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Why Comcast, AT&T and other Internet providers might not sue the FCC after all

FCC ChairmanTom Wheeler, center, joins hands with Commissioners Mignon Clyburn, left, and Jessica Rosenworcel, before the start of a hearing in Washington on Thursday.  (AP Photo/Pablo Martinez Monsivais)
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Internet providers are widely expected to sue the Federal Communications Commission to overturn the agency's new net neutrality rules. Who will fire the opening salvo, and when, is becoming the subject of a new Washington parlor game — at least until the rules are actually published.

But will the country's biggest broadband companies be part of the mix? That's the question facing companies such as Comcast and AT&T even as they're hoping those same federal regulators approve a set of multibillion-dollar mega-mergers.

AT&T is seeking FCC and Justice Department approval for its $49 billion merger with DirecTV. Comcast, meanwhile, has proposed a $45 billion merger with Time Warner Cable. And Verizon, which appealed the FCC's previous net neutrality rules, has a pending deal with Frontier Communications that also needs federal approval.

"Optically, it looks bad for Comcast to say, 'We don't agree with whatever the FCC's doing,' but, 'Oh, you need to approve our merger,'" said one industry analyst, who spoke on the condition of anonymity in order to speak more freely.

Many individual Internet providers are keeping their deliberations to themselves; Comcast and AT&T declined to comment, and Verizon said that its deal with Frontier is "totally unrelated" to its decision-making on whether to sue.

Other analysts believe that the drawn-out nature of litigation means the companies don't have much to fear from launching a legal attack on the FCC's rules. "Call me insufficiently cynical, but I actually don't think carrier deals would be affected much by whether these companies file lawsuits against the rules," said Paul Gallant, a telecom analyst at Guggenheim Securities.

All this adds up to a minor dilemma for Internet providers. Do you sue and potentially put your deals at risk? Or do you sit back and let others move on your behalf?

For these reasons, "the trade associations most likely will be a little more front-and-center" on litigation, predicted one telecom industry official who asked for anonymity in discussing sensitive plans.

A wireless industry official agreed, saying that the idea was "cogent" but that "no decisions have been made on that front."

Already, two prominent cable associations have indicated that they'd be open to appealing the FCC's net neutrality rules.