Washington – Days after President Obama weighed in on Open Internet rules, saying the Internet was too critical to let a few big network access companies become gatekeepers for content, one of those big companies responded with a threat. AT&T told Wall Street it may suspend its plan to invest $18 billion in broadband deployment over the next year if the FCC approves Open Internet rules.

Those who have watched the politics of the bigger Internet Access Providers in recent years have sometimes accused them of not building out and upgrading Internet speeds and service so that they could charge more for scarcity. This latest bullying threat by AT&T is likely to backfire and increase the call for Open Internet rules, since it is proof that they deploy a scarcity strategy and will use their power to impose it. Open Internet rules would curb IAPs’ ability to hit up both its own customers and Internet services for extra money to ensure Internet access.

The Computer & Communications Industry Association had filed FCC comments asking for strong Open Internet rules using Title II. The following can be attributed to CCIA President & CEO Ed Black:

“The fact that AT&T is now resorting to extortionist tactics to prevent any regulation and hold up Internet service and improvements for its customers only underscores the very need for the FCC to both deny AT&T’s proposed merger and enact strong Open Internet rules. The reason Open Internet rules are needed is to stop outrageous conduct that is currently possible because of a lack of real competition in the marketplace. It’s ludicrous that AT&T is asking for approval of a merger that would increase their market power while they use their current power to issue threats like this.

“Those advocating Open Internet rules believe they are needed because of the likelihood that without them, dominant companies like AT&T would use their market power to be gatekeepers online, discriminate against possible competitors, and force others to pay excessive prices. This extortionist behavior by AT&T proves the need for Open Internet rules. AT&T is essentially saying they can afford to not build out their network and just offer customers a lower level of Internet service because they can – customers have little choice to switch. They are lucky if they have even one other provider they could go to instead. If AT&T would threaten bad service to get their way with the FCC, it’s probably fair to say they’ll threaten bad service and ask people to pay them more if the FCC doesn’t block that kind of behavior with strong Open Internet rules.

“The excuse AT&T is giving for holding up broadband build out is uncertainty over Open Internet rules, but they have lived with that uncertainty for years now, as have we all. Yet real innovative companies prosper when they take good risks.  Legacy telecommunications and cable companies want reward without risk.  Some uncertainty will remain regardless of what rules the FCC adopts since court challenges by dominant Internet access providers are likely. If the FCC classifies Internet access as telecommunications under Title II the legal uncertainty would be reduced since that provides the strongest legal foundation, one that will stand up in court this time.

“This is hardly the first time AT&T has used fiber deployment as a political ploy. It promised in 2003 it would deploy fiber if it were deregulated and later promised fiber build out in exchange for a merger approval — but we’re still waiting for delivery on these promises.”

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