AT&T Aids the Shift to Cable Monopolies

If you live in a city where AT&T is the incumbent telephone company, the chances are high that the cable company is now a broadband monopoly. Unless some other ISP is building fiber, you no longer have a choice of broadband provider – it’s the cable company or nobody. When AT&T announced that it is no longer connecting DSL customers as of October 1, the company has fully ceded its historic telephone properties to its cable company competitors.

Broadband customers are not going to like what having a monopoly provider will mean. The changes won’t happen overnight, but when the cable company becomes a monopoly provider in a market they will eventually act like a monopoly.

  • The cable company will get slower on repairs because there is no threat of losing customers. Technicians will miss more appointments.
  • Customer service will deteriorate. Call waiting times will increase. Customer service reps will become less interested in fixing problems. It will become harder to win billing disputes.
  • Network performance will deteriorate because the cable company will be able to save money by shaving on maintenance budgets. Outages that used to last an hour might last for a day. Outages that used to last for a day might stretch to a week.
  • Financial incentives for new customers will disappear when it becomes clear that the cable company gets every broadband customer without trying.
  • Prices will increase. Data caps will be more strictly enforced in monopoly markets. Customers will no longer be able to negotiate lower rates and will be forced to pay full list prices.

If you don’t think monopoly abuse is real, talk to any rural DSL customer. They can describe in detail how service slowly deteriorated over time once it was clear that the big telcos had a rural broadband monopoly. The abuses that have been heaped upon rural DSL customers are almost unbelievable.

The slide into monopoly behavior won’t happen immediately – but it is inevitable. Most monopoly behavior originates in the local market as regional managers come to understand that they can improve financial performance (and bonuses) by cutting corners. There’s no reason to pay overtime to put a customer back in service – waiting until the next day is fine. There’s no reason to give a complaining customer a discount because they can’t leave. Slowly, bit by bit, the abuses that are to be expected in a monopoly market will become the new normal.

AT&T walking away from DSL will accelerate the shift to monopoly, but it’s a shift that’s already underway everywhere there is no fiber alternative. The telco DSL market has been sinking for a decade as cable broadband became faster. Quarter after quarter, hundreds of thousands of DSL customers are making the shift to cable company broadband. My firm does broadband surveys and we’re surprised when we find a city with a DSL market share over 30%, and in most markets, DSL penetration is now under 15%.

For the most part, urban DSL providers have already given in to the inevitable. The big telcos have continued to cut technicians who understand copper technology. The copper wires continue to age and every year more pairs of copper wire go dark and can’t be used. There are no longer manufacturers supporting some of the older versions of DSL and it’s nearly impossible to get replacement electronics. Long before AT&T formally announced they won’t connect new DSL customers, local telco technicians have been regularly telling that same story to customers.

AT&T is the first big telco to announce the end of DSL support, but they won’t be the last. I find it hard to think that Verizon won’t soon follow now that AT&T has taken a public stance. CenturyLink management has made it clear that they would love to get out of the copper business. Frontier will continue to try to make copper work because the company has no other revenue stream to fall back upon. But within the next decade, the copper wires are finally going to stop working for all of the telcos.

It will be interesting to see how long it takes the FCC to acknowledge this new reality. When AT&T announced the end of DSL, it took away the second broadband option from millions of households. But AT&T will continue to report its dwindling number of DSL customers, and my bet is that the FCC won’t recognize or admit that millions of homes now have only one broadband choice.

2 thoughts on “AT&T Aids the Shift to Cable Monopolies

  1. Or worse, some DSL customers may now not have a broadband choice at all… Unless you believe satellite can deliver a usable broadband service.

  2. Pingback: Weekend Reads 122420 – rule 11 reader

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