AT&T Inc. (T - Analyst Report) is proceeding with its legal actions against the "One Touch Make Ready" ordinance imposed by the Nashville City Council. The council recently voted in favor of the ordinance, which allows competitors such as Alphabet Inc’s Google Fiber install wires on AT&T’s utility poles, without prior approval. Such ordinances bring down network layout costs and reduce installation time for network equipment. These have also intensified competition in the local market. Notably, this February, AT&T sued the Louisville Metro Government on the same grounds, backed by Frontier Communications Inc. (FTR - Analyst Report) .
AT&T, who owns around 20% of the poles in Nashville, believes that the government of the area doesn’t have the authority to exercise control over the poles. Moreover, since the ordinance allows third parties to utilize poles which could be less familiar to competitors, AT&T faces the risk of damage to its existing cable layout. Thus, in order to protect its interest, the company has decided to challenge the ordinance in a federal court. Google, however, has backed the Nashville metro government on the issue.
The Bottom Line
As competition continues to intensify in the telecom space, such ordinances are definitely going to bring in new players in the market where AT&T enjoys a large presence. Thus, it is no surprise that AT&T has been forging ahead with its efforts to stall the successful implementation of such laws. Nevertheless, it is ultimately the consumer who will bear the brunt of higher fees for lower speed services.
AT&T currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is SITO Mobile, Ltd. (SITO - Snapshot Report) with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. SITO Mobile has seen current year estimates increase by 25% over the past 7 days.
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