Tag Archives: AT&T

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.

The End of Rural Landlines?

Recent coverage by CBS News on Channel 13 in Sacramento, California documented how AT&T had cut off landline telephone from 80-year-old Patricia Pereira in Camp Seco. She called at the beginning of 2023 to ask if landline service could be transferred from a neighboring home to hers. Instead of transferring the service, AT&T cut the copper lines dead on both properties. She tried a cellphone, but she lives in a dead zone and barely receives cellular signals. She is now cut off from 911 and other essential services.

AT&T told CBS13 that “Our application seeks approval from the CPUC to remove outdated regulations in California and to help the limited remaining landline consumers transition to modern, alternative services to replace their current outdated ones. All AT&T California customers will continue to receive their traditional landline services until an alternative service becomes available by AT&T or another provider.”

That’s obviously not true since many rural customers are in the same position as Pereira, where cellular service doesn’t work well, or at all, in many rural places in the country. In this case, the company cut off Pereira long before the company applied to cut copper dead in her area.

This is happening in rural AT&T areas across the country. AT&T is walking away from rural copper facilities that provide landline telephone and DSL broadband.

I’m sure that the rural AT&T copper networks are old and in poor condition. It has been inevitable that copper technology will eventually come to an end. But that’s not the whole story. Copper networks maintained by smaller independent telephone companies are still in workable condition because these companies have been doing the needed maintenance over the years. AT&T stopped doing routine maintenance on rural networks decades ago, and the company’s neglect has accelerated the death of the copper networks.

State regulatory commissions have not been doing their job. AT&T and other telephone companies have been operating under regulations that include the concept of carrier-of-last-resort, which means that the telephone companies are obligated to provide customers with voice service. It sounds like a noble sentiment that AT&T wants to make sure that customers have an alternate service before killing copper – which would be cellular coverage in rural areas. However, the company’s treatment of Pereira shows that is just a statement for public consumption and not the truth.

If the California Public Service Commission was enforcing the carrier-of-last-resort rules, it would make sure that customers have cell coverage at home before allowing AT&T to walk away from the copper. If that means AT&T would have to build new cell towers, so be it.

One of the oddest things about the TV coverage is that the newscaster ended the segment by parroting AT&T’s position by saying, “All AT&T California customers will continue to receive their traditional landline service until an alternate service is available by AT&T or another provider.” This was said after a segment that shows that AT&T is already walking away from a customer, and without first getting permission from the CPUC.

A Look at Open Ran

AT&T recently announced a $14 billion dollar deal with Ericsson to start upgrading its cellular networks to Open RAN (ORAN). I suspect most of the readers of this blog know a lot more about fiber technology than cellular technology. They’ve probably been seeing headlines for years talking about various flavors of RAN technology and probably wondered what it means. The bottom line is that the AT&T announcement is a big deal and means a big shift in the cellular vendor industry.

RAN stands for Radio Access Network, which is an acronym for the radios and antennas at a cell site. Open RAN represents a migration to a software-driven network where any brand of radio can be used at a cell site. This is a big deal in an industry where three major companies – Huawei, Ericsson, and Nokia – have made the gear for cellular networks. This means that most cellular networks rely entirely on the proprietary gear of a single vendor. A shift to Open Ran is akin to the migration a few years ago when data centers migrated to lower-cost white box routers and switches instead of having to buy proprietary gear from large vendors like Cisco.

However, the migration of the cellular network to generic hardware is a lot more complicated than making switches operate in a data center. This is mostly due to the complicated nature of operating a cell site in an environment where factors like temperature, precipitation, and customer traffic volume change the overall performance and operating characteristics of a cell site during the day. I always think of the old saying that operating a fiber network is science while operating a wireless network is art. The only solution for dealing with the complexities found at cell sites has been to pick an integrated suite of products from one vendor.

AT&T is the largest cellular carrier to announce it is moving towards ORAN. A few years ago, the newly formed DISH cellular effort announced it would use ORAN, but the technology was not ready, which drastically hindered the company’s initial launch of the network. The UK announced in 2021 that it has a goal to migrate its cellular networks to 35% Open RAN by 2030. The AT&T announcement doesn’t mean the company will be able to freely integrate any brand of radios into its networks but is a big first step towards true Open RAN.

The original view of Open RAN was that a cellular company could put any radio anywhere, connect it to the backhaul, and it would work. The software in the cloud would automatically handle the integration with the overall network and the surrounding cell sites, and the new site would work out of the box.

We’re still a long way from that ideal and may never fully get there. Cellular carriers have relied on the major vendors because they made sure that a cell site would work. I think back to all of the other launches of wireless technology where vendors released beta equipment and the first generation of customers were, unfortunately, the guinea pigs. I painfully recall watching ISPs try to launch wireless broadband networks using LMDS and MMDS spectrum and failing when the radios didn’t operate as promised.

Part of the reason that the migration to Open Ran has been slow is that vendors and carriers have also been pursuing other network options to cut costs. Historically, all of the electronics were fully integrated at a cell site. The RAN radio units were installed on a tower, and the BaseBand unit (BBU) with all of the brains was installed in a hut at the base of each tower. Technicians had to go through the time-consuming process of fine-tuning the electronics at each tower to meet the specific local circumstances.

In recent years, there have been efforts to consolidate some of the BaseBand Unit functions.

  • DRAN (Distributed RAN) was the first attempt to separate the base electronics from the radios. That was a lot harder than it might seem because a cellular tower relies on precise timing and fiddling with the type or length of wiring between the radios and the base caused all sort of problems.
  • CRAN (concentrated RAN) moved the base units into regional data centers (BBU hotels) and opened up the concept of DAS – Distributed Antenna Systems that would work from these centralized sites.
  • C-RAN (Cloud RAN), not to be confused with CRAN, has been a movement to move the entire brains of a cell site into data centers.

Open RAN takes something from each of these various evolutions and takes the final step of breaking the equipment monopoly of the big vendors. This isn’t going to be easy and has the danger of moving back to a time when we test new radios by foisting them on the public. But the savings from ORAN are potentially gigantic, and if we’ve seen anything in the wireless industry, it’s that the lowest-cost option is going to get the most attention.

Where is FWA Finding Customers?

Several people have asked me where the cellular carriers are finding the millions of customers they are adding to FWA cellular broadband. T-Mobile added 550,000 customers in the third quarter to reach 4.6 million total subscribers. Verizon added 380,000 in the third quarter to reach 2.7 million customers. AT&T is late to the game but says it is now adding 2,000 a week and plans to step this up significantly. Other carriers like UScellular are poised to enter the market.

The new FWA customers have to be coming from somewhere – and there are a lot of possibilities. In urban areas, the customers would have to be coming from cable companies, telco DSL, or fiber. In rural areas, customers would be coming from DSL, fixed wireless, satellite, or cellular hot spots. I’ve not seen any discussion or announcements from T-Mobile or Verizon about where they are gaining customers.

T-Mobile and Verizon together now have almost 6% of all broadband customers using the new wireless product. I’ve seen those companies speculating about growing to a 15% market share, which would mean adding another 10 million customers. That would make FWA collectively the third largest ISP behind Comcast and Charter.

I’ve been doing some digging, but my research is far from scientific. I’ve looked in detail at half a dozen counties using detailed Ookla speed tests to see where the FWA customers live. I looked at a few rural counties with only one or two sizable towns, and I looked at two suburban counties where cable companies serve the large majority of the geography. The first thing I noticed is that speeds are only good for around two miles from a cell tower – that’s not far in a rural area, but the carriers are now passing a lot of customers.

I also noticed in this tiny sample is that there are a lot more FWA speed tests in rural areas than in towns. That makes sense. In many places the FWA product delivers speeds of between 100-300 Mbps download – and for rural customers who have had no decent broadband option, this is a spectacular upgrade option. Upgrading to FWA from a creaky 10/1 Mbps DSL probably feels like the change we remember from going from dialup to DSL. I’ve noticed that there are still a lot of rural towers that have not yet been upgraded to the product, and perhaps those upgrades will provide a lot of the path to adding another 10 million customers.

There are FWA customers in cities and dense suburbs, but the relative penetration of FWA in densely populated areas looks to be relatively miniscule. The FWA sales proposition in urban areas is price. It’s still not unusual to find a 15% market penetration of DSL in cities, and it should be easy to sell faster speeds and better reliability at the same price as DSL. CenturyLink recently said that its rapid drop in DSL is due mostly to FWA.

One place that the cellular carriers are getting the customers is from their own embedded customer base. In many rural counties, T-Mobile and Verizon already have a 2 to 4% market penetration of cellular hotspot customers. These older broadband products delivered whatever cellular speed was available on the rural 4G network – and were exceedingly expensive due to severe data caps. It’s a pretty easy sell for a cellular company to tell customers they are sending them a new receiver that will get faster speeds and that will provide unlimited broadband – but with the small print caveat that bandwidth can be throttled any time that cell phone traffic is heavy.

I know that AT&T is using the product to convert its rural DSL customers. I happened to be in an AT&T store recently and heard them tell a customer that their copper DSL and voice line was soon going to be cut dead and replaced with FWA. The sales pitch to compete against satellite is also pretty easy. The FWA product is faster and costs less than any of the satellite options. Competing against WISPs using fixed wireless is more of a local situation since the quality of WISP broadband ranges from miserable to great.

The big question everybody wants answered is the impact of FWA on cable companies. In the last quarter, the big cable companies collectively added only 8,000 customers, and only Charter grew a little. The big cable companies have made themselves vulnerable due to high prices and in many markets due to reliability. Converting to FWA can almost cut a broadband bill in half. In cities, almost everybody lives within a decent distance of a cell tower – but the big concern for urban FWA is the capacity to support the product. While the cellular carriers love the new FWA product, they still view this as a footnote product in their annual reports. They are not about to jeopardize cellphone quality by oversubscribing fixed broadband customers on networks that weren’t designed to provide continuous broadband connections.

I still have no idea of the extent to which cable companies are losing customers to FWA or fiber. They are certainly losing to both – but the cable companies and their competitors are staying mum on the topic.

Upgrades for FWA Cellular Wireless

In the recent third quarter earnings call, Verizon CEO Hans Vestberg expressed strong support and belief in the future of the company’s FWA wireless broadband product. This product provides home and business broadband that uses the same cellular spectrum used today to provide bandwidth for cellphones.

There is good reason for the company to be optimistic about the broadband product. In only a few short years the company has added almost 2.7 million FWA customers, and most of its broadband customer growth in the third quarter of this year came from FWA. As noted by Vestberg, rapid growth has continued even after the company increased the price of the product by $10 per month.

As I have addressed in several blogs, there are some limitations on the current FWA product. The biggest downside is that the fast speeds advertised for FWA by Verizon and T-Mobile are only available for customers that live within a mile or so of a cell tower. Speeds seem to cut in half in the second mile from a tower and drop significantly by the third mile.

Another drawback is that both Verizon and T-Mobile throttle the bandwidth for FWA any time that cellphone usage gets heavy. In scouring through multiple speed tests, we have found customers who vary between fast and extremely slow speeds – which might be evidence of this throttling.

But Vestberg mentioned a big technology boost that will be coming to the Verizon FWA product. Verizon purchased a lot of C-Band spectrum in an FCC auction in 2021. This is spectrum that sits between 3.7 GHz and 3.98 GHz. The licensed spectrum provides Verizon with anywhere from 140 MHz to 200 MHz of cellular bandwidth in markets across the country.

Vestberg says the company is starting to upgrade busy urban towers with the extra C-Band spectrum. He implied that the upgrades will be coming to other urban towers and some suburban towers in 2024.

He said the C-Band spectrum will double or triple the cellular bandwidth depth in most markets. He said that using the new spectrum for FWA could result in speeds as fast as 900 Mbps to 2.4 Gbps. Like all speed claims made by ISPs, those speeds are likely faster than anybody will see in real life and probably represent theoretical maximums. However, FWA users can expect a big boost in speeds, particularly those living near towers.

I have to assume that Verizon has already built C-Band capabilities into its home FWA receivers, so speed upgrades ought to be realized immediately after an upgrade. A lot of the newest cell phones also already include C-Band capabilities. Verizon seems to have the most aggressive plan for C-Band, but AT&T has started to deploy the spectrum in a few markets. T-Mobile owns C-Band spectrum, but still seems to be hanging on the sidelines for upgrades.

Significant speed increases to FWA can make the product into a potent competitor to cable companies, at least for customers within a close distance of a cellular tower. The FWA prices are far lower than the prices charged by the big cable companies for broadband, and fast speeds can make this a viable alternative.

The first generation of FWA has delivered speeds in the 100-300 Mbps range. That has been fast enough to attract millions of customers. But the first generation product has felt more like a big upgrade to DSL rather than a direct threat to cable companies. But if the current speeds are really doubled or tripled, many households are going to be attracted by the lower prices on FWA. It’s an interesting product to market since the attractiveness for customers is in a direct relationship to the strength of the cellular signal that reaches their home –  an extremely local situation.

Cable Company Speed Claims

I don’t know if it’s just me, but my perception of ISP and cellular advertising is that the big ISPs and cellular carriers push the envelope more every year in trying to make claims that can give them a marketing edge over the competition.

The advertising for 5G cellular has repeatedly made claims over the years that are far in excess of the ability of the technology to deliver. If your only view of the state of broadband technology is ads seen on TV during sporting events, you would be fully convinced that we live in a completely wireless world and that 5G is the end-all-and-be-all of the broadband world.

What’s funny about many ads is that carriers try to differentiate themselves from their competitors, even though their peers are delivering essentially the same product to the market. There is not much difference in the cellular technology being delivered by AT&T, T-Mobile, and Verizon – although ads claim that each is by far the superior company. In real life, the biggest differentiator between the three carriers is the strength of their signal at your home, office, and other places you frequent – a strictly local difference based on the location of cell towers.

The competition between cable companies and fiber overbuilders is not based on equivalence. There is a clear technical advantage of a 300 Mbps broadband connection on fiber versus the same connection on a cable company. Fiber has a steadier signal throughout the day with lower latency and jitter, and any consumer comparing the two can quickly spot the difference. This puts cable companies in a tough spot. They know that fiber ISPs have a quality advantage for downloading and a huge advantage for upload speeds. Fiber networks tend to also have fewer glitches and outages.

Cable companies know when a fiber network shows up in a market that they will lose customers who care about signal quality. Since cable company prices are normally higher than the prices of fiber ISPs, the cable companies have to scramble and lower prices drastically with special prices to try to hang on to customers and lure new ones.

But cable company marketers never stop trying to make a pitch that makes them sound better than fiber. One of the latest examples comes from Comcast, which has started to advertise itself as the 10G ISP. The company now refers to its broadband network as the ‘Xfinity 10G Network’. This is based on the CableLabs 10G standard that lays out a future upgrade path for cable companies to eventually achieve an overall speed as fast as 10 Gbps download and 6 Mbps upload.

Verizon took exception to Comcast’s advertising and asked the National Advertising Division (NAD) of BBB National Programs to get Comcast to stop using the term 10G. The NAD program is something that many of the big ISPs voluntarily participate in to avoid expensive lawsuits between each other over advertising claims. NAD ruled that the 10G term was not factual and said Comcast should stop using it. The participants in the NAD generally comply with NAD rulings, but this time, Comcast is appealing the ruling. An interesting sidebar of the NAD ruling is that it also felt that consumers would interpret 10G as some advanced version of cellular 5G.

As an outsider, it’s pretty easy to agree with Verizon in this case. The 10G term was based on some theoretical future upgrade to meet the CableLabs 10G specifications, and Comcast’s coaxial networks today cannot achieve that speed. The only example of where Comcast has a 10 Gbps capability today is where it has upgraded to a 10 Gbps fiber platform – a tiny portion of the overall Comcast network. Comcast’s advertising implies to consumers that the future upgrades are already in place.

In a similar dispute, AT&T took exception to Cox ads that claim that Cox cable broadband is ‘powered by fiber’. NAD agreed with AT&T and ruled that Cox could not imply in advertising that its coaxial network is fiber-to-the-home. Again, it’s easy to agree with NAD on this ruling. Having fiber somewhere in a network does not mean that the network can deliver the same quality of broadband as an all-fiber network. Many DSL fiber nodes are fed with fiber, and I don’t recall any telcos making the claim that their DSL is “powered by fiber”.

More aggressive cable marketing is inevitable in a market where cable companies have stopped growing. There has to be a lot of angst in cable company board rooms about finding ways for the companies to claim fast broadband speeds and stop losing customers.

Starlink Promising Satellite Cellular Service

Starlink recently launched a new webpage that advertises the future ability to deliver text, voice, and data to 4G cell phones via satellite.

The texting service is supposed to be available in 2024 with voice and data coming in 2025. The service will require a user to have a view of the open sky. I would also guess that a user will have to be stationary and not in a moving vehicle. The service is likely going to be aimed at people who spend a lot of time outdoors, in places out of reach of cell towers. There is no talk yet about price, but this seems like a premium service and will probably be priced accordingly.

T-Mobile’s service will be able to connect through any of its many satellites, and reports have said that speeds will be relatively slow, at perhaps only a few Mbps.

Starlink says that users of the service will be able to connect to users in cellular networks that participate in the program. The initial list of network partners includes T-Mobile in the U.S., Rogers in Canada, Optus in Australia, One NZ in New Zealand, Kodi in Japan, and SALT in Switzerland.

There is already an early version of satellite texting. Apple provides texting to 911 through a satellite connection to those using an Apple 14  or newer iPhone. The text connection to 911 is slow and takes about 15 seconds to complete a transaction. The service allows very limited follow-up texts between public safety and the person initiating the 911 call. Apple is providing this service for free today but will eventually likely charge for using it.

AT&T claims to have made the first broadband connection with an unmodified cell phone and a satellite in September. The company used AT&T’s 5G spectrum and a Samsung Galaxy S22 to connect a caller from a dead cellular zone in Maui, Hawaii to one in Madrid, Spain. This test was done in conjunction with AST SpaceMobile. The first test achieved a download speed to the phone in Maui of 10 Mbps, but AST has subsequently been able to boost the speed to 14 Mbps. AST plans to launch five BlueBird satellites in the first quarter of 2024 to support the cellular satellite effort.

It’s unlikely that any of these services are going to be competing with mainstream cell phone connectivity. The speeds will be slower, and the satellite constellations will not be equipped to process the amount of data associated with normal cellphone service. There is no need to pay extra to use a satellite connection for anybody in reach of a cell tower or a WiFi connection.

I’m not sure if most people appreciate how much of the land mass of the U.S. has little or no cell service. Practically every county I’ve worked in has large dead cellular zones. Providing even rudimentary cell coverage in remote areas is a valuable new service for the many people who work in remote places. I can picture that farmers, park rangers, and anybody who spends a lot of time in unconnected areas will want this service as soon as it is available. I envision the satellite companies and cellular companies generating good revenue while filling this needed market niche.

Industry Shorts September 2023

Following is a discussion of a few topics I found to be interesting, but which are not long enough for a separate blog.

Starlink is massively far behind its original business plan. Starlink ended 2022 with around 1 million customers, while its original 2015 plan projected 20 million customers by the end of 2022. The 2022 revenues were $1.4 billion, far under the original projection of over $12 billion. The original projection was for Starlink to make $7 billion in profits in 2022, but the company still had monthly operating losses last year – although the company now claims a small profit at the end of the first quarter of 2023. Starlink company currently has over 4,700 satellites in orbit. The FCC has approved the launch of over 30,000 satellites, and Starlink says that 11,000 are needed to complete the first full constellation.

The company is currently up to around 1.5 million customers worldwide, which is impressive. But Starlink has a new competitor in FWA cellular wireless in many rural parts of the country. T-Mobile and Verizon added almost 3.2 million customers in 2022 and another 1.8 million in the first two quarters of this year. Much of rural America should be getting faster broadband over the next four years from the many federal grants, and I have to wonder if Starlink will ever meet it’s rosy projections for rural America.

Starlink has also been delivering slower broadband speeds than it originally advertised. The company now claims the following speed capabilities on its website, which are slower than what was reported a year ago. For example, in September 2022, residential speeds were claimed to be between 50 – 200 Mbps with upload speeds of 10 – 20 Mbps.

Download                   Upload

Residential      20 – 100 Mbps            5 – 15 Mbps

Business          40 – 220 Mbps            8 – 25 Mbps

RV                  5 – 50 Mbps                2 – 10 Mbps

There is still a lot of pent-up demand for Starlink. In every county I’ve worked in this year, I’ve talk to people on the Starlink waiting list.

AT&T Internet Air. AT&T has not taken the same aggressive approach to selling FWA cellular broadband as Verizon and T-Mobile, which together had over 5.9 million FWA customers at the end of the second quarter of this year.

But AT&T recently announced that it is now installing several thousand FWA connections every day. The product will use the frequencies that AT&T has labeled as 5G for customers living in range of a 5G-enabled tower and will use LTE spectrum elsewhere. AT&T said customers could be provisioned with a combination of 4G and 5G.

Chris Sambar, the President of AT&T Networks, wrote a recent blog that says that the AT&T cellular network has seen a 30% annual increase in the amount of bandwidth used per cellular customer. Any network engineer will tell you that is a huge increase. Landline broadband usage has historically grown at a rate of about 20% annually. At a 30% annual increase, network traffic will double in less than three years.

Sambar also said that AT&T was starting to test what he calls standalone 5G. That means using cellular technology that incorporates the 5G standards. For the last five years, everything offered by cellular companies that has been labeled as 5G was actually 4G LTE delivered using a new set of frequencies. It will be interesting to see what 5G can actually do differently. The blog mentions network slicing, which is perhaps the most important 5G feature – it will allow a cell tower to match the bandwidth being delivered to a customer to match the demand – small bandwidth for simple uses, and bigger bandwidth when needed. If network slicing works as originally intended, the bandwidth at a cell site will be used far more efficiently and a cell site will be able to handle a lot more simultaneous connections.

Reflecting on AT&T

I was talking to somebody about AT&T recently – we both worked at the company before the divestiture of the company into the Baby Bells in 1984. This set me to contemplate the odd path the company has taken since the days when it was perhaps the premier U.S. corporation.

AT&T was divested as a long-distance company in 1984 and thrown into a competitive environment where long distance rates and revenues plummeted. AT&T’s fortunes and status decreased to the point where SBC, Southwestern Bell, was able to acquire the company in 2005 while keeping the AT&T brand name.

The reunited Baby Bell companies and AT&T were far diminished from the days when AT&T was at the top of the world. SBC and the other Baby Bells started to cut back on the maintenance and upgrade of copper infrastructure soon after the divestiture. The companies felt emboldened to do this since divestiture also brought the beginning of telephone deregulation. The big telcos were no longer strictly required to meet quality and performance standards, and they responded by trimming technicians and capital repair and upgrade budgets.

During the 1990s, AT&T turned its attention to becoming the largest cellular carrier. The company spent most of its capital in the 1990s on cellular networks, which was timed perfectly with the explosion of the cellular business where practically everybody in the country came to have a cellphone. But even in the cellular world, AT&T didn’t put as much money into its cellular infrastructure and spectrum as its competitors. When AT&T won an exclusive contract to market the iPhone in 2007, it quickly became clear to customers that the AT&T (Cingular at the time) network was inadequate.

AT&T next made several devastatingly bad investments. It bought DirectTV, which then lost half of its customers in a few ensuing years. AT&T was also apparently trying to keep up with Comcast when it spent $100 million to buy Warner Media. A few years later, AT&T unspun this deal and recognized a $47 billion loss to shareholders.

In the last decade, AT&T has been forced to spend a lot of money to upgrade its 4G and 5G networks. While cellular performance has improved dramatically for consumers, 5G still looks like a business plan looking for a revenue stream. Over the last decade, cellular competition has resulted in lower cellular prices for consumers, and it can be argued net 5G revenues for the industry have been a big negative. And now, the biggest cable companies are siphoning off valuable cellular market share.

AT&T and the other big telcos might also be facing an expensive effort to remove lead cables from the environment. Smaller telcos mostly replaced lead cables a long time ago, but it seems the big telcos never quite got around to getting rid of the lead.

AT&T has finally gotten serious over the last few years about building last-mile fiber networks for the future. The company built 500,000 fiber passings in the second quarter of this year to bring it up to 20.2 million fiber passings – with a goal to reach 30 million by the end of 2025. AT&T added 272,000 fiber customers in the second quarter to bring the company to over 7.7 million fiber subscribers. The company is still losing non-fiber customers and dropped 25,000 net broadband customers in the second quarter.

AT&T is late to the game compared to its cellular competitors in selling FWA cellular broadband and just rolled out its Internet Air product in April of this year. AT&T CEO John Stankey characterizes the company’s FWA plans as being used to replace copper infrastructure and perhaps to bid on BEAD grants in remote areas. But for now, the company is far behind Verizon and T-Mobile in selling cellular home broadband. But AT&T recently announced it now signing a ‘few thousand’ FWA customers daily.

It not particularly easy to equate AT&T with some of the recent events in the company, because for all practical purposes, the company has been run by folks from SBC. But a lot of mistakes have been made in AT&T’s name, and it’s somewhat sad to see how far the company has fallen since the early 1980s. AT&T has made mistakes that would have sunk a lot of other businesses, but it is still diverse enoughto generate the cash to keep trying over and over again.

A Tale of Two Markets

I wrote a blog the other day that got me thinking about the huge disparity in regulating two distinct but highly intertwined industries – broadband and voice. Before you stop reading because you might think voice is no longer relevant, voice regulation includes the cellular business, and in terms of revenue, the voice market is larger than broadband. JD Powers reported in April of this year that the average household is spending $144 for cellular per month.

I call these industries intertwined because the players at the top of both industries are the same. The big ISPs are Comcast, Charter, AT&T, and Verizon. The biggest voice players are AT&T, Verizon, and T-Mobile. Comcast and Charter are making aggressive moves to develop a wireless business, and T-Mobile is aggressively selling broadband.

The two markets are intertwined in a household. Most people connect their cell phones directly to landline broadband when they are home. The primary use for cell phones is to connect to the Internet. My twenty-something daughter is amazed that I predominantly use my cell phone to actually talk to people.

This handful of giant companies control the lion’s shares of both the voice and broadband industries. Yet we’ve decided to regulate the two business lines completely differently. You must admit that this it’s an odd national decision to regulate AT&T’s voice business but not its broadband business, particularly considering how intertwined the two businesses are. Comcast and Charter are proof of the link between the two industries since the companies will only sell cellular plans to customers who are buying broadband.

A regulatory expert from another country would look at the U.S. regulatory environment with incredulity. They would instantly wonder how we can treat the two industries so differently since they engage in such similar business lines, particularly since the same companies lead both markets.

The average American has no idea of how differently we treat the two industries and would be just as confused as a foreign regulator expert. It’s really hard to explain the difference in regulations since that quickly devolves into a discussion of things like Title II regulation, and the average person listening will quickly have no idea what you are talking about.

The easiest way to explain the difference in regulation is that we don’t regulate according to common sense but base regulation on the original legislation that established regulations for each industry. Voice is still regulated because, in the past, various pieces of federal legislation, like the Telecommunications Act of 1996, specifically mention voice. There were also laws that specifically defined how to regulate cable TV – but there has never been a definitive legislative declaration that broadband must be regulated.

This all started when interest in home broadband mushroomed. AOL, CompuServe, and others created a robust ISP industry that took off rapidly when DSL and cable modems increased speed to the point that people could do useful things with broadband. In those early days, there was a lot of discussion about regulating broadband, but the consensus among legislators was that regulators should leave the fledgling new broadband industry alone until it grew large enough. No doubt, this hands-off approach was whispered into the ears of legislators by lobbyists for the big ISPs.

With no direction from Congress, the FCC and various States tried to find ways to regulate broadband over the last few decades. But as hard as it is to believe, we weren’t even able to define what broadband is without legislative direction – is broadband a telecommunications service or an information service? All of the wrangling about regulating broadband ultimately comes down to this simple designation.

Regulation gets really bizarre the deeper you go into the details. Cell phones calls are regulated for voice, but the broadband on a cellphone is considered to be an information service. What is the regulatory regime of a cell phone call that is handed off to a broadband network through WiFi but then eventually reconnected with the cellular network? The average cell phone user regularly bounces between regulated and unregulated functions.

The title of the blog refers to A Tale of Two Cities, which opened with, “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness”. That’s as good of a description of our odd regulatory environment as anything else I can think of.