USA Today reported last week that AT&T stopped selling new DSL to customers on October 1. This is an event that will transform the broadband landscape in a negative way across the country. There are a number of immediate consequences of this action by the company.
Probably the most dramatic impact will be that many rural customers will no longer have an option for landline broadband. While rural DSL broadband is slow, a DSL connection at speeds between 1 Mbps and 6 Mbps beats the alternatives – which is satellite broadband or cellular hotspots. Since there are a lot of rural homes where those two technologies don’t work, this means some homes will suddenly have no broadband option. Expect to soon see stories of folks who buy rural homes and then find they have no option to buy broadband.
In cities where AT&T DSL is the only alternative to a cable company broadband service, this move bestows total monopoly power to the cable company. Our firm does broadband surveys and we still find markets where AT&T DSL represents as much as a 30% market share. Many homes buy DSL because it costs less, and that option just got taken off the table in AT&T markets. And just like in rural markets, every city has customers who’s only choice is DSL. For various reasons, there are streets in most cities where the cable companies never constructed network. Any customer moving into one of these broadband deserts will find themselves with no broadband alternative.
According to an article just published by Ars Technica, only 28% of AT&T broadband customers have access to AT&T fiber – anybody living in the neighborhoods without fiber will no longer be able to buy broadband from AT&T. That has to equate to tens of millions of households that just lost a broadband option. The FCC proudly measure the number of homes with multiple broadband options, and I’ll be curious to see if they recognize this sea change in the market.
This change will stop the practice of customers who hop back and forth between DSL and cable company broadband to save money. I just talked to a customer the other day that has bounced between DSL and cable company broadband for almost twenty years. Both the cable company and the telco offer introductory prices each time for swapping, and this customer has gone back and forth between the ISPs regularly every few years. In neighborhoods where AT&T is the telco DSL provider, this might mean the end of introductory special prices from the cable company – they now have zero incentive to compete for customers.
I would have to think that Verizon will eye this announcement closely. They have openly said that they want to do away from copper network technology. This might be all of the push needed for Verizon to follow suit. This announcement might be citied in telco history as the beggining of the end of copper wires. AT&T says they won’t be tossing folks off DSL service, but will no longer connect new customers to the DSL technology. Over time this is going to mean fewer and fewer customers on copper, and I suspect AT&T already has a date in mind when they walk away from the technology completely.
Ironically, AT&T just recently announced that they were going to claim a seventh year of CAF II support in 2021 and will collect over $427 million in subsidies next year to supposedly support rural DSL. Hopefully, the FCC will view this announcement as grounds for stopping such payments. It would be absolutely insane to give millions to AT&T to support a technology that the company will no longer sell or install.
This timing of the announcement is also curious at a time when the pandemic is still raging. This means a home that needs to buy broadband to support students or adults working from home will no longer have that option if the only wired connection is AT&T DSL.
This announcement also creates an interesting dilemma for the FCC. Will the FCC pretend that the huge AT&T DSL footprint still exists? It’s impossible to pretend that areas have a broadband option when the only provider of landline service refused to connect new customers. I’m sure the FCC will act as if this announcement never happened – because recognizing it means now counting millions of homes as having no broadband option.
This day has been inevitably coming for decades. Regulators have long pretended that they could demand that the big telcos keep supporting an obsolete technology. AT&T and Verizon have been telling regulators for years that they are going to walk away from copper, and now one of the big telcos is doing so. It’s just a matter of time until AT&T begins decommissioning DSLAMs and starts tearing down copper wires for the salvage value – and I can’t see any way that regulators can stop them.