Google's quest to build a fiber network in Austin, Texas has hit a snag in the form of AT&T.

AT&T owns about 20 percent of the utility poles in Austin, with the rest of them being owned by the city. Instead of increasing congestion by adding more poles, the City Council was expected to vote last week "to force AT&T to allow Google Inc. use of its utility poles to install its planned high-speed Google Fiber network in the city," as the Austin American-Statesman reported last Tuesday. The Council drafted a new ordinance making it easier for communication service providers to secure pole attachments at reasonable prices.

The vote was postponed until January 23, 2014, however. AT&T and Google are expected to negotiate an agreement before that date, but AT&T's public stance is that it doesn't have to let Google use its poles.

“Google has the right to attach to our poles, under federal law, as long as it qualifies as a telecom or cable provider, as they themselves acknowledge," AT&T Public Affairs VP Tracy King told the American-Statesman. "We will work with Google when they become qualified, as we do with all such qualified providers." Further Reading AT&T offers gigabit Internet discount in exchange for your Web history whining" about sharing utility poles with Google. But AT&T's argument seems to be legally sound, and it will likely allow the company to win payments from Google, similar to a previous outcome in Kansas City.

AT&T did not answer questions from Ars, but a city official explained what's going on.

"Basically, the current regulations require companies with utility poles in the public rights of way to provide access to certified telecommunications providers and to TV/cable companies," Paul Lewis, assistant manager of telecommunications and regulatory affairs in Austin, told Ars. "Google is not a certified telecommunications provider, and it's a video service provider as opposed to a television/cable company."

If Google were to apply to the Public Utility Commission of Texas to become a qualified telecom, "It would make them subject to all of the state and federal telecommunications regulations," Lewis said.

Telecom in this context essentially "means the same thing as telephone service," Matt Wood, policy director at consumer advocacy group Free Press, told Ars. That excludes pure Internet services, even though Google and many other companies such as Microsoft's Skype provide voice calling over the Internet.

Telecom providers are subject to more regulation, which Google wants to avoid. Google would probably not have to promise universal service, because that requirement "usually goes to the incumbent" rather than a challenger, Wood said. But there would still be "state oversight of the rates you might charge."

Google also hasn't positioned itself as a cable provider, not because it uses fiber instead of coaxial cable, but because federal communications law defines cable service as "one-way transmission to subscribers of video programming or other programming service." Google Fiber delivers IPTV, which counts as a two-way network because "A subscriber to an IPTV service uses a set-top box to request specific individual video signals from the IPTV service provider," telecom attorney Michael Glaser writes. "Thus, the subscriber controls the video signals he or she wishes to access."

Google: “We're happy to pay”

For those reasons, AT&T appears to be on solid ground in claiming that Google isn't a telecom or cable provider. That means federal law doesn't give Google guaranteed pole attachment rights at the reduced rates charged to telecom and cable companies.

AT&T has argued that telecom regulations are outdated and too restrictive and that they should be eliminated or dramatically reduced as the nation moves from traditional phone networks to all-Internet Protocol networks. But those rules still exist today, and AT&T doesn't want Google to gain the benefits of being a telecom provider without the regulatory risks, especially in a market where Google is trying to lure away AT&T's Internet customers. Google's entry into Austin led to AT&T building its own fiber network in the city.

The companies will probably come to some agreement in Austin. City Council member Mike Martinez wrote on Facebook, "After hard work, lots of meetings and tons of input—AT&T and Google agree to negotiate their issues with the city."

The delay of the Council vote gives time for those negotiations to happen. Something similar happened in Kansas City, the first city with Google Fiber. While no specific details of the Kansas City deal were revealed, the companies "entered into an agreement whereby Google Fiber Inc. can attach to AT&T’s poles in the Kansas City, Kansas, and Kansas City, Missouri, city limits," AT&T told the Kansas City Business Journal last year.

Google told the Austin American-Statesman that it "would be happy to pay for access (to utility poles) at reasonable rates, just as we did in our initial buildout in Kansas City."

If negotiations with AT&T fail, Google will bank on the City Council forcing AT&T's hand.

"Our biggest concern is making sure that Austin citizens don’t have to deal with unnecessary disruption and extra infrastructure," a Google spokesperson told Ars. "We’d be thrilled to reach this outcome regardless of whether it comes about from a City Council ordinance or from signing reasonable pole attachment agreements with pole owners."