) faces charges of $27.5 million under a patent lawsuit filed by
Colorado-based Two-Way Media LLC. We believe that the regulatory
charges would remain a headwind for the company, which already
remains exposed to heavy expenses on network deployment and
subsidies over high-end smartphones like
) iPhone and Android-based smartphones. However, according to
news reports, AT&T plans to move against this verdict and
challenge the fine amount imposed by the federal jury in San
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AT&T's legal battle with Two-Way Media has been ongoing since
2008 when the latter filed a patent infringement case against
Akamai Technologies, Inc.
Limelight Networks, Inc.
) as well as AT&T. Two-Way Media had five patents pertaining
to live streaming technology applied in Internet broadcasting,
which were violated by these companies. Two-Way Media has
reportedly settled its disputes with the other companies.
However, its legal battle with AT&T continues to exist, as
the latter's U-verse services allegedly infringed two patents of
We believe AT&T's domestic operations are subject to
regulations by the Federal Communications Commission (FCC) and
other federal, state and local agencies. These regulatory regimes
frequently restrict the company's ability to provide certain
products or services in designated areas.
In addition, the loss of certain licenses due to infringement and
other disputes could have a material effect on the wireless
business of the company. In addition, the development of new
technologies, such as Internet Protocol-based services, including
VoIP and super high-speed broadband and video, could be subject
to conflicting regulations between the FCC and various state and
local authorities. Such restrictive and conflicting regulations
could significantly increase the cost of implementing and
introducing new services that aid future developments.
AT&T has a Zacks Rank #3, implying a Hold rating.