Sprint breaks from script on Title II investment impact
As part of comments made during its release of fourth-quarter financial results, Verizon Communications CFO Fran Shammo noted that should the Federal Communications Commission move forward with plans to regulate broadband services under Title II, it would “absolutely” have a long-term impact on Verizon’s investments into its business.
Verizon reported that it spent $17.2 billion on capital expenditures in 2014, an increase from the $16.6 billion spent in 2013. The latest capex included $10.5 billion spent on its wireless operations, with a vast majority of that going to bolster its data-based LTE network, and most of the rest bolstering its FiOS fiber-based broadband network. Shammo noted that the telecom operator was still set to spend up to $18 billion on capex in 2015.
The FCC is currently working up new regulations tied to broadband services, with expectations that it will announce those plans next month. FCC Chairman Tom Wheeler has hinted in comments that the government is looking to expand Title II control over the broadband space, with wireless services also likely to garner increased regulation attention.
Late last year, a group of 60 technology firms sent a letter to the FCC stating that Title II regulations would lead to a loss of up to $45.4 billion in capital investments over the next five years. Verizon and rival AT&T noted that such a move could also result in legal challenges.
“That course will likely also face strong legal challenges and would likely not stand up in court,” Verizon noted in a policy blog.
“We feel the actions called for by the White House are inconsistent with decades of legal precedent as well as Congressional intent,” said Jim Cicconi, SEVP of external and legislative affairs at AT&T. “Moreover, if the government were going to make such a momentous decision as regulating the entire Internet like a public utility, that decision is more properly made by the Congress and not by unelected regulators without any public record to support the change in regulation. If the FCC puts such rules in place, we would expect to participate in a legal challenge to such action.”
Wireless trade association CTIA also came out against the move toward invoking Title II oversight.
“Imposing antiquated common carrier regulation … on the vibrant mobile wireless ecosystem would be a gross overreaction that would ignore the bipartisan views of members of Congress and the FCC, would impose inappropriate regulation on a dynamic industry and would threaten mobile providers’ ability to invest and innovate, all to the detriment of consumers,” explained CTIA President and CEO Meredith Attwell Baker. “CTIA strongly opposes such an approach.”
Sprint breaks rank
Sprint earlier this week seemed to break from the script in announcing that the enactment of Title II regulations as part of the net neutrality debate would not have any impact on the carrier’s network investment plans, though it did hint that regulations should be lighter on wireless networks than on wired broadband connections.
“Sprint does not believe that a light touch application of Title II, including appropriate forbearance, would harm the continued investment in, and deployment of, mobile broadband services,” noted Sprint CTO Stephen Bye in a letter to Wheeler. “So long as the FCC continues to allow wireless carriers to manage our networks and differentiate our products, Sprint will continue to invest in data networks regardless of whether they are regulated by Title II, Section 706, or some other light touch regulatory regime.”
Sprint earlier this year signed $2.1 billion in financing deals designed to help the operator expand the reach of its 2.5 GHz-based LTE network. The carrier’s deep 2.5 GHz spectrum holdings would seem to enhance its ability to support more robust mobile broadband traffic that could result from altered net neutrality regulations.
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