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AT&T to pause fiber spending on net neutrality uncertainty

The signage for an AT&T store is seen in New York October 29, 2014. REUTERS/Shannon Stapleton

By Marina Lopes

WASHINGTON (Reuters) - AT&T Inc (T.N) on Wednesday raised pressure on the U.S. telecom regulator's work on new "net neutrality" rules, saying it would stop investing in new high-speed Internet connections in 100 U.S. cities until the Web traffic rules are settled.

The statement from AT&T Chief Executive Officer Randall Stephenson is the first business move by an Internet service provider in response to President Barack Obama's unexpected call on the Federal Communications Commission on Monday to regulate such companies more like public utilities.

The statement came as AT&T has been spending heavily on acquisitions and days after it had cut its capital spending estimate for 2015.

The industry and Republican lawmakers have been protesting Obama's proposal, saying stricter Internet traffic regulations 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.

Ensuring access to quality Internet for all Americans has been the FCC's major focus. The White House detailed Obama's plan in a blog post on Monday, saying that if implemented, it "shouldn’t create any new burden for Internet providers."

Telecommunications companies plan to fight Obama's call for utility-style regulations in Congress and the courts.

More than three dozen congressional Republicans on Wednesday wrote to FCC Chairman Tom Wheeler that Obama's proposed regulatory changes were "beyond the scope of the FCC's authority."

AT&T, whose $48.5 billion bid for DirecTV (DTV.O) is under government review, 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.

At the same conference on Wednesday, Verizon Communications Inc (VZ.N) Chief Financial Officer Fran Shammo struck a somewhat lighter tone but also 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.

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

(This story has been refiled to correct day of week of White House blog post to Monday from Wednesday in the seventh paragraph)

(Reporting by Marina Lopes; Additional reporting by Alina Selyukh; Editing by Franklin Paul and Lisa Von Ahn)