AT&T (NYSE:T) has found a new way to confound would-be customers. Perhaps more importantly, it also continues to not deliver on promises to federal regulators that it would bring broadband Internet service to all of its traditional wired territory.
That's troubling when you consider the wireless, Internet, and pay television giant has made a rash of new promises in the hopes that those same government agencies will approve its purchase of DirecTV (NASDAQ:DTV). It's hard to believe a company that seems willing to say anything when it needs something but finds loopholes or simply ignores its promises after the fact.
AT&T may be telling the truth this time, but a handful of people who live within the territory served by the company who can't get Internet service probably think otherwise.
What did AT&T do?
AT&T delivers Internet service in some of its markets over the copper DSL-capable lines it has running into the homes it serves. The problem with DSL is that it has a limited capacity that can fill up. Once that happens, the company can either choose to effectively downgrade the service of all the subscribers on that particular loop or close it to new customers.
That's what happened to Mark Lewis, who told ArsTechnica that he had concerns about his ability to get Internet service from AT&T when he purchased his Winterville, Ga., home in August 2012. He knew his neighbors had it, and the people he bought the house from did as well.
"The previous owners had left their DSL modem and everything in the house," Lewis told Ars. But when he called AT&T, the company said it was "at maximum capacity, but if someone else in your neighborhood terminates their service, that should open up something for you."
However, the tech site reported, even when two neighbors moved out, the answer for Lewis when he asked whether that opened up a spot for him was still no.
This is not an isolated case, according to Ars, which said a number of other would-be customers of AT&T had contacted the website.
Why does this matter?
When it purchased BellSouth in 2006, AT&T agreed to a number of conditions to ensure FCC approval for the deal. These were voluntary -- at least in the sense that the company proposed them, not the FCC -- but the agency could enforce them. The language agreed upon, which the company wrote, seems to leave no wiggle room.
AT&T/BellSouth will offer broadband Internet access service (i.e., Internet access service at speeds in excess of 200 kbps in at least one direction) to 100 percent of the residential living units in the AT&TBellSouth in-region territory. To meet this commitment, AT&T/BellSouth will offer broadband Internet access services to at least 85 percent of such living units using wireline technologies (the "Wireline Buildout Area"). AT&T/BellSouth will make available broadband Internet access service to the remaining living units using alternative technologies and operating arrangements, including but not limited to satellite and Wi-Max fixed wireless technologies.
Unless the definition of 100% has changed, Lewis' story shows that even by the standards of 2006, AT&T has failed to deliver on its promise. None of the people who told Ars that they lived in AT&T territory but were denied DSL service where provided a high-speed alternative, the website reported.
That didn't stop the company from filing this document with the FCC in 2008, which certified that it had met its obligations. Of course, the company did leave itself some wiggle room:
Attached please find the declaration of AT&T's Corporate Compliance Officer attesting that AT&T has substantially complied with the terms of these conditions in all material respects.
The word "substantially" is the key here. It's how 100% can mean not quite 100%, yet the company can pretend it lived up to its promises. AT&T also contends in another document filed with the FCC that its original promise was no longer valid because the 200 kbps standard has become outdated.
Basically, the company never delivered 100% service even at the old standard and feels it has no obligation to meet the modern standard, even though keeping customers up to date would seem a logical assumption based on the original promise.
AT&T should not be trusted
AT&T is the guy at the bar who will say anything get a woman to go home with him. Its promises, the company has shown, are valuable only when the FCC or another agency has something it wants.
That doesn't mean the DirecTV deal should be killed. It does mean the FCC shouldn't accept the company's word at face value -- or even its written, legally enforceable assurances. There need to be conditions on this deal, and real penalties should AT&T violate not just the technicalities of the agreement but also its spirit.
The FCC should mandate that the company find a solution to bring Lewis and those like him proper broadband service. It should make AT&T live up to its 2006 promises and then evaluate how to make it keep the ones it makes in 2015.
Daniel Kline has no position in any stocks mentioned. He hates when TV weathermen say "we can use the rain." The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.