AT&T to halt investment in fiber optic lines because of net neutrality

AT&T Inc will stop investing in new high-speed Internet connections in 100 U.S. cities until regulators decide whether to enact tough "net neutrality" rules proposed by President Obama, Chief Executive Officer Randall Stephenson said on Wednesday.

The investment pause is the most dramatic action yet by a telecommunications or cable company after Obama on Monday urged the Federal Communications Commission to regulate Internet service providers more like public utilities.

At the same time, AT&T had been spending heavily acquisitions and had cut its capital spending estimate for 2015.

Companies and industry groups have already protested Obama's proposal, saying it would stifle growth and investment.

"We can't go out and invest that kind of money deploying fiber to 100 cities not knowing under what rules those investments will be governed," Stephenson said at an analyst conference.

In April, AT&T said it would deploy its high-speed fiber network in 100 cities, including Chicago, Los Angeles and Miami.

A primary goal for the FCC in recent years has been to ensure quality Internet access across the country, especially in rural communities.

AT&T pushed back against Obama's comments on Monday and said it would take the government to court if the FCC follows through on his request.

The company, which is buying DirecTV for $48.5 billion, said on Friday that it would also pay $1.7 billion to acquire Mexican wireless operator Iusacell. It trimmed its 2015 capital spending outlook to $18 billion from $21 billion. [ID:nL1N0SX2RQ]

At the same conference on Wednesday, Verizon Communications Inc Chief Financial Officer Fran Shammo struck a somewhat lighter tone.

"I think the independent agency of the FCC will make the right decision," Shammo said.

He said the FCC could restrict "paid prioritization" deals, where content companies pay for faster downloads of some websites or applications, without pursuing utility-style regulations under Title II of the Telecommunications Act.

"We don’t need to bring Title II into this," he said.

(Reporting by Marina Lopes, Editing by Franklin Paul and Lisa Von Ahn)