Tag Archives: AT&T

The Trajectory of FWA

In what is bad news for many other ISPs, both T-Mobile and Verizon have plans to continue their aggressive growth of FWA cellular broadband. As a reminder, this is home broadband delivered from cell towers that mostly uses the same spectrum already being used at cell towers for cell service.

AT&T, T-Mobile, and Verizon have had unprecedented success with this new broadband product since it first launched in 2021. The following table shows the growth in FWA so far this year.In the first two quarters of this year, the three carriers added almost 1.8 million customers, while big cable companies lost almost 500,000 customers, and big telcos saw a net gain of under 50,000 net new customers.

AT&T is the newest provider of FWA service and just getting serious about selling the service in 2023. AT&T does not provide FWA everywhere it has cell customers, and strategically uses FWA, mostly in rural markets, as a replacement technology when discontinuing copper service. AT&T continues to be focused on fiber expansion and has passed far more new locations with fiber in recent years than anybody else.

T-Mobile has been the most aggressive in deploying FWA broadband and now has over 6 million customers. T-Mobile says it’s goal is to reach 8 million customers by the end of 2026, which would require a continued growth of 400,000 new customers per quarter. T-Mobile recently announced longer-term plans to reach 12 million customers by the end of 2028 – which would mean stepping up customer acquisition to an average of 500,000 net new customers per quarter.

Verizon recently announced plans for aggressive FWA growth. The company says it will set a goal somewhere between 8 and 9 million customers by the end of 2027. This would mean average growth in the range of 275,000 to 350,000 customers per quarter – slower than the current rate of growth.

T-Mobile currently has over 1 million customers on a waiting list for FWA. Like Verizon, T-Mobile uses excess spectrum capacity at cell sites for FWA. Each company likely has an algorithm for each cell site to calculate the safe number of FWA customers that can be added without degrading cellular broadband service. Both carriers have said that they can’t justify building cell sites strictly for FWA service and only plan to deploy it at current or new cellular cell sites.

Verizon has been increasing FWA speeds in some markets by layering on C-band or millimeter wave spectrum for FWA. The advantage FWA has today is lower prices, but the product become formidable if download speeds can compete with fiber and cable companies.

If the three companies meet their growth goals, they will collectively have almost 20 million broadband customers in 2028 – almost as big as Charter or Comcast today. This growth is by far the biggest disruption of the traditional broadband industry, with FWA growth taking customers away from all other ISPs.

The real key to these growth plans is waiting to see if the public likes the FWA product and doesn’t go back to faster broadband alternatives. Reaching 10 million customers so quickly is impressive and unprecedented in the industry. But it’s no guarantee that they can grow at the same pace to reach 20 million customers.

 

Telecom Strikes

As I write this, there has been a strike by 17,000 union member of the Communications Workers of America (CWA) against AT&T that started on August 16. Like most strikes that last for more than a week, there is some rhetoric flying from both parties accusing the other side of negotiating in bad faith.

Telcom strikes have been part of the history of the industry. One of the first big telecom strikes was in 1947 with the union at that time being the National Federation of Telephone Workers. AT&T was determined at the time to bust the union, and instead of negotiating nationally, reached agreements with regional subsets of workers, which quickly broke the union.

The CWA was born out of the aftermath of the 1947 strike. CWA workers went on strike over the years with regional strikes against carriers like Southern Bell and General Telephone Company. CWA had a nationwide strike against the Ma Bell AT&T in 1968, 1971, and 1983. After divestiture there were strikes against AT&T in 1986 and  Verizon in 2000 and 2011.

The nationwide strikes have generally been resolved fairly quickly. The 1968 strike lasted eighteen days, the 1971 strike for seven days, and the 1983 strike for twenty-two days. Other strikes lasted a lot longer, such as a strike against General Telephone in Indiana, Ohio, and Kentucky that lasted for five months. As I am writing this, the current strike against AT&T has already lasted for twenty-two days.

I decided to write about this because I was part of the 1983 strike against AT&T. I was in management at Southwestern Bell and was informed at midnight on a Saturday night to report immediately to be an operator.

Being on the management side of a strike makes you quickly appreciate what the union employees do for a living. A handful of other management people and I walked into an operator center in St. Louis that probably had sixty operator positions. The boards were flashing with waiting calls and we got a crash hands-on course in being an operator from an operator center manager. It was largely a disaster for the first day or two since the quick training could not teach us all of the nuances of being an operator and operating a switchboard.

I ran into a situation that really shook me. I got a call from a woman in a phone booth whose husband was having a heart attack and needed an ambulance. Unfortunately, that phone booth was located at an intersection where St. Louis and two suburbs all came together. I had no idea that each of these towns had a different 911 system, and I guessed wrong and had to try all three towns to find a dispatcher who would send an ambulance. That was ten minutes of panic on my part – and I never found out what happened to the heart attack victim. A few years after the strike, the region started working on a unified 911 system that eliminated this kind of jurisdictional nightmare. The union operators would have known this kind of nuanced information, but I had no clue.

A lot of my colleagues were assigned to fix outdoor problems. The 1983 strike started on August 7, and in St. Louis, that means thunderstorm season. I recall storms hitting almost immediately after the strike started and then regularly through the strike. My friends working outdoors said they fell behind immediately and the backlog of open issues increased every day. They got better at making repairs, but they never came close to catching up. This strike happened long before broadband, and my experience is that broadband customers today are far more demanding than voice customers were in 1983. I can’t imagine what would have happened if there had been a major hail storm or something that knocked out a lot of the area all at once.

I grew up in a union household, and I saw first-hand how being in a strong union benefited workers and their families with good wages and a solid retirement plan. Getting a firsthand look at the day-to-day work of running a giant telco during a strike gave me an increased appreciation of the great work the union folks at the company did every day.

The 2024 AT&T Outage

On February 22 of this year AT&T had a massive cellular outage. Customers started noticing the inability to make calls or texts or reach the Internet at 3:30 AM Eastern time. Ookla’s service Downtector said it recorded over 1.8 million reports of customer problems during the outage event, making this the most widespread outage since a big T-Mobile outage in June 2020.

The outage had a big impact on customers who found themselves unable to communicate. I was one of the many people affected that morning, but since I work from home I was able to pivot to make most of my planned calls work for the day to use video conference. That’s a much smaller impact than being away from home with your smartphone as your only means of communication.

The biggest immediate concern is always 911 and emergency services. Many local 911 centers issued an alert about the problem and warned people to use alternate ways to reach 911. But these alerts are largely worthless to somebody connected to AT&T on a smartphone since it’s unlikely they’d get the alert.

These kinds of outages trigger some folks to be prepared for outages. I recently talked to a real estate agent who carries three phones subscribed separately to AT&T, Verizon, and T-Mobile. The main reason for doing this is that she works in a rural area where each carrier has dead zones, but this also means always being able to reach 911.

AT&T was slow to acknowledge the problem and didn’t make a public announcement until noon Eastern. Service didn’t get fully fixed until more than twelve hours after it started. As usual, the company announcements both during and after the outage were nondescript. The first thing AT&T said was that the outage was not due to a cyberattack. That seems like an odd thing to say, but social media had settled on the cause as either terrorism or solar flares. AT&T said that the outage was due to “the application and execution of an incorrect process” during a network expansion.

I’m sure most folks had no idea what that meant, but industry folks understood that to mean there was human error in implementing an upgrade – more likely software than hardware.

A decade ago, this kind of outage was unthinkable. The cellular network used to be arranged in small regions that coordinated roaming, but each cell site was a standalone entity, largely operating using it’s own software and hardware. I have a friend who made a great living for many years doing cell site upgrades. He and his crew would travel for months on end going from cell site to cell site to repeatedly make the same upgrade. But the upgrades weren’t identical, because each cell site differed in the exact configuration of software and hardware installed. It took up to a year to make a nationwide upgrade to the cellular network.

The cellular network still has some of that regional flavor, but software is now upgraded nationally or by large region, as was being done in the “network expansion” at the time of the AT&T outage. A mistake in coding or a mistake in the sequence of the update steps can now crash a huge number of cell sites simultaneously. In the old configuration, any update bugs would get worked out in the first few cell sites that got updated.

There is no question that consolidation is better for the public in the long run because it means that people get to take advantage of upgrades sooner, instead of waiting for up to a year to see improvements. We would not have seen the big upgrades in cellular speeds over the last few years if cell carriers were still traveling to cell sites one-by-one to implement the many upgrades on the path to implement 5G.

But one of the big drawbacks of a modernized and centralized network are these big outages. There is always going to be human error when updating networks. It seems like there must be a way for big carriers to test upgrades on a few cell sites before updating many at the same time. In the old days, we called this having a test lab to test updates in a way that didn’t impact customers if something went wrong. Unfortunately, while we have gained huge efficiency, our networks are susceptible to widespread damage from cyberattacks, solar flares, and technician errors.

Will We Ever End Legacy Telephone Networks?

Anybody not involved in the telephone business will probably be surprised to find that the old TDM telephone networks are still very much alive and in place. The old technologies were supposed to be phased out and replaced by digital technologies. The FCC started talking about this before 2010. In 2013, Tom Wheeler, the FCC Chairman at the time, announced an effort to force the needed changes, which was dubbed the IP Transition. The goal of the transition was to upgrade and replace the public switched telephone network that was used by every telco, CLEC, and cable company for exchanging voice traffic.

The FCC made good on the promise and released an order in 2015 that described the process for telcos to retire copper networks, and that also discontinued the requirement that big telcos offer wholesale TDM services. In 2016 the FCC released that full IP Transition Plan that was aimed at replacing the TDM voice infrastructure with an all-IP network.

But somewhere along the line, AT&T and Verizon highjacked the IP Transition. AT&T announced a few trials to eliminate the TDM network, but then the transition process stopped and was never discussed again. Industry insiders speculated that all the big telcos really wanted from the IP Transition was the ability to retire copper telephone networks, and once they won that issue they lost interest in the costly process of replacing or upgrading legacy systems. The FCC didn’t help when it poured billions of dollars into upgrading the old copper networks of the big telcos through the CAF II subsidy program.

The problem is that all of the problems that were identified with old TDM technology in 2013 are still around today. Any telephone company or CLEC that wants to exchange traffic with the big telephone companies must still do so using TDM technology (technology based on T1s). Telephone features like caller ID still rely on the SS7 network, which is a separate network used to exchange data associated with a telephone call.

Small carriers have been begging for years for the big telcos like AT&T, Verizon, and CenturyLink to allow digital SIP connections instead of TDM connections – but the big companies are deaf to these pleas. There are big parts of the national telephone networks that have been upgraded – for example, large cellular companies have digital SIP connections to the big telcos. It’s interesting how something that benefits AT&T and Verizon was upgraded, just not the connections used by everybody else.

It’s getting more costly every year for traditional carriers to keep using the TDM networks. The prices being charged for T1s have steadily climbed since the 2015 order that eliminated mandatory wholesale T1 prices. The cost of ancillary services needed to support voice, like the SS7 network, is climbing even faster. A handful of large companies that provide most of the SS7 services have squeezed smaller providers out of the market. The cost to access to the databases that include things like the name of calling parties needed for Caller ID has skyrocketed.

Meanwhile, smaller telcos have done everything suggested by the original IP Transition order. Most of them have replaced, or are in the process of replacing copper networks with fiber. These companies have modernized everything except for the legacy connections that are still the only option for completing local calls with neighboring carriers.

What is probably most amazing (or maybe not amazing at all) is how the FCC ordered the IP Transition and then just let the biggest telcos walk away from the process with no repercussions. This is partly due to the big telcos that just stopped working on the issue, but also on the Ajit Pai FCC that entered the picture in 2017 with the agenda of not regulating big companies. It’s time for the FCC to pick this back up and finally make this happen.

My consulting firm is still highly attuned to these issues. Anybody having a problem with TDM trunking, or access to SS7 or SS7 databases should contact me. I will be the first to tell you that I never expected to be still talking about these issues in 2024.

The Trajectory for FWA

Mike Dano, in LightReading recently quoted Sowmyanarayan Sampath, the EVP and CEO of Verizon’s consumer business, as saying that Verizon expects to have 4 to 5 million FWA customers at the end of 2024, up from 3.4 million at the end of the first quarter of 2023. Mr. Sampath says that Verizon’s current network can support 4 to 5 million customers, but that the company is assessing how to grow beyond that point – a decision they will make later this year.

Verizon says its FWA growth was a little sluggish at the beginning of 2024, but that sales have picked in March after the company started offering new customers a free Nintendo Switch, the game console that retails for $200 to $300.

Dano also quotes financial analysts at TD Cowen who predict that Verizon will add 888,000 new net subscribers this year while T-Mobile will add 1.3 million more customers this year to add to the 4.8 million customers at the end of 2023. We also can’t forget that AT&T has entered the fray. The financial analysts at New Street Research recently predicted that AT&T will hit a peak of 180,000 new FWA customer additions per quarter by late 2025.

FWA broadband has majorly disrupted the broadband industry. According to the TD Cowen estimates, FWA operators will gain 2.6 million new customers in 2023 while fiber operators will add around 600,000 new customers. They predict that the big cable companies will lose about 1.1 million customers in 2024. That’s a net market change of 2.1 million new broadband customers – down from 3.5 million new customers in 2023.

I don’t know if the TD Cowen estimates include the impact from the end of the ACP program that brought discounts to 10 million landline broadband households. While many of those customers will likely still keep a broadband connection, many of these households got free broadband after applying the discount, and it doesn’t seem unrealistic to think that at least several million households will eventually disconnect broadband without the discount.

FWA broadband has one notable weakness that might define a natural market cap for the product as currently configured. The current version of the product shares bandwidth with cellular customers. Cell sites were not designed to accommodate large numbers of broadband connections that stay connected for long periods of time – and that, according to OpenVault, now use an average of 651 gigabytes of broadband every month. FWA broadband usage has to be eating into the resources at cell sites – and the impact will only get worse as both home and cellular customers use more broadband every year.

I think I’ve already witnessed some evidence of the stresses caused by FWA. I’ve had access to detailed speed test records for entire counties, and I’ve seen FWA customers who test at speeds of 100-300 Mbps down most of the time but who occasionally test at only a few Mbps. The FWA providers all say that they throttle users any time the cell site gets too busy, and I’ve seen enough examples to think this is evidence of severe throttling. That’s a situation that will occur more often as the FWA providers add more customers. Most broadband customers today won’t tolerate occasionally losing all broadband and likely will return to their original ISP if they continue to get throttled.

Mr. Sampath touched on a possible solution to the problem. He says Verizon is exploring the use of millimeter-wave spectrum at cell sites. Both Verizon and T-Mobile are considering C-Band spectrum for FWA customers. Moving at least some FWA customers off the same spectrum used for cellphones would eliminate the biggest weakness of FWA – that it uses the same spectrum that is serving cellphones. As much as carriers like FWA, they are not going to endanger their much larger cellular business – and one has to think that the success of FWA has already degraded cellular quality to some extent.

Interestingly, both Verizon and T-Mobile had originally publicly predicted that they would eventually achieve 15 million customers on FWA. They still have a long way to go to get there. It already looks like Verizon might have tapped into a lot of the households that are choosing FWA strictly due to lower prices. Having to bribe new customers with a new video console is a sign of a market that is already maturing.

It’s clear that FWA growth is probably the most important statistic in the market today since other ISPs are competing for the customers who aren’t opting for FWA. If the overall broadband market is reaching maturity, it gets even harder to predict how any given ISP or technology will perform.

Satellites Directly to Cellphones

AT&T and satellite company AST SpaceMobile announced a partnership to provide satellite cellular service directly from satellites to cellphones. This will provide a service that is much needed for the billions of remote users who are not in the range of a cell tower.

This is an emerging industry that is still being referred to be different acronyms. Direct-to-Device, or D2D seems to be emerging as a popular term. The FCC has been calling this Supplemental Coverage from Space (SCS). Others have been referring to this as Direct-to-Cell Phone.

AST offers a unique satellite technology that is far different than what can is used for broadband satellites like the ones being deployed by Starlink. The AST satellites have a large surface area which provides the ability to shape the signal to reach cellphones and to receive the signal back directly from a phone.

The company claims that the large satellites will be able to process up to one million simultaneous calls. The satellites will also be able to provide some broadband capability. AST is also using both low- and mid-band frequencies to increase connectivity options to and from users. Backhaul will likely be accomplished through links to AT&T ground stations.

The first AST launch will include five satellites in July or August that will be operational in about three months after launch. The satellites will be circling the globe at a high speed, and initial customers will only be able to make calls when the satellites are overhead. The company needs at least 45 satellites to provide constant connectivity, and over time, will likely keep adding satellites to improve overall capacity.

There are a lot of other players interested in pursuing the lucrative market that could include as many as 5 billion customers worldwide for folks who live, work, or travel to remove places. Here in the U.S., there are still huge parts of rural America with terrible cellular coverage.

  • Apple started the race by providing links directly from satellites to devices in 2022 when it announced that the iPhone 14 had the capability of connecting to Globalstar satellites for emergency text messages. Apple has invested more than $450 million to help Globalstar upgrade its ground stations.
  • Later in 2022, SpaceX announced a partnership with T-Mobile to also allow emergency texting. SpaceX had previously acquired Swarm in 2021 to try to develop the technology.
  • In early 2023, Qualcomm announced that its Snapdragon chip could connect directly to the Iridium satellite network to relay emergency text messages.
  • Lynk Global is working on constructing a fleet of satellites. The company has three test satellites in orbit. Lynk is collaborating with over 40 worldwide cellular carriers.
  • MediaTek has developed a satellite-compatible chipset that can connect to a Bullitt platform to use high-orbit GEO satellites from Inmarsat and Echostar.
  • Huawei and China Telecom have developed emergency calling and are working to deploy a LEO satellite constellation.
  • Deloitte predicted at the end of last year that 200 million smartphones will be sold in 2024 that contain the capability of connecting directly to a satellite.

There is a lot of demand for seamless cellular connectivity. People who travel around the world get frustrated by cellphones that only work in some countries. People who work daily in rural areas are frustrated as they move in and out of cell coverage. The ability to provide cellphone broadband could bring Internet connectivity to billions of people who are still not able to connect to an ISP. This service could also provide connectivity to remote sensors and other devices located out of reach of terrestrial networks.

This is going to be an interesting market, and it’s likely to be a huge one. It’s not unexpected to see AT&T jump into the fray to chase a huge new revenue stream.

Telcos Shedding Jobs

I heard a chilling story recently. AT&T apparently notified a bunch of employees in Los Angeles that their jobs are being eliminated and that they need to report to other cities like Dallas or lose their job. Many of these employees were relocated to Los Angeles in the last five or six years, and the company paid for that past relocation. Employees now must move at their own expense. I was told the same thing was happening in other AT&T markets across the country. This is a particularly callous way to eliminate employees, and AT&T is clearly trying to induce employees to resign to avoid paying severance. This is not the kind of behavior that would normally be expected from a large corporation. It certainly tells the remaining employees of the company that they are not valued.

There is rarely a month that doesn’t go by without hearing that one of the big telcos is laying off a group of employees somewhere. The story piqued my interest, and it took only a little research to see that telcos have steadily been eliminating staff while the biggest cable companies have not.

Consider the following chart that shows employment at the biggest ISPs and carriers since 2018.

2018 2023 Change
AT&T 268,220 150,500 -44%
Verizon 144,500 105,400 -27%
Lumen 45,000 28,000 -38%
T-Mobile 80,500 67,000 -17%
Comcast 184,000 186,000    1%
Charter 98,000 101,100    3%

It’s not easy to make sense of the staffing changes at the various carriers. Consider some of the big trends at each company since 2018.

Some of the staff reductions at AT&T can be justified since the company suffered from several disastrous investments. The biggest was buying Time Warner Media and spinning it off just three years later to Discovery with a huge loss. The company had another big failure from its purchase of DirectTV. While AT&T flourished from 2018 to 2023 in adding cellular customers, competition dropped the average revenue per customer over that time period. AT&T lost only 3% of its net broadband customers over that period while it has been transitioning from copper to fiber.

Verizon has a similar story of making bad investments in AOL and Yahoo. Due to the big surge of FWA cellular broadband and good sales in FiOS, Verizon has 54% more broadband customers today than it had in 2018. Verizon also thrived and grew cellular customers during this period.

Everybody has likely heard Lumen’s story. The company has struggled since it was spun off from AT&T as US West. The company divested it’s copper assets in twenty states and recently announced more layoffs.

T-Mobile is an interesting case. Cellular customer additions have been sluggish since it merged with Sprint. It recently added 4.8 million FWA broadband customers. The layoffs at T-Mobile seem to be clearly aimed at improving the bottom line – even though one of the big promises made to employees with the Sprint merger was that it would create new jobs, not lose jobs.

Comcast has thrived in everything except cable TV. Since 2018, the company added 5 million broadband customers and 6.5 million cellular customers.

Charter also did well except with cable TV. Charter added 5.3 million broadband customers since 2018 and 7.8 million cellular customers.

The bottom line of my quick analysis is that telcos have been reducing staff at a much greater pace than can be justified by looking at the overall trends of each business. I have to wonder how Comcast and Charter are going to react to the sudden slump in broadband growth? Will they now start shedding employees like the telcos have done?

Spying on Our Calling

Wired published an article last year that highlighted  a program run by the federal government that has kept records of phone calls made within the country. The article was prompted by a copy of a letter obtained by Wired from Senator Ron Wyden to the Department of Justice complaining about the program.

The program is called the Data Analytical Services (DAS) and has been available for over a decade for local and federal law enforcement to obtain calling records without needing a subpoena. This program has one added advantage is that it stores older call records. Historically, telephone companies have not kept call records more than two years.

The program is operated in conjunction with AT&T, which is the natural partner since a huge percentage of calls pass through the AT&T network at some point. AT&T owns the vast majority of tandem switches, which are the regional switches used to route both landline and cellular calls. It turns out that most companies that use voice over IP also eventually dump the calls somewhere into the public switched telephone network (PSTN), so these calls are also likely mostly captured by AT&T.

As Wired points out, there is no federal law requiring AT&T to record and store call records, and it seems like it is being done by the company as a money-making venture. What’s interesting about this effort is that it appears to be fully out of compliance with earlier court orders pertaining to telephone records captured and stored as a result of the Patriot Act. The Patriot Act allowed the government to gather large amounts of data from citizens in the aftermath of September 11 and the anthrax attacks in 2001.

However, some of the provisions of the Patriot Act expired. Lawsuits brought by the ACLU forced the NSA to begin deleting phone records in 2018. At the time, the agency said it was deleting over 600 million phone records that were improperly collected. Apparently, the NSA would gather huge amounts of calls that were tangentially related to somebody of interest that were obtained under a warrant. The ACLU ended up suing the NSA almost immediately after the agreement since the agency did not cease the practices that has invited the suit.

The DAS program was originally known as Hemisphere. The New York Times disclosed the existence of the program in 2013. Following the public disclosure, President Barack Obama ordered the suspension of the program and cut off funding. But it seems that the program was renamed to DAS and was instead funded by various law enforcement agencies rather than directly by the federal government. Both the Trump and Biden administration have resumed funding for the program.

To be clear, the data collected with DAS is not wiretapping, which fully records a call. Wiretapping requires obtaining a subpoena, but getting data from DAS does not. Instead, the DAS program records the calling and called parties, and AT&T can apparently run sophisticated software that will show patterns for everybody associated with somebody of interest to law enforcement, including friends and family.

Repeating Telecom History

This is a story I’ve told before, and I repeat it from time to time since I believe we can’t ignore the history of our industry if we want to avoid the worst of it from happening again.

We let the big telcos walk away from their responsibility to maintain rural networks. That resulted in a shameful situation where rural folks were never offered working broadband, and now the telcos are even walking away from landlines. What I find saddest about this, other than the situation this has caused for rural communities across the country, is that we don’t seem to have learned any lessons from the past. It’s likely that we are again going to hand billions of dollars to giant companies to take care of rural networks.

There are a variety of factors that led to the rural mess that created the need for BEAD and other broadband grant programs. While the primary blame goes to the big companies that allowed rural networks to deteriorate, a lot of the blame also goes to regulators and government. So let me talk about them first.

I think the downward trajectory started with the divestiture of AT&T into AT&T as a long-distance company and large regional telephone companies. Regulators had an opportunity to make sure that the regional RBOC companies remained fully regulated with mandates to maintain universal service. But for some reason, regulators did the exact opposite and told each RBOC to thrive in the open market. Companies like Verizon and Bell South quickly got sucked into the Wall Street game of caring more about stock prices than running a good telephone company. I worked at AT&T pre-divestiture, and this was a huge chance after divestiture. The employees of the giant Ma Bell monopoly took pride in doing the right thing for the public. I sat near the person who took the daily calls to the executive help desk – customers could call the top guy in each state if they had a problem, and that almost always meant the problem got solved.

The newly-formed telco lobbied hard to be able to make profits over and above the low, but steady profits that could be earned by a regulated utility. Unfortunately, lobbying works when it’s done right, and the Baby Bells lobbied everybody from city councils to federal legislators. Within a few years after divestiture, the process of deregulating the big telcos began. By promising to keep residential telephone rates low, regulators across the country deregulated the big telcos from their many obligations.

The big telcos ran with the power that came from deregulation. For example, Bell South grew a cellular business that grew to rival the telco business. All the Baby Bells except US West thrived under the relaxed regulatory regime.

I hesitate to say that the folks running the Baby Bells were bad people, but from the perspective of customers, they were. Telcos that once had always put customers first were suddenly obsessed with stock prices and the bottom line. They became just another set of corporations operated by MBAs that valued the stockholder over the customer.

The changes were mostly, but not always, gradual. Verizon was the abruptest of the Baby Bells and decided early on to divest itself of its rural networks. Unfortunately, they weren’t able to sell all rural copper. In places like West Virginia, when they couldn’t find a buyer, Verizon ceased maintaining the network. I saw this happen firsthand, and it was not pretty.

But the other Baby Bells ended up in the same place, just not as rapidly. Year after year, and budget cycle after budget cycle, the big telcos cut back on maintenance. Open technician jobs weren’t replaced, and there were occasionally big layoffs to help maintain stock prices. Hardware wasn’t upgraded when needed, and copper networks went to hell. We finally got to the point where whole counties have no working DSL – the telcos just quietly got out of the business.

We are now poised to do it all over again. We have a gigantic broadband grant program that clearly favors big companies over small ones, companies that can use equity instead of debt for grant matching, and companies with the resources to pursue giant multi-county grants. Big cable companies are joining the big telcos to pursue rural grants. The big cable companies have a similar history to the telcos. One only has to talk to folks in small communities where the cable companies eliminated business offices and cut back on maintenance staff. Cable companies have neglected small markets by not making needed upgrades while bragging to Wall Street that all of their networks are state of the art.

I doubt there is anything that can be done to stop this, but we are on the verge of doing it all over again. Over the last decade we awarded tens of billions of subsidies to big telcos to improve rural broadband, and the money mostly got pocketed. I find it impossible to believe that the giant companies are going to care and nurture newly built grant networks any better than they have taken care of rural or small community networks in the past. A few big companies might try to do the right thing. But they will be under pressure to maintain earnings, and over time, they will cut staff, maintenance, and repairs – and the cycle will eventually repeat. It’s virtually impossible to believe that the giant ISPs will devote the needed resources for decades to come to properly support rural networks.

The ironic thing is that we know what works in rural areas  and it’s not giant ISPs. We’ve seen small telcos and cooperatives take care of rural networks while big companies let networks rot in place. But lobbying is still king, and regulators are not brave enough to do the right thing – which is to not give grants to publicly traded companies. Watching this cycle repeat itself will give me fodder to write about how we screwed it all up again – but I’d much rather be writing about rural success stories.