Can Big ISPs Resist Data Caps?

MagneticMapI think we can expect data caps to continue to be in the news. Comcast was getting a lot of negative press on data caps at the beginning of the year and had generated tens of thousands of complaints at the FCC from their 300 GB (gigabit) monthly data cap. They relieved that pressure by unilaterally raising all of the data caps to 1 TB (terabit) per month. But Comcast has now been quietly implementing the terabit cap across the country and recently activated it in the Chicago region.

In May of this year, AT&T U-verse revised a few of their data caps upward, but at the same time began seriously enforcing them for the first time. Until recently, most AT&T data customers that exceeded the caps paid no extra fees. The AT&T U-verse data caps are much smaller than the new Comcast cap. For traditional single-copper DSL customers the data caps is 150 GB per month. For U-verse speeds up to 6 Mbps the cap is now 300 GB per month. For speeds between 12 Mbps and 75 Mbps the cap is 600 GB, while customers with speeds at 100 Mbps or faster now have the same 1 TB monthly cap as Comcast. AT&T has a kicker, though, and any customer can buy unlimited usage for an additional $30 per month.

The large ISPs, in general, are under a lot of pressure to maintain earnings. They have all profited greatly by almost two decades of continuous rapid growth in broadband customers. But that growth is largely coming to an end. A few of the cable companies are still seeing significant broadband growth, but this is coming mostly from capturing the remaining customers from big telco DSL.

At the beginning of this year, the Leichtman Research Group reported that 81% of all American homes now have a broadband connection. When you add up rural homes that can’t get broadband and those elsewhere that can’t afford full-price broadband, there are not room for much more growth. Even if a lot of low-income households get broadband through the Lifeline Fund subsidies, those customers will be at low rates and won’t do a lot to the bottom line at the big ISPs.

Meanwhile, the large ISPs are seeing an erosion of cable revenues. While cord cutting is small, it is real and the cable industry as a whole is now slowly losing customers. Probably more significant to their profits is cord-shaving; customers cut back on the cable packages to save money (and because they have alternatives to the big cable packages). Even if cable wasn’t starting to bleed customers, the margins continue to shrink due to the huge increases in programming costs. Even high margin revenue streams like settop boxes are under fire at the FCC.

When I look out five years from now it’s obvious that the ISPs will somehow have to milk more profit out of broadband. There are only two ways to do that – increase rates or find backdoor ways like data caps to get more money from broadband customers.

It’s not hard to understand why the large ISPs fought net neutrality so hard. By putting broadband under Title II regulation the ruling has already started to impact their bottom line. I think Comcast raised their data cap to stop the FCC from investigating data caps. The proposed FCC rules on privacy will largely strip the ISPs of the ever-growing revenues from advertising and big data sales. And it’s certainly possible in the future that the FCC could use the Title II rules to hold down residential data rates if they climb too high.

It’s got to be a bit hard to be a big ISP right now. They look at envy at the big revenues that others are making. The cellular companies are making a killing with their stingy data caps. Companies like Google and Facebook are making huge amounts of money by using customer data for personalized advertising. Meanwhile, the ISPs live in a world where, if they aren’t careful, they will eventually become nothing more than the big dumb pipe provider – the one future they fear the most.

Comcast, and perhaps the new Charter, are large enough to find other sources of revenue. Comcast is now pursuing a cellular product and has done fairly well selling security and smart home products. Comcast also makes a lot of money as a content provider, boosted now by buying DreamWorks. But any ISP smaller than these two companies is going to have a nearly impossible time if they want to continue to match the growth in bottom line they have enjoyed for the last decade.

Shrinking DSL Competition

turtle_backFor a number of years Verizon has been trying to get rid of DSL customers. Verizon just recently increased the price of its older DSL by $7 in an attempt to drive more customers to FiOS, Verizon wireless, or the cable company.

Unlike the other large telcos Verizon never upgraded DSL to the paired copper wire technology used by AT&T U-verse. In that technology, AT&T and other telcos have bonded together two copper wires and also used a later variety of DSL that, together, can increase DSL speeds to as much as 50 Mbps on perfect copper, but even to 25 Mbps on poor copper. Instead, Verizon put all of their investment into FiOS fiber and most of their DSL is from the very early 2000s. The older DSL that is still operating has speeds of up to 3 Mbps, with ‘newer’ DSL with speeds up to about 7 Mbps.

These are the speeds in urban areas and Verizon customers who live outside of towns get far slower speeds, often reported at near-dial-up slowness. And many of these rural customers have to worry about Verizon wanting to tear down their copper lines, leaving them with no wireline broadband alternative. Verizon is the only large telco that largely rejected the FCC’s offer for taking Connect America Funds to upgrade its rural DSL. Verizon has sold large chunks of its rural market to Frontier and the company has made it clear to the FCC that they would like to walk away from the rest.

If you’ve never read the customer reviews at DSL Reports it’s worth a look. This is a site where customers have been posting stories of problems with broadband for years – everything from lack of speed, poor customer service, slow repairs and pricing. For anyone that happens to have a fast broadband connection it’s an eye-opener to hear from homes that do not.

The FCC tries to paint the picture that there are many markets in the US that have at least two competitors. But when one of the two competitors is a telco trying to edge its way out of the DSL business it’s hard not to argue that a lot of the country really has become a cable monopoly for broadband. The households that stubbornly stick with DSL seem to be those that are willing to accept slow speeds for a lower price. But Verizon seems to want these customers to move on to some other alternative.

Even where the telcos are trying to make DSL competitive it’s a losing battle. AT&T put a lot of money into upgrading and selling its U-Verse DSL product. This was their alternative to building fiber and AT&T thought they could get a few more decades out of their aging copper.

But AT&T total underestimated the huge increase in household demand for bandwidth. The U-verse product uses the paired DSL product – with speeds generally between 25 Mbps and 40 Mbps – to serve both cable TV and broadband. AT&T quickly found out that this data pipe is too small for homes that want to watch multiple TVs or that today want to watch multiple Netflix streams. AT&T is remedying this by working feverishly to shift TV over to their new DirecTV platform, freeing up the full amount of U-verse bandwidth for Internet access.

We are not too many years away from the time when the myth that most urban markets have at least two broadband competitors will fade away. As household demand for broadband keeps growing there will be fewer and fewer people on DSL, and that exodus will be accelerated by companies like Verizon helping to push DSL customers out the door.

Verizon passes many millions of homes with its fiber-based FiOS. But that network has always been very patchwork in that it will serve one neighborhood while bypassing nearby neighborhoods. There is a slight glimmer in the FiOS story since Verizon recently announced that they are going to greatly expand FiOS in downtown Boston.  Boston is like most east coast cities where Verizon built a lot more fiber in the surrounding suburbs while largely ignoring the more costly construction in the city. But after having not built FiOS for a while the company surprised everybody by announcing this new fiber initiative.

The bottom line is that DSL is in its death throes. But like dial-up (which is still sold to millions of homes) there is likely to be DSL around for as long as the telcos don’t physically tear down the copper or pull the plug on the electronics. But it’s clear that Verizon, at least, is hoping for DSL to fade away sooner rather than later.

Two Tales of DSL

DSL modemI had to chuckle the other day when I saw two articles about DSL that were going in opposite directions. In the first announcement AT&T announced that they are phasing the TV product out of their U-verse product. The same day I saw an announcement from Frontier that they are entering the video-over-DSL business in a big way.

The technology that is being used in both cases is paired DSL. This means putting DSL onto two copper phone lines and then using them together to create one data path. Under ideal conditions, meaning perfect copper, the technology can deliver about 40 Mbps through about 7,000 feet of copper. But of course, there is very little perfect copper in the real world and so actual speeds are typically somewhat slower than that.

In AT&T’s case this change makes sense. They purchased DirecTV and they are going to use the satellite platform to deliver the cable TV signal. This will free up the DSL pipe to be used strictly for data and VoIP, and this will extend the competitive ability of the DSL technology. In most cases the company can deliver 20 Mbps – 40 Mbps to homes that are close enough to a DSLAM. I’m sure that AT&T has been finding it increasingly difficult to deliver data and cable together on one DSL pipe.

The downside for AT&T is that not everybody can get DirecTV. Some people live where they can’t see the satellite and many people in apartments aren’t allowed to stick up a dish. So this isn’t a perfect solution for AT&T, but the increased data speeds probably mean a bigger potential customer base for the U-verse product.

Frontier is coming at this from a different direction. The company has seen declines in revenue as voice customers continue to drop off the network and as they continue to lose DSL customers to cable companies. The company saw a 1% decline in revenue just in the fourth quarter of 2015.

To try to generate new sales the company just announced this week that they are entering the business that AT&T is abandoning. The company launched IPTV in the 4th quarter of last year and announced that they are going to extend this to 40 other markets and pass 3 million customers with the product. They are going to use the same paired DSL as AT&T U-verse and will offer video on the DSL.

Frontier is hoping that this move, which will give them the triple play bundle will bring in more broadband customers and bolster both revenues and the bottom line. The company also expects to get a nice bump from finally closing on their purchase of Verizon properties in Texas, Florida and California. It is going to be a busy year for the company as they also hope to add 100,000 new broadband customers this year for the first of six years of an expansion funded by the CAF II funds from the FCC.

I have a lot of sympathy for a company like Frontier. They have purchased a lot of rural markets that have been neglected for years by Verizon and which don’t have very good copper. Where many smaller telcos are converting all of their rural areas to fiber, Frontier does not have access to the capital needed to do that, nor would they want to suffer through the earnings hit that comes from spending huge amounts on capital.

But the problem for all DSL providers is that within a few years the demand for broadband speed is going to exceed their capabilities. The statistic that I always like to quote is that household demand for broadband speeds doubles about every three years. This has happened since the earliest days of dial-up. One doesn’t have to chart out too many years in the future when the speeds that can be delivered on DSL are not going to satisfy anybody. The CAF II money is only requiring DSL that will be at least 10 Mbps download, which is already inadequate today for most families. But even the 20 – 40 Mbps paired-DSL is going to feel very slow when cable companies have upgraded to minimum speeds of 100 Mbps or faster. And if that DSL is also carrying video along with the data it’s going to feel really slow. I would not want to be one of the companies still trying to make copper work for broadband a decade from now.

AT&T – Building Fiber by Press Release

u_verse_truckIt seems like every few months AT&T makes a new announcement about markets where it’s going to bring its GigaPower broadband service. Just a week ago they announced more than three dozen new markets that include places like Memphis, San Francisco, and Detroit. And they supposedly already have this product available in over twenty markets today.

The trouble is that there is very little evidence anywhere that AT&T is actually building much, if any, new fiber. I’ve seen several reports that suggest that AT&T is offering the product only in those handful of places where they already have fiber – upscale high-rises and new housing developments where they decided to deploy new fiber rather than new copper.

The AT&T press releases make it sound like AT&T is undertaking a massive fiber building project in these cities similar to what Google is doing. Google pre-sells to neighborhoods and then follows up those pre-sales by building fiber past everybody in that neighborhood. I have my reservations about whether it’s really good for a city to let a carrier build to only select parts of their community, but at least Google is out spending the capital dollars on fiber.

In the communities where Google is building you find all sorts of evidence of the construction. There are tons of consumer reviews of the Google products. There are local news articles mentioning construction issues and warning people to stay away from certain streets on certain days. There are tons of local articles in each Google community speculating about who is going to get fiber and what it’s going to mean. The web becomes awash with local news of Google Fiber as it is being deployed.

And yet there is virtually nothing similar in the press in AT&T gigabit cities other than in Austin. In Austin, AT&T built fiber-to-the-home to some neighborhoods as a way to counteract Google, and so in that city the local news is awash with news of AT&T fiber. But there is almost nothing on the web from the other AT&T markets. I can only find a small handful of customer reviews about the AT&T GigaPower product outside Austin.

And other than corporate press releases there doesn’t seem to be big local advertising push by AT&T in the GigaPower markets. Verizon FiOS got their initial fiber customer base by an aggressive door-to-door campaign, a tactic also employed by Google. These campaigns also generate web noise and I can’t see any evidence that AT&T is doing this.

One would also expect that if AT&T was really out building fiber that there would be a big bump in spending on the landline side of the business. It’s not easy to decipher the AT&T annual reports to figure out landline versus wireless capital spending, but there are several wireless analysts who think that the vast majority of AT&T’s capital budget goes to the wireless business. When Verizon was building FiOS there was a huge uptick in capital spending that had all of the telecom analysts buzzing.

The funny thing is that AT&T seems to be using the illusion of building fiber to gain regulatory favor. For instance, one of the ways they got approval of the DirecTV deal was by promising to bring fiber broadband to many millions of homes. In the net neutrality debate they threatened at one point to stop their largely non-existent fiber buildout if the FCC ordered Title II regulation of broadband.

The mainstream press seems to have been duped by the AT&T press releases. As an example, there was just an article last week by Brian Fung of the Washington Post that praised AT&T for entering so many new markets and which chided Google for going slowly. I don’t really want to criticize Brian too much because his tech reporting is usually on point, but he missed this one. Google is spending the millions of capital dollars needed to bring fiber to urban neighborhoods while AT&T seems to largely be building fiber by press release and by increasing speeds in the tiny percentage of their network already on fiber.

For a company that is crowing so loudly about fiber, AT&T is not reporting GigaPower customers separately, nor are they likely to. They do report ‘broadband customers’ which is a combination of fiber customers and customers added to the U-Verse DSL network. In the third quarter the company added 172,000 broadband customers, most of whom were regular DSL customers upgraded to U-Verse. That does not look like a statistic of a company that is aggressively rolling our fiber to almost sixty markets and which is supposedly going to add millions of customers to fiber.

How We Love to Hate the Large ISPs

Poor-customer-satisfaction-272x300I have read a number of articles lately that reminded me of the love / hate relationship that Americans generally have with the large ISPs. Here is a summary of some of these stories.

Americans Pay More for Less Bandwidth. The Open Technology Institute at the New American Foundation recently released its third annual report where it compared US broadband speeds and prices in 24 US cities and in cities around the world. This report shows that speeds have increased in US cities since 2012, but on a cost per megabit delivered most US cities still fall to the bottom of the comparative list. The broadband winner is Seoul where a gigabit of data costs $30 per month followed by Hong Kong and Tokyo at $37 and $39. Contrast this to Verizon FiOS where 500 Mbps costs $300. Very few places in the US outside of Google, some municipalities and some Independent telcos offer an affordable gigabit service.

One of the more interesting comparisons made by the report is comparing the cost for buying 25 Mbps connectivity. The most affordable place for this was London at $24 followed Seoul, Paris, Tokyo, Copenhagen and Prague. The cheapest US City is Kansas City at $41, due to competition with Google. The US cities with Verizon FioS came in around $50. The lowest price in a US City not served by a fiber provider is San Francisco at $58 per month. Most US cities are over well over $60. Not surprisingly, the larger municipal networks like Chattanooga and Lafayette LA are at the head of the US affordability list after Google. The US is also the only country that charges monthly fees for a cable modem and the cable modem customer spends over $100 per year for the cable modem.

The report went on to note that 75% of US customers who can get 25 Mbps service have only one service option. The report concluded that around the world that one thing that holds down landline data prices is significant competition with cellular data. For example, in much of the rest of the world the monthly data caps on cellular phone plans are up to 40 times higher than they are in the US. But our low data caps and the relatively slow speeds of our cellular data networks means that cellular is not a good substitute here for a landline connection.

Customers Continue to Rate Large ISPs Poorly. The results of the annual American Customer Service Satisfaction Survey was recently released and showed that satisfaction with large ISPs is still quite low and is getting worse. This is an annual poll of 70,000 consumers and asks about a wide swath of large businesses. The composite satisfaction with all large ISPs was at 63 on a scale of 100, down from 65 a year ago, and which puts the ISPs at the bottom of the list of all industries. Within those numbers, Verizon FiOS held steady at a rating of 71. Time Warner did the worst dropping from a rating of 63 in 2013 down to 54 this year. Comcast was not far behind dropping from 62 to 57. Century link is the only ISP that improved slightly and went from 64 to 65. Both Cox and Charter dropped 4 points in the last year.

Consumers felt slightly better about their cable TV service and that got a composite rating of 65 compared to the 63 for broadband, But that rating is down from a 68 a year ago.  The ratings were down for every major cable provider compared to 2013. The highest ratings for cable were 69 by DirectTV and AT&T U-verse, while the lowest rating was again Time Warner with a 56.

What is probably the most disheartening about these ratings is that they are dropping year over year. Consumers already rate ISPs and cable companies at the bottom of their satisfaction list across all industries. One would think that would prompt them to improve. And perhaps to some degree they are improving some since speeds are slowly getting faster. But overall satisfaction continues to drop. One might think that price has a lot to do with this, particularly for the cable TV business where there are hefty rate increases each year. But prices have also started to creep up for data and several of the major ISPs are now planning on raising data rates a little each year.

AT&T U-verse Told to Change Advertising. The national Advertising Division (NAD) told AT&T to modify the way they advertise  U-Verse data speeds. AT&T has widely advertised the product as offering up to 45 Mbps and NAB found that in many markets this speeds was either not available or not widely enough available to justify the claim. NAB is a division of the Council of Better Business Bureaus and monitors national advertising claims of all sorts. The NAD recommendations are not mandatory, but since big companies participate in the Better Business Bureau they generally take heed of NAD findings. NAD has made similar findings against CenturyLink in recent years.

I guess it’s really not surprising that customers rate the large ISPs so poorly when you consider some of their practices. Many of them use poorly trained contract installers who don’t put a good face on their company. Many of these companies are notorious for not showing up for scheduled appointments, which is something that a lot of consumers never get over. This year we heard several recordings from Comcast reps who would not let customers drop service. And there is the annual and persistent rate increases.

Are They Really Digital Trials?

A800px-OSU_Bucket_TruckT&T is now doing two ‘digital trials’ in West Del Ray Beach, FL and Carbon Hill, AL. The supposed purpose of these ‘trials’ is see if there is any way to bring all customers onto an all-IP network. But that is bosh. The only purpose of these ‘trials’ is for AT&T to prove to the FCC that it’s okay to kick people off copper networks.

This is all being done as part of the IP transition where we move away from a legacy TDM-based phone network into an Ethernet world. But that transition is supposed to be about the network that is used to move calls from one town to another, and somehow AT&T twisted this to become about moving people off of copper. And it ignores the fact that anybody served by DSL or cable modem is already on an IP and digital network.

AT&T doesn’t want to kick everybody off the copper network. They have their U-Verse products into millions of homes, which requires two pairs of copper. But U-Verse has been sold in large cities and suburbs and not in the small towns like the ones in these tests. It’s apparent in these smaller places that AT&T would rather find a way to force people off the copper than upgrade it.

And this is a bit ironic because for years AT&T has been heavily subsidized to help them pay for the copper wires. They were a rate-of-return carrier, meaning that they were guaranteed for decades to make a profit in each state they operated in. One would have thought that they would have rolled some of those profits back into taking care of the copper wires, and in the metropolitan areas they did. But AT&T walked out of the rural towns many years ago. They closed offices and cut back rural staff and have slowly let those copper networks deteriorate.

So now they want a ‘trial’ to figure out how they can best walk away from rural America. They want to go to all of the small towns on America and force people to move to wireless or move to the cable company. The problem with this idea is that there are a whole lot of rural places where the wireless coverage is awful and where the cable companies have not made any investments also.

A few years ago the FCC had estimated that there was 19 million US households with no broadband. People who work in rural America know that this was a bogus estimate based upon facts fed to them by AT&T and Verizon, and that there are a lot more houses with no broadband. But there has been a lot of effort to get broadband to some of these areas, so one would think that there are fewer households without broadband today, regardless of the actual number.

But if AT&T is allowed to progress past this test and start knocking people off copper there is going to be a whole lot of new homes without broadband. A whole lot more.

I am sure that the FCC has no comprehension of what ‘broadband’ is like in the typical small rural town. The phone company will have first generation DSL that they market at 3 Mbps download (to qualify with the FCC as broadband), but which probably gets half of that. The little town might or might not have a cable company, and even if they do they either don’t offer cable modem or it is also first generation technology and very slow. And you don’t need to go very far outside town until there is no broadband. The cable companies generally stop around the town borders. DSL carries a little further, but since DSL quality decreases with distance, you don’t have to go far until DSL is no better than dial-up.

I have no doubt that AT&T is going to play very nice in these trials. They will find a solution for everybody in these two small towns, even though for many that solution is going to be inferior to what they have today. But then, if the FCC is dumb enough to give them the permission, they are going to mail out notices to millions of homes in small towns and tell them to go find broadband elsewhere.

The New Digital Divide

The InternetThere was a time, not very many years ago, when the digital divide meant the difference between pockets of people that had dial-up versus places that had something faster. But this is no longer a good definition and I think the digital divide is growing very quickly and is a huge issue again. The new digital divide is between cities and suburbs that have relatively fast broadband and rural areas and urban pockets that have been left a few generations of technology behind. Below when I say rural areas we can’t forget that there are many parts of inner cities in the same condition and that have become broadband deserts.

Today, most of rural America is several generations of technology behind the cities and there is no real expectation that this gap will ever close. A large portion of rural America is served by DOCSIS 2.0 cable modems and first generation DSL. These technologies are delivering anything from 1 Mbps up to maybe 5 Mbps to the average home and business in these communities. The incumbent carriers claim these areas are served by broadband, and they are always careful to claim that these communities have advertised speeds that are about the paltry 4 Mbps used by the FCC to define broadband.

But every community in this situation has now fallen on the wrong side of the new digital divide. The large telcos and cable companies are making big investments in the metropolitan areas. There are numerous affluent parts of the country that have broadband between 50 Mbps and 100 Mbps download if people are willing to pay a premium price. But in these markets even the slower cable modem products are already between 20 – 30 Mbps.

And I am not talking only about place where Verizon has built FiOS. The larger cable companies have upgraded to DOCSIS 3.0 in many large markets and now have fast speeds. AT&T has launched U-Verse using bonded pair DSL in many of these same markets with speeds of around 40 Mbps. And we are on the verge of AT&T and other copper providers having G.Fast which is going to increase speeds on copper to as much as several hundred Mbps. Even the cellular carriers have stepped up their game in the cities, and the latest version of 3.5 G is delivering speeds of 40 Mbps to 50 Mbps in short bursts.

But these new technology upgrades are not being brought to rural America and are unlikely to be brought there. The incumbent cable companies and telcos installed the current technology over a decade ago and have not upgraded it since. Meanwhile there has been several upgrades in the areas with good broadband.

The incumbents are not willing to make the needed upgrade investments in small markets. They aren’t going to get the same kind of returns they can make for the same investment in a big suburb. They have largely ignored the small markets for years and the wires are in bad shape compared to bigger markets. So I think we now on the verge of a permanent new digital divide defined by areas that keep getting new technology upgrades and areas that will be stuck in the past. And the gulf between these two areas is only going to grow.

There are real life repercussions of this gap. Homes on the wrong side of the digital divide can’t use broadband in their homes the same way that people in a City can. But much more importantly, businesses can’t get the same bandwidth that their competitors in the City have. In the long run this is going to squelch innovation in the rural areas. Areas on the wrong side of the digital divide are going to have a really hard time creating jobs that will let their kids stay in the area. The biggest fear in rural communities is that they are going to become economically irrelevant. They won’t be able to create jobs or keep jobs, their kids will move away and over a few decades the communities will die.

The DSL TV Market

CenturyLink Contingent

CenturyLink Contingent (Photo credit: sea turtle)

I find it surprising that DSL TV providers have been the fastest growing segment of the cable TV industry. And my surprise is due to the fact that these companies are delivering TV over the smallest data pipe of any of the comparable technologies. Over the last year the companies using DSL and fiber to deliver cable TV have grown in customers while the traditional cable companies have lost customers.

Cable TV is delivered over DSL using a bonded pair of telephone wires using either ADSL2 or VDSL. In theory these technologies can deliver speeds up to about 40 Mbps. But depending upon the gauge, the age and the condition of the copper many actual deployments are closer to 20 Mbps than the theoretical 40 Mbps. The bandwidth that is left over after the TV signal is used to deliver voice and data.

The DSL providers make cable work by using a technology called IPTV. This technology only sends the signals to the home that the customer is asking to see. One can always tell that you are on an IPTV system because of the small pause that occurs every time you change channels.

The DSL cable industry is composed of AT&T U-verse, CenturyLink Prism and a whole slew of smaller telephone companies. Not every telco has taken the bonded DSL path. For example, a number of the mid-sized telcos like Frontier, Fairpoint and TDS have elected to partner with a satellite provider in order to have a TV product in the bundle. But last year TDS ventured out into the DSL TV market in Madison Wisconsin.

AT&T is by far the most successful DSL TV provider as one would expect from their large customer base. AT&T has made the product available to over 24 million homes. At the end of the first quarter of 2013 they reported having 5 million cable customers on U-verse and 9.1 million data customers.

The biggest problem with using DSL is the distance limitation. The speeds on DSL drop significantly with distance and so customers have to be on a relatively short copper path in order for it to work. The DSL that AT&T is using can support the U-verse product up to about 3,500 feet on good single copper pair and up to 5,500 feet using a two bonded copper pairs. And the key word in that description is good copper, because older copper and copper with problems will degrade the speed of the product significantly.

I really don’t know who is in second place. CenturyLink announced that they had 120,000 TV customers on their Prism product at the end of the first quarter of 2013. There may be some other telcos out there with more DSL cable customers. But CenturyLink if fairly new to the product line having launched it just a few years ago. They still only offer it in a few markets but are adding new markets all of the time. So if they are not in second base they soon will be.

In researching this article I came across some web sites that carry customer complaints about Prism. Look at the Yelp pages for CenturyLink in Las Vegas. I’ve always suspected that unhappy customers are more likely to post an on-line review than happy ones, but some of the stories in here are extraordinarily bad. Obviously CenturyLink is having some growing pains and has a serious disconnect between their marketing and sales departments and their customer service. But some of the policies in here, such as charging people a large disconnect fee even though there is no contract is surprising in a competitive environment. And yet, even with these kinds of issues the company has added over 100,000 customers in just a few years.

I have to wonder how this industry segment is going to handle where the cable business is going. How much they can squeeze out of a 20 Mbps data pipe when you have customers who want to watch several TVs at the same time, record shows while watching another show and also streaming video to tablets and laptops, all simultaneously? Yesterday I noted the new trend in large TVs which is to split the screen into four parts, each showing something different. Most reviews of the performance of TV over DSL are pretty good, but how will DSL handle the guy who wants to watch four HD football games at the same time while surfing the internet?