SB 88 NOT LIKELY TO MATERIALLY INCREASE AT&T’s CAPITAL SPENDING IN KENTUCKY ABOVE PAST LEVELS

SB 88 NOT LIKELY TO MATERIALLY INCREASE AT&T’s CAPITAL SPENDING IN KENTUCKY ABOVE PAST LEVELS  Posted: March 9, 2013

AT&T’s representatives have indicated that passing Senate Bill 88 could result in greater capital investment coming to Kentucky. Yet the 2013-2015 investment that AT&T recently announced for Kentucky appears to be what it has been in recent years - around 1% of AT&T’s national investment in its wireless and wireline network. It does not appear that SB 88 will materially change AT&T’s pattern or level of investment over what it has been spending in Kentucky as a percentage of total national investment in its networks in recent years.

AT&T announced that it expects to invest between $600 million and $800 million over 2013-2015 in Kentucky, as part of the national AT&T announced spending of $22 billion during each of those three years for “Project Velocity IP.” Those projected Kentucky expenditures, taken at the high end of $266 million for each of those years (i.e. a total of $800 million over the three years), would constitute about 1.2% of what will be spent nationally over those three years – almost the same percentage of national investment as has been spent in Kentucky during the past three years before the announced 8% increase in total AT&T national capital spending.

At the low end of $200 million for each of years 2013-2015 ($600 million over the three years), the investment would follow the trend of the capital expenditures by AT&T in Kentucky for the 3 year period of 2009 – 2011, and would represent less than 1% of AT&T’s projected investment for 2013-2015.

AT&T’S PRAISE FOR THE REGULATORY ENVIRONMENT FOR TELECOM INVESTMENT IN KENTUCKY THAT IT NOW COMPLAINS IS A DRAG ON NEW INVESTMENT

AT&T has complained that having to provide basic stand-alone phone service under PSC supervision creates an environment in Kentucky that discourages investment. Yet notwithstanding the obligation, AT&T claims to have “aggressively” invested in Kentucky in recent years due to the business-friendly environment here.

In June 2010, AT&T praised Kentucky leaders for creating “an environment that encourages companies to invest aggressively in Kentucky.” In June 2011, AT&T announced that it had invested more than $525 million in Kentucky “over the past three years” and that “the company will continue to invest aggressively in” Kentucky as part of a $19-billion nationwide investment in 2011.

In March 2012, AT&T said that “thanks to the vision and business-friendly approach of the General Assembly, Kentucky has a strong regulatory environment for telecom infrastructure investment.” AT&T also expressed hope that the General Assembly “will build upon their past success and update our telecom laws to encourage even more capital investment across the Commonwealth.”

AT&T invested more than $95 billion nationwide during 2007-2011 and $20 billion in 2011 alone. That investment of roughly $1.1 billion from 2007 – 2011 in Kentucky, which AT&T called “aggressive,” amounted to 1.1% of the total national AT&T capital investment over that period. The announced 2013-2015 investment for Kentucky will continue that investment trend as a percentage of national investment, and could be marginally higher or lower. Eliminating the right to stand-alone, reliable, local exchange phone service does not appear likely to materially change AT&T investment in their wireless and wirelines networks in Kentucky.

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