Why No Outcry about AT&T DSL?

I’ve been a little surprised that there hasn’t been any regulatory reaction to AT&T pulling out of the DSL market last October. The company stopped taking orders for DSL connections. I’ve heard instances where the company won’t even connect a voice customer on copper. I’ve heard stories that once DSL is disconnected for any reason that the company won’t reconnect it. If somebody buys a house served only by AT&T, the new owner can’t get DSL, even if the old owner had it. If somebody gets disconnected for late payment, they aren’t being allowed to reconnect. I heard a few stories lately of customers who had technical trouble with DSL and were told that the company can’t and won’t fix it.

This is a huge change for customers. In towns where there is a cable competitor, AT&T has suddenly made the cable company into a de facto monopoly as the only broadband option for a new customer. In rural areas where there is no cable competitor, the change strands homes with no landline alternative. AT&T says publicly that rural DSL is being replaced by fixed cellular broadband – but it seems like the wireless product is far from universally available. Many homes are left with no alternative other than satellite broadband, assuming they have a decent view of the sky.

I really thought that at least a few states would react to the change. Just a year ago, the Public Service Commission in New Mexico took CenturyLink to task for doing a poor job for copper customers. I expected at least a few states to be up in arms about AT&T. Perhaps state regulators have finally given up on telephone copper and are getting realistic about the coming end of the copper networks. Or perhaps AT&T has a strong enough lobbying effort in states to stave off a public enquiry.

AT&T took a different approach than Verizon, which has been following the formal rules for turning down copper networks. Verizon goes through the process of notifying all customers that they are withdrawing copper services, and months later cuts the copper dead. AT&T is not going out of service yet. Customers with DSL are allowed to keep the service. But give the company the slightest reason to disconnect, and AT&T is gone. The company is withdrawing from copper through attrition instead of a formal withdrawal. It’s an interesting tactic because it doesn’t trigger any of the regulatory rules associated with fully walking away from copper. It’s pretty clear that this is AT&T’s first shot and that the day will come when they’ll disconnect the remaining customers and walk away from the copper business entirely.

I’ve been hearing similar stories for several years about CenturyLink and Frontier. Customers are put on a years-long wait list to get new service. Customers are often told that problems can’t be fixed, and the telco walks away instead of repairing problems. But those two companies have not formally stopped providing DSL to new customers in the same manner as AT&T.

The reaction that I was expecting was for states to make AT&T prove that it has a fixed cellular alternative in an area before refusing customers on copper. That would be hard for AT&T to do since many rural areas have poor or no cellular service.

The biggest impact of this change is not in rural areas. AT&T’s rural DSL in most places has been so slow that it barely works. Many rural homes walked away from DSL years ago since the monthly rate couldn’t be justified with the tiny bandwidth being delivered. The bigger impact from this change comes in cities and towns where AT&T is the telephone incumbent. DSL has retained a decent market share in many towns because it’s cheaper than cable broadband. In the many towns and cities that AT&T serves, the company has taken away the low-price option from the market. I’m sure that potential customers are still being surprised when they find out that the DSL option is off the table. I haven’t seen any noticeable reaction from the cable companies in these markets, but by now, they realize they are a monopoly. We know over time this will mean a slow return to monopoly practices – higher prices, less attention to maintenance, slower repair times, and less incentive to upgrade.

3 thoughts on “Why No Outcry about AT&T DSL?

  1. Seems to me that the biggest problem with AT&T doing this is in rural areas, at the relatively few addresses where neither cable nor fixed wireless service is available. Those folks are essentially left with no decent options. It’s certainly a reason for folks considering moving into a new home in those areas to figure out the internet/phone situation first. Buyer beware.

    But the author seems to think it’s more of a problem in areas where cable IS available, because AT&T DSL exiting the market is creating an internet monopoly that will allow cable to raise rates. Now, correct me if I’m wrong, but I do not think that AT&T is doing this phase-out with fiber-to-the-node DSL (what was originally branded as Uverse), which provides speeds ranging from about 12 Mbps up to 100 Mbps, depending on how close the home is to the node. Those customers (most of them) are actually getting broadband (i.e. speeds of at least 25 up and 3 down).

    The kind of DSL that AT&T is phasing out is regular ol’ DSL that runs fully over copper, with downloads ranging from under 1 Mbps up to a max of 6 Mbps. That’s not much competition for cable. I’m sure there are a few households who would rather pay AT&T maybe $45 for 6 Mbps than their local cableco $65 for 100 Mbps or faster. But not a lot. (And note that home phone service is much cheaper from Comcast and Charter, as an add-on to broadband, than is landline POTS from AT&T. So for households taking both services, they not pay any more, and possibly even less, to switch to cable.)

    I tend to think that whatever downward pricing pressure that AT&T’s slow DSL exerted on cable pretty much faded away a few years ago. Their faster FTTN DSL (and of course FTTH) certainly does, though, and that continues to be available in parts of many areas.

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