

Randall Stephenson, Chairman and CEO of AT&T and chairman of the Business Roundtable SAUL LOEB/AFP/Getty Images

When AT&T said this month it was halting a plan to give 100 cities ultra-fast Internet, it apparently didn't really mean that.

The telecom giant was threatening to pull its investments in new fiber optic cables if it didn't get more "certainty" from Washington about how Internet service providers would be regulated under net neutrality, the idea that broadband companies shouldn't be allowed to speed up or slow down certain Web sites over others. AT&T's chief executive, Randall Stephenson, told investors this month that "we can't go out and just invest that kind of money" without knowing what rules the government might apply.

But after the warning raised eyebrows at the Federal Communications Commission, AT&T is now saying that it "still plans to complete" the rollout after all, underscoring the delicate balance the company has to strike with federal officials if it wants them to approve its $49 billion merger with DirecTV.

AT&T has argued that its merger with DirecTV, if approved, would help consumers by expanding video choices and promoting competition with the cable industry. Let the deal go through, and everybody benefits, the company says.

Separately, however, AT&T is making a more ominous argument: If regulators don't craft industry-friendly net neutrality rules, AT&T (and everyone else who's an ISP) will have no choice but to hurt consumers by slowing down the pace of their network upgrades. If you pass aggressive regulations, the consequences are on you. Stephenson's comments this month seemed to offer a taste of that.

You might already see the tension inherent in these two positions. AT&T can only go so far with its bad-cop messaging before it comes across as arm-twisting. The FCC appears to grasp this dynamic. And that poses a potential problem for AT&T's merger hopes, because the FCC holds the power to kill AT&T's bid to acquire DirecTV.

Even if the FCC allows the deal to go through, which analysts anticipate, the agency could still slap onerous conditions on the merger that AT&T would be forced to swallow. What those conditions might look like isn't clear, and it's in that ambiguity where the FCC finds the bulk of its leverage against AT&T.

That AT&T backed off of its investment warning suggests the company doesn't want to be too provocative, lest it threaten its chances with the merger. Of course, there are other concerns, too: its rival, Google Fiber, is expected to announce by year's end where it'll be expanding in 2015, and AT&T needs to be positioned to respond. It can't do that if it's already said it's putting its fiber rollout on hold due to net neutrality.

AT&T and the FCC both declined to comment.