February 11, 2015 / 12:10 AM / in 4 years

Sprint says U.S. telecoms will invest despite stronger net neutrality

SAN FRANCISCO (Reuters) - With its surprise endorsement of a stricter U.S. regulatory regime for Internet service providers, Sprint Corp (S.N) wanted to show that tougher rules would not stop rival telecom players from investing, Chief Technology Officer Stephen Bye said in an interview.

“It’s one of those topics that is highly charged, highly politicized and we took a step back and said it works in the interest of our customers, our consumers and the industry and we frankly found some of the arguments (of our competitors) to be less than compelling,” Bye told Reuters this week.

“Our competitors are going to continue to invest so they are representing a situation that won’t play out,” he added.

Sprint’s stance starkly contrasts with that of other U.S. wireless and cable companies such as Comcast Corp (CMCSA.O), Time Warner Cable Inc TWC.N, Verizon Communications Inc (VZ.N) and AT&T Inc (T.N).

The companies say they support net neutrality, the concept that all web traffic should be treated equally, but vehemently oppose the Federal Communications Commission’s proposal to regulate Internet service providers more strictly under a section of communications law known as Title II, which would treat them more like traditional telephone companies.

They are expected to challenge the rules in court after the FCC votes on them on Feb. 26.

In a call with investors last week, Verizon’s Chief Executive Officer Lowell McAdam said that the stronger regulatory regime is “completely the wrong way to go” and would stifle job creation and innovation.

But Bye said that the government’s recent record-setting $44.9 billion spectrum auction is a “great proof point of the level of investment the companies in the industry are willing to make.”

AT&T and Verizon emerged among top buyers in the auction with bids worth $18.2 billion and $10.4 billion. Sprint did not participate in the auction, eyeing the next auction in 2016.

“The notion that some of our competitors are suggesting that they will stop investing if Title II is brought into effect... That’s something we’ve refused,” Bye said.

Sprint’s public support of stricter net neutrality rules, revealed in a Jan. 15 filing in the run-up to FCC Chairman Tom Wheeler’s latest proposal last week, took the industry and competitors by surprise.

The proposed rules would ban Internet providers from blocking or slowing down websites or charging companies for swifter delivery of their content. But Wheeler also sought to address some Internet providers’ concerns, saying he would not pursue price regulations, tariffs or requirements to give competitors access to their networks.

“In the terms of Title II with the appropriate forbearance we made the point that we really don’t see this as negative for the industry at all,” Bye said.

Sprint is the third-largest U.S. wireless carrier based on subscribers. Bigger rivals AT&T and Verizon have market capitalizations about 10 times that of Sprint’s $19.47 billion.

Given the sheer scale of AT&T and Verizon’s operations, some analysts have argued that they have more at stake when it comes to net neutrality rules.

Reporting by Malathi Nayak; Additional reporting by Alina Selyukh in Washington; Editing by Lisa Shumaker

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