The U.S. House Subcommittee on Communications and Technology today held a hearing on H.J. Res 37, disapproving of the FCC’s net neutrality order, which the Commission adopted in December.  Jim Cicconi, AT&T Senior Executive Vice President of External and Legislative Affairs, delivered the following statement:

Chairman Walden, Ranking Member Eshoo, Chairman Upton, Chairman Waxman, Chairman Barton, distinguished members of the committee, thank you for inviting me to testify today on behalf of my company, AT&T.  I recognize it is unusual to be asked to testify on a resolution on which we’ve not taken a position.  However, as I’m sure all of you know, we have been involved for years in the issue that underlies H.J. Res. 37, and that is the protracted dispute over net neutrality regulation by the FCC.

Let me first stress that AT&T has long supported the “broadband principles” laid out by the FCC six years ago.  We support an open Internet, and have promised to abide by that concept.  But like many issues that start from a shared belief, this one quickly devolved into a long and contentious debate over specifics:  whether the FCC should be able to enforce the broadband principles; whether a broad set of rules was needed; what legal authority the FCC has to put any such rules in place.  And all of this despite any real evidence of a problem.

As in most regulatory debates, this one has not lacked for radical voices.  Many sought heavy-handed government regulation and control of free markets… some for commercial advantage, others to advance their own ideology.   Since this debate began back in 2005, AT&T has consistently opposed any FCC regulation of Internet services or facilities.  This is still our strong preference today.  We feel the antitrust laws, the Federal Trade Act, and the discipline of highly competitive markets are more than adequate to police any potential abuses. 

Nonetheless, the pressure for Internet regulation continued.  You’ve all heard the saying that there is nothing so powerful as an idea whose time has come.  Unfortunately, this is sometimes also true of a bad idea.  And the versions of net neutrality put forth by our opponents were in many cases truly bad, and radical, ideas.

In October of 2009, some of these bad ideas found their way into a proposed net neutrality rule at the FCC.  AT&T, and the entire industry, strongly opposed this proposal.  It created a high degree of market concern, and needless to say a very bad climate for investment.  Unfortunately, in the spring of 2010, the situation went from bad to worse.  Following a decision by the DC Circuit that questioned the FCC’s legal authority to enforce its broadband principles, the Commission reacted by proposing to subject all broadband facilities to common carriage regulation under Title II of the Communications Act.  This proposal was both extreme and without foundation in law, and we fought it vigorously.   Again, this even more radical proposal upset the financial markets.

By the summer of last year, and after hearing from a bipartisan majority of House and Senate members, Chairman Genachowski, to his credit, began seeking a different approach.  Discussions began between the opposing sides.  AT&T participated because, quite frankly, we felt the issue was on a dangerous path that could end very badly for our company and industry.  This process was long, hard, contentious.  It led ultimately to discussions last Fall under the auspices of Chairman Waxman and a compromise with which, like most compromises, no one was entirely happy, but most participants felt to be fair.  However, legislation proved impossible in that time frame, and the FCC made clear its intentions to move forward with a vote on net neutrality regulations by year end.

In this situation, my company faced a difficult decision given that the only proposals currently before the FCC were either bad, or worse.   With others in the industry, we decided we’d be willing to accept a rule modeled on the compromise reached in the Waxman process, but were unwilling to support anything that went beyond that.  Chairman Genachowski, I might add, was under tremendous pressure from others, including voices on the Commission, to impose Title II regulation.  Instead, he and his staff worked with the industry in good faith, and with the various stakeholders, to craft a compromise rule that tried to balance major differences while avoiding more extreme proposals.

I would be the first to stress this is not a perfect solution.   Our preference has always been that the FCC should not regulate in the Internet space.   But it was also clear to us that a majority of the FCC was determined to move forward in December, and that we would not be representing our shareholders well if we let the perfect be the enemy of the good.   We faced opponents pressing for more extreme regulations, and knew that, absent a fair middle ground, a good bit of harm might be done to our industry and to needed investment.

Chairman Genachowski resisted those pressures and acted in good faith to find that fair middle ground.  The rule is consistent with AT&T’s current Open Internet policies, and would not require us to change any of our business practices or plans assuming it is applied in a reasonable, narrowly tailored way.  And as our Chairman has said, it provides a path for continued investment by removing much of the uncertainty this issue has caused.  It was a factor, along with recent tax law changes, in AT&T’s decision to accelerate the investment in the buildout of our LTE wireless network.  In short, we believe the result, given the alternatives before the Commission, is both fair and will help maintain our company’s ability to invest.

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