AT&T to Chop Copper Networks

In a pronouncement that is news to nobody, AT&T announced at a recent investor day event that it has plans to cut its copper network footprint in half by 2025. This can’t be a surprise from a company that stopped connecting new DSL customers in October 2020. I figured we could start the countdown clock on copper from that date.

However, Jeff McElfish, the CEO of AST&T’s Communications division, said something that is surprising. He said the company isn’t planning to forcibly move customers off copper as they decommission copper. He says customers are naturally migrating off copper. I find that hard to believe.

My consulting firm administers surveys, and we are still seeing DSL penetration rates in cities between 10% and 40%. Our surveys indicate that the people who are staying with DSL are doing so because of price – they largely hate DSL performance, but it’s what they can afford. This is not hard to understand when looking at the rates for broadband from the big cable companies.

In this blog, I’ve often talked about how expensive broadband is from Comcast and Charter, but broadband rates from some of the other cable companies like Cox and Atlantic Broadband are even higher. There are a lot of homes that can’t afford the cable company prices. It’s hard for me to believe that all of these people are going to voluntarily walk away from DSL over the next two or three years. The last estimate I vaguely remember reading was that there is still something like 19 million households still using DSL.

McElfish said AT&T plans to have 75% of its footprint covered by fiber or fixed cellular wireless by 2025 – I have to assume that in terms of square miles of footprint that this will mostly be wireless. AT&T is going to have a PR problem with trying to push customers to wireless. For rural customers within reach of a tower, a switch from DSL to fixed cellular wireless will be a no-brainer. The broadband speeds will be faster, and the price still affordable. But the big problem in rural markets is that there are huge parts of rural America where fixed wireless won’t work. The rural cellular coverage maps for all three big cellular companies are a joke, and anybody who drives into rural areas can see that you don’t usually have to go far to run out of bars of service. It’s worth noting that cellular voice covers a much larger footprint than cellular data. At some point, AT&T will have to drop rural DSL customers who might have no other alternative than satellite broadband. Extrapolating from McElfish’s statement of covering 75% of the footprint means that AT&T will be abandoning folks in 25% of its footprint.

Urban areas are a bigger issue for AT&T because that’s where most of the DSL customers remain. It’s clear that AT&T has no goal of overbuilding whole cities with fiber but is building in selected neighborhoods. It’s not clear if those neighborhoods are chosen due to the most affordable construction costs or the best demographics – but AT&T will not be building fiber to cover the majority of its footprint in most cities.

With today’s 4G LTE technology that’s been branded as 5G, AT&T is not prepared to deliver fixed cellular broadband to huge numbers of people in cities. That’s what 5G is supposed to fix, and it’s not here yet. But even when AT&T finally implements real 5G (estimated to be 5 – 7 years in the future), the company would have to install a huge number of small cell sites to have enough broadband capacity to migrate DSL customers to fixed cellular broadband. And that means building more fiber deep into neighborhoods to serve the small cell sites. None of that is happening by 2025, so AT&T must be planning on turning down rural copper markets first.

Perhaps AT&T is really counting on everybody else to pick up its DSL customers. T-Mobile is already aggressively rolling out fixed cellular broadband, and Verizon plans a big push starting in late summer of this year. Dish plans to open 25 major markets with cellular data by June. Smaller wireless player like Starry might be making a dent by 2025.

AT&T is ultimately going to have to force people off DSL. The download speeds on much urban DSL are not dreadful, at 15 – 30 Mbps, although upload speeds are nonexistent. I don’t see millions of people voluntarily abandoning the product so that AT&T can tear down the copper without a public stir.

But maybe there is another motive behind this – as the technicians who understand DSL keep retiring, AT&T might not be able to keep DSL running by 2025. I know that sounds cynical, but I don’t think it’s far from the truth.

3 thoughts on “AT&T to Chop Copper Networks

  1. It is a reasonable plan.

    Suppose that by 2025 the lowest speed offer on the fibre will be 1000Mbps(maybe even higher 2000Mbps) and the price will far lower than now,the customers are naturally migrating off copper in the coverage areas of both dsl and fibre.

    • Hardly. Many of these areas will never see fiber. Many that have fiber are not getting 1 gig. I used to be the director of a muni owned fiber network. DSL areas many times dont even have cell phone coverage. Areas that had only 3G (which was turned off by AT&T) now have nothing.

      AT&T has often inflated the areas they cover. When I was the Director of the fiber network, they said they had 1Gig service in the same city. Go to their web site and put an address in, the best you could get was 6 Meg. I was looking at a house kitty corner from the CO for AT&T. People in the city need to get out once and a while to see what is going on the country.

      Also what good is 2000 if no computer can handle it right now? I am not aware of any home router (except for perhaps Calix etc) that can handle 2 Gig. Most people use perhaps 30 meg and use it wirelessly.

      I have 500 meg at home and I am turning it down because I see no benefit. And we are VERY heavy users.

  2. on the fibre area,telcos want to upgrade the speed to at least 500+ Mbps,so they can beat the cables badly!I have 100% confidence that by 2025 the lowest speed offer on the fibre will be 1000Mbps.

    on the fibre area,telcos can decrease the price of gigabit service (now AT&T: $80) because of the decreasing of the cost of gigabit equitment. Thanks to china,Chinese are decreasing the whole cost of the fibre ecosystem!

    At the begining,market development isn’t decided by the demand from ueser because of the lag of demand development.
    The lower upload speed limits the demand for higher speed download in the states now.

    look at the fact in Chile,Thailand and Romania, there are higher downlaod speed and at least 5 TIME upload speed than in states.
    So what is good ? what is the demand for upgrading the network, People in the states need to get out once and a while to see what is going on around the world.

    BTW: Aussie use as poor network as Filipino.

    On the area with no fiber that is a political issue.

    Give to Caesar What Belongs to Caesar and to God What Belongs to God.

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