Large Telcos and DSL

Copper wireThere has been a spate of articles recently talking about how the number of cable customers at the large cable companies took their first big dip last quarter. This was the first time when the cable industry as a whole saw an overall significant customer loss, and this raises the question the question if cord cutting is real.

But there was another significant statistic in these same press releases. AT&T and Verizon together lost 474,000 DSL customers in the second quarter of 2015. The two made up some of these losses by adding 313,000 data customers to their FiOS and U-verse networks, so certainly some of the losses are offset by customers who shifted from DSL to something faster.

But this continues the trend that these two largest telcos are shedding DSL customers. The numbers just keep growing and this is the first time that number approached half a million customers.

Verizon has made it clear for years that they have no love for their copper networks. They have been selling significant chunks of the older networks to Frontier. They have been pestering the FCC for years to be able to turn down the copper in neighborhoods where they already have FiOS fiber.

Perhaps more surprising is that Verizon recently sold a significant number of FiOS customers to Frontier, and I have speculated before that Verizon doesn’t want to stay in any landline business. When you read their annual reports, any mention of their landline business is buried deep inside and they obviously have put all of their emphasis on the wireless business.

AT&T is a bit more perplexing. They have not been selling copper customers. But they have told the FCC a number of times that they would like to walk away from millions of customers on rural copper networks. AT&T recently promised the FCC as part of the DirectTV deal that they would aggressively add new broadband customers. While they have insinuated to the FCC that the new customers would all be on fiber, I would not be surprised to see a lot of them on U-Verse.

Many people speculate why AT&T bought DirectTV. My guess is that they want to get out of the business of delivering video over wires. U-Verse becomes a much better data product  if it doesn’t have to carry video so that all of the bandwidth would be used for data. There must already be a lot of current U-Verse customers bumping up against their bandwidth and wanting faster data connections.

It’s also interesting that AT&T hasn’t divested of rural copper networks in the same manner as Verizon. Again, I am only speculating, but my guess is that they don’t want those networks to be revitalized and then compete against their wireless networks. I think AT&T has a long term plan to serve rural areas with wireless only.

The one shame about cutting down the copper networks, particularly in urban and suburban neighborhoods, is that those networks could be upgraded relatively inexpensively with G.fast to deliver much faster speeds. CenturyLink just announced that they are testing 100 Mbps copper in Salt Lake City. Some of the copper networks in Europe are doing this with even faster speeds and the technology is generally referred to there as fiber-to-the-curb.

But obviously both companies have decided that G.fast is not a technological path they want to follow, and both are going to be aggressively decommissioning copper over the next five years.

I don’t feel too bad about a customer who is told they have to move from a copper network to a FIOS fiber network. But I am really worried about rural customers if somebody cuts down the only telecommunications wire to their home when the copper comes down. At that point those folks are going to be paying cellphone prices for both voice and data, and for some millions of them there is not enough coverage to provide those services over cellular. I predict we are going to be cutting customers off from communications and moving parts of the country back seventy-five years. I hope I am wrong.

3 thoughts on “Large Telcos and DSL

  1. Pingback: Large Telcos and DSL | Doug Dawson | POTs and P...

  2. There is no hope for copper, and the sooner we get the fibre in the better. Rural areas should do it themselves, smaller leaner companies should be state aided to get the fibre everywhere. We should never ask what it costs to do this – we should ask what it costs if we don’t do it. Countries without phone networks go straight to fibre. It is only those with assets to protect who are so slow. And Gfast is not the answer, it is high maintenance and still reliant on old copper. Not carbon friendly and expensive to run. It has to be fibre. Moral and optic. If a load of farmers in the uk can do it, American farmers can too. This is what they get for £30 a month. http://www.dslreports.com/speedtest/1030028 gigabit symmetrical.

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    • I agree with your sentiment 100%. I’d like to see the whole US get fiber. But the multi-billion dollar question is who is going to pay for it? We are a long way here from even having fiber in cities and other than what Verizon built in the past, the only fiber builders today are Google, CenturyLink and handful of small overbuilders. AT&T promised the FCC they would build some fiber, but we shall see how much the really do. Those companies are not going to come close to getting fiber to all of our cities. And the story in the rural areas is bleaker. When you say these areas should do it for themselves, the rural areas in the US are gigantic compared to the UK and we are talking probably tens of billions of dollars to get this done. This is what I do for a living, and proving in a business case that a bank will loan to for a farming area is incredibly hard. There are many rural areas looking at doing this, but there are legal and financial impediments galore than make it a huge challenge. It’s not impossible and I helped prove in a business case for Sibley County, MN that is being called fiber to the farm. But even that county had enough towns in it to average out the high price of getting to the farms, and so it worked. Most places are not that lucky. What you’ve stated is the obvious wish list and I don’t think many would argue that getting fiber everywhere would be amazing. But actually doing it means slogging out the details in County after County. Unless the federal government had a huge change of heart and decides to pay for it, there are many areas in this country that still won’t have fiber thirty years from now. It’s a huge uphill battle.

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