AT&T is glad to expand service, but wants pesky FCC regulations dropped

On Wednesday, AT&T announced a plan to invest $14 billion in expanding its wireless and U-Verse service around the country. At the same time, the company submitted a petition to the Federal Communications Commission asking for an end to the "conventional public-utility-style regulation."

AT&T said it would expand its fiber-to-the-node (FTTN) product to 22 states, which would include 75 percent of "customer locations." The rest of the country would be served by the expansion of its 4G LTE network, which AT&T says would reach 300 million Americans (nearly the whole country) by the end of 2014.

With the company's announcement, it also filed a request for regulations restricting AT&T's business to be dropped. The document calls AT&T’s new investments a step towards the National Broadband Plan.

"AT&T believes that this regulatory experiment will show that conventional public-utility-style regulation is no longer necessary or appropriate in the emerging all-IP ecosystem," the company wrote in its FCC filing on Wednesday.

"Customers are abandoning obsolescent [time-division multiplexing] services, but AT&T and other incumbent carriers still must be prepared to serve every household in their service territories on demand. Thus, the costs of maintaining those networks remain in place, and every loss of another customer increases the average cost per line of serving the customers that remain."

Industry watchers have pointed out AT&T now seems less than genuine with regulators. The company claimed that without being able to acquire T-Mobile it would not be able to expand its LTE offerings. According to the AT&T's most recent financial data (PDF), the company receives about three times as much quarterly revenue from wireless ($15 billion) as it does from traditional wireline voice service ($5.5 billion).

"They painted the stakes as dire as possible when they were trying to buy T-Mobile, but the fact is AT&T had to match its competitors in 4G market roll-outs," said Ken Rehben, an analyst at Yankee Group, told CNNMoney.

Deregulation incentive

Some industry watchers are worried such a move would make an end-run around existing regulations that require a baseline level of phone service under federal law. If the FCC heeds AT&T’s advice, some fear there will be even further entrenchment of the dominant wired carriers, like AT&T and Verizon, who are pushing more profitable wireless services.

"For 100 years we’ve had the idea that everyone has a phone line," said Susan Crawford, a visiting professor at the Harvard Kennedy School and a telecom law expert. It's the principle known as "common carriage," she told Ars.

"Today the general purpose network is a fiber-to-the-home (FTTH). That’s what’s going on in Europe and Asia, but we seem to be abandoning that concept. Instead, we’re allowing private carriers to choose who has to rely on wireless and who gets a wire and who gets what type of wire. The whole system has been turned upside down."

Still, both the FCC and telecom watchdog group Public Knowledge praised AT&T’s announcement.

"AT&T’s announcement of billions of dollars in new investment in wired and wireless broadband networks is proof positive that the climate for investment and innovation in the US communications sector is healthy," said Julius Genachowski, the FCC chairman, in a statement. "Today’s announcement adds to nearly $200 billion of investment in wireless and wireline broadband networks since 2009, and powerful growth in the Internet economy."

Bruce Kushnick, a telecom analyst at NewNetworks, likened AT&T’s move to "extortion." He argued the $14 billion investment was a quid pro quo to sweeten the move to further deregulation—and he anticipates further lobbying from AT&T to Congress in 2013.

"The letter that they filed says they want to get rid of regulation, and there will be an attack by AT&T and Verizon to get rid of all regulation in Congress probably at the beginning of next year," he told Ars. "Their goal is to take the letter and to extend it through Congress. What we need is a wireless and wireline to have an open utility, and let customers choose whatever provider and whatever services they want. If we don’t do that, we will fall behind."