This morning, we announced a very significant capital commitment to our broadband infrastructure.  The net-net is that we are committing $14 Billion in capital to bring Internet broadband infrastructure – wireline and wireless – to more places over the next three years.  As part of that commitment, we plan to expand our 4G LTE network by an additional 50 million consumers (based on population covered).  And we plan to provide an additional 8.5 million customer locations with our award winning U-verse product that will directly compete with the cable incumbent’s voice, video and broadband offerings.  As a result of these investments, millions of customer locations that have at best access only to legacy DSL services will have access to either U-verse or IP DSLAM technology.

In addition to that expansion, we are also committing capital to build 21st century fiber infrastructure to 50 percent of the Multi-Tenant buildings in our wireline service area, which will be capable of serving more than one million additional business customer locations.

We plan to invest on average about $22 billion in capital per year over the next three years.   To build that additional infrastructure means that we will be buying 21st century broadband equipment, including laying new fiber and providing faster Internet services to a significant part of our service area.  AT&T’s announcement is exactly the kind of infrastructure investment story that policymakers have been urging to create jobs in the United States.  AT&T is stepping up to meet that challenge.

But to maximize and incent infrastructure investment, we need to finish the transition away from the legacy TDM infrastructure to our IP future.  In the last several years, the FCC has made enormous progress towards the goal of converting the nation’s telecom system, affectionately referred to as the POTS network, to a 21st century broadband system.  The Kennard Commission correctly refused to apply 1930’s era telecom regulation to VoIP providers and ISPs.  The Powell Commission articulated a vision on fiber infrastructure to provide incentives for more investment in that fiber infrastructure.  The Martin Commission took a similar approach to fiber and Ethernet-based services, once again to encourage investments in those services.  And the Genachowski Commission articulated the vision of our broadband future by authoring the nation’s first National Broadband Plan.

The Genachowski Commission then took steps to actually implement the vision of the National Broadband Plan by reforming the universal service subsidy system, re-targeting those funds towards broadband services and completely overhauling the intercarrier compensation regime to further incent carriers to move away from legacy TDM services and towards our broadband future.  Point of fact, I still don’t think people fully appreciate the importance of those orders and how critical they are to achieving the goals of the National Broadband Plan.  Have those policies been successful? Well, in the 22 states in which AT&T operates a wireline network, less than 30 percent of homes are actually connected to an ILEC’s old POTS infrastructure. So, yes, I would say that these policies have resulted in competitive investments and advancements in both wireline and wireless broadband technologies that consumers are rapidly adopting.  But we need to finish that work.

Today, we made a filing at the Commission to build upon the foundation the FCC has built over the past 15 years and begin the necessary dialog that we have to have in order to complete the transition to our broadband future.  Let me start by saying that AT&T is not asking for any relief in this filing.  We are asking for a proceeding and a beta trial to address all of the policy, technology, technical and operational questions that must be addressed to complete the transition away from the legacy TDM infrastructure that has served us so well for the past 50 years.

Our plan will be to do our very best to provide our customers with services built on an IP broadband architecture.  And for those few we cannot reach with a broadband service, whether wireline or wireless, they will still be able to keep voice service. That’s our goal and our commitment to our customers.  We are very cognizant that no one should be left behind in this transition.  To be sure, every geography is different, and the plan for Dallas, Texas may be different from the plan for Dallas, North Carolina.  But we are approaching this massive capital investment with the intention that as many of our customers as possible have the opportunity to enjoy an IP broadband future.  And not at some indefinite point in time. Instead, we plan to do this over the next three years.  So, this is not only a very big investment, it’s also a very big deal for all of our customers and potential customers. And it’s exactly the sort of investment in broadband infrastructure that our nation badly needs.

We know that there are important policy issues that have to be addressed that are just as important as the technical and technology questions, and we are eager to engage in that discussion.  At bottom, if we want to maximize the private investment component of broadband infrastructure investment in the United States, we have to begin that dialog now.

As the National Broadband Plan observed, “requiring an incumbent to maintain two networks . . . reduces the incentive for incumbents to deploy” next-generation facilities, “siphon[s] investments away from new networks and services,” and “lead[s] to investments in assets that could be stranded,” and thus government policies must “ensure that legacy regulations and services [do] not become a drag on the transition to a more modern and efficient use of resources.”

In other words, we have to have a plan for telecom companies to retire legacy technologies if we are going to meet what the National Broadband Plan called “the great infrastructure challenge of the early 21st century.” We are hopeful that this proceeding will provide some additional stepping stones on the path towards achieving that plan.

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