is considering reclassifying cable internet to a Title 2 service.  Under the tighter Title 2 classification, the FCC would gain new powers of regulation.  AT&T executive Randall Stephenson says that could change the economics of the business.

The FCC says it won't exercises its greatest Title 2 power -- regulating pricing -- but AT&T fears that stance could change at any time.  Stephenson states, "If this Title 2 regulation looks imminent, we have to re-evaluate whether we put shovels in the ground.  I'm a 3-2 vote away from the next guy coming in and saying I disagree with that, I take it away"

Besides pricing, AT&T did not elaborate on what other forms of regulation could be damaging to the economics of its cable television business, though

Stephenson estimates that AT&T will spend a "couple billion" of the approximately $19B USD it spends on wireline and wireless infrastructure this year on the Uverse offering.

Even if the reclassification goes through, it may be shot down in courts.  Courts recently ruled that the FCC did not have the power to censure Comcast for throttling peer-to-peer traffic.  However, that could change with new Net Neutrality legislation that looks to give the FCC greater, explicitly-defined regulatory powers.

That legislation and the reclassification of broadband and cable may have a serious effect on other service providers as well.





"What would I do? I'd shut it down and give the money back to the shareholders." -- Michael Dell, after being asked what to do with Apple Computer in 1997







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