Are We Really Funding More DSL?

DSL modemRecently while speaking at the National Association of Regulatory Utility Commissioners (NARUC), AT&T CEO Randall Stephenson told the attendees that AT&T’s DSL technology is obsolete. This is a rare admission of the truth from AT&T, which has been less than forthcoming over the years about its broadband business.

And it’s a pretty interesting quote from a company that last year accepted $427 million in CAF II funding from the FCC to expand broadband in rural markets. That money is supposedly going to be used to upgrade rural customers to be able to receive at least 10 Mbps download and 1 Mbps upload speeds. CenturyLink and Frontier plan to spend their federal assistance money by expanding DSL. I think it’s widely assumed that AT&T will also use the money for DS. But we can’t be certain that they aren’t planning to instead use that money to bring cellular wireless to rural homes, against the intentions of the FCC.

To be fair to Stephenson, his response was answering a question about how regulators should look at new technology cycles. Stephenson pointed out that technology cycles have shortened over the years. When DSL was first introduced it was expected to be good for about 10 – 15 years, but today the cycles for new technology have shortened to 5 years – with his example being the transition between 3G and 4G wireless.

Stephenson is right about the speed at which broadband technologies are improving. Since the introduction of DSL we have seen cable modems go through several generations of improvements and in 2016 we are seeing the first widespread roll-out of DOCSIS 3.1 and gigabit speeds from cable companies. And in that same time frame we have seen the development and the maturation of fiber technologies for serving homes. From a performance perspective DSL has been left in the dust.

AT&T certainly still has a lot of DSL in service. But it’s hard to decipher AT&T’s broadband statistics because they lump all broadband customers together. This has gotten more confusing since they picked up DirecTV, which sells satellite broadband. AT&T has been further making a distinction between traditional DSL customers and U-verse customers, most of which are served by bonding two pairs of copper together and using two DSL circuits. But supposedly within the U-verse numbers are also customers on fiber, which many analysts suspect are MDUs or small greenfield fiber trials that AT&T has done over the years.

In the fourth quarter of 2015 AT&T announced a net gain of 192,000 IP broadband customers, which is a mix of the three different types of broadband customers. If AT&T is like Verizon and CenturyLink they have been losing traditional DSL customers at a torrid pace, so it’s hard to know what to make of that number. Are they finally adding some FTTP customers?

But back to DSL. Stephenson is right. At best, a DSL service on a single copper line can deliver perhaps 20 Mbps of data – but conditions are rarely ideal and in the real world DSL is generally a lot slower than that. But even if people could get 20 Mbps from new DSL it’s obsolete because that is no longer considered as broadband.

It’s a shame that the FCC is going to invest billions in DSL at a time when the large telcos were never going to make those investments on their own. The CAF II funds will channel billions of dollars to the DSL vendors for one last hurrah before the technology hits the dust heap. Without the CAF II money one can imagine the DSL equipment market fading away.

While CAF II is a huge gift to the companies that sell DSL equipment – it’s going to be a long-term curse to people that will be upgraded with CAF II funding. They are going to get upgraded to DSL in a fiber world and the telcos are going to check these areas off as upgraded and needing no more investment. A lot of the first DSL built in the 90s is still working in the network, and sadly we are probably going to find a lot of CAF II DSL still working in rural America twenty years from now.

4 thoughts on “Are We Really Funding More DSL?

  1. DSL isn’t going to be workable in much of AT&T’s service territory because the copper cable plant is too deteriorated to reliably support DSL. In August 2015, AT&T indicated to the FCC it would use a mix of technologies to serve high cost areas including fixed wireless. Presumably the fixed wireless would carry data and VOIP while video programming would be delivered by AT&T’s newly acquired DirecTV.

    https://eldotelecom.blogspot.com/2015/08/at-to-deploy-wireless-local-loop-fixed.html

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    • The truth is that none of the big telco’s rural copper is in good shape. I’ve witnessed some amazingly bad copper in CenturyLink western states. Frontier bought a lot of properties from Verizon like the state of West Virginia that Verizon had totally neglected for nearly two decades before the sale. Yet somehow CenturyLink and Frontier are going to try to make rural DSL work.

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      • The question here is are CenturyLink and Frontier going to install aerial fiber plant to replace the old copper or use fixed “wireless local loop” as AT&T plans? The CAF II service quality standard of 10/1 seems to me to be set at that level in order to accommodate fixed wireless technology while minimizing the need for new fiber backhaul.

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      • AT&T has a lot more incentive to provide wireless local loops. First, being a cellular carrier they already have access to a lot of the towers that would be needed for that. And if they use the CAF II money to build more towers, that construction will add benefits to their cellular business. Further, AT&T has made it clear that they want to get out of the copper business period – not just rural, but everywhere.

        But there is not much incentive for Frontier or CenturyLink to take that path other than in places where the wires are so bad that they don’t work at all (such as what I’ve seen on some Indian reservations). Frontier doesn’t have any choice about staying in the wireline business – it’s all they have. And I don’t see that CenturyLink has ever made any noise out of having rural copper. I think they get a lot of their margin from that business since they have been slaughtered in urban areas with their DSL. CenturyLink is building a ton of FTTH in urban areas, but my gut says they will milk rural copper for all it’s worth

        I also don’t see those two companies replacing copper loops with fiber loops as you mention. Instead look at them to extend fiber into rural areas just far enough to build new DSLAM cabinets and to them force DSL onto the copper lines. With the newest DSL cards they can probably get something like 10 Mbps within 2 – 3 miles of any of these new cabinets, even with somewhat crappy copper.

        I am not privvy to what they are planning at the corporate level, but I’ve talked to some of their field techs and what I’ve said above is what they expect, for all that’s worth.

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