Tag Archives: DSL

AT&T’s Landline Alternative

AT&T announced at the end of 2024 that it plans to retire all copper networks by the end of 2029. The FCC noted in a recent filing that the use of traditional telephone service has decreased rapidly over time. At the peak in 2003, incumbent telcos had 181 landline telephone customers. By the middle of 2024 that had reduced to 18 million traditional landlines along with 64 million voice-over-IP voice customers.

The transition away from copper is going largely unnoticed in urban areas since customers typically have good alternatives to a landline. Surveys have shown that practically everybody has a cellphone, and in cities, except for dead zones in cellular coverage, the cellular network provides a good alternative to landlines.

However, there are still a lot of rural customers for whom a landline is the only reliable communications path to the world. AT&T was catching a lot of public grief when it started to tear down rural copper networks in areas where customers were told the only alternative was cellular service. Because of spotty or nonexistent rural cellular coverage, many rural residents never purchased an expensive cellphone. While a cellphone can be used to make voice calls, a cellphone is not an alternative for connecting medical devices, analog burglar alarms, and other technologies that had relied on the landline connection.

In 2024, AT&T conducted a test of a new technology it labeled as AT&T Phone – Advanced (AP-A). The service relies on an in-home cellular receiver that provides VoIP that can be plugged into existing telephone wiring to provide connections to existing telephone sets and devices connected to the customer’s copper.

The technology worked as planned, and the FCC approved the new technology as a landline replacement. The FCC’s initial approval only concerned a small test conducted of the device in Oklahoma. It’s not clear how widely AT&T is marketing this product, but the company touted the trial to the FCC as being a robust replacement product for rural landlines.

You might wonder about how the product replaces DSL, and it doesn’t. This product is for the rural home that wants to maintain only a landline. It’s worth noting that now that the FCC has labeled broadband as a service, not regulated under Title II, the FCC has no rules that require telcos to offer an alternative to eliminating DSL broadband. This was made explicitly clear in July when the FCC created a 2-year moratorium on having to notify the public about copper replacements.

Rural DSL has rarely been an adequate product due to the fact that customers are typically too far from the DSL hub to get any appreciable speed. But AT&T does have a rural DSL replacement in places where the company has enabled rural cell sites to provide FWA cellular home broadband. As of the second quarter of this year, AT&T has installed over 1 million customers on the FWA product. The FWA product is only effective within a few miles of cell sites that have been FWA-enabled.

It looks like AT&T will be able to expand its FWA footprint after the announcement that the company purchased a pile of spectrum from Echostar. Analysts are already speculating that the primary benefit of the new spectrum is to greatly expand the FWA broadband product.

AT&T to Retire Copper

AT&T has made it official that it plans to shut down copper networks everywhere except California by the end of 2029. This is not exactly news since the company has been quietly shutting down copper all over the country.

California is a special situation because the California Public Service Commission has never deregulated AT&T as a local telephone company and the state is going to make AT&T prove to it that customers will not be stranded when the copper comes down. Even California regulations have not stopped AT&T from quietly killing copper in California, as described in this blog I wrote early in 2024.

AT&T says it will offer an alternate technology to customers – either fiber or wireless. AT&T announced in early December that it plans to build fiber to 45 million additional passings by the end of 2029. That will certainly cover a lot of remaining DSL neighborhoods in cities and towns. But I have to wonder if AT&T is really planning on building fiber everywhere in cities. The concept of building ubiquitous fiber is counter to its historical construction plans of only building fiber in neighborhoods with the lowest cost per passing.

Consider my City of Asheville, NC. AT&T currently claims to have built fiber to pass 17,500 of 32,600 passings in the city. Is AT&T really going to build fiber to everybody else in order to replace DSL? If AT&T has already built fiber in the lowest-cost neighborhoods, it will cost a lot more per passing to cover the rest. 45 million passings is a huge number, and while it’s possible the company could build to this entire city, it would be a lot easier to build to neighborhoods with the best demographics and quietly disconnect copper DSL in the rest.

Replacing copper in rural areas is a much bigger challenge. AT&T says it will replace rural copper with FWA wireless technology – but that implies having rural towers in place that will reach everybody. FWA technology only covers roughly a two-mile circle around a tower, and in most counties, AT&T towers covers maybe a quarter of the geographic footprint. The company has no financial incentive to add new cell towers in sparely populated rural areas.

AT&T can’t tell the truth and say it will offer an alternative for only a portion of rural customers, but that’s the reality. AT&T can’t bring cellular broadband to places where cellphones barely work. The company is not about to say that it will offer an alternative for only some portion of copper customers, but that is what will ultimately happen.

I can’t imagine AT&T building in high-cost urban neighborhoods or sparely populated areas where construction makes no financial sense. Wall Street would crucify AT&T if it tried to bring a DSL replacement to everybody in the historical monopoly footprint. Even worse, doing so might entice regulators to treat AT&T like a monopoly again and make them really be the carrier of last resort.

One interesting part of the announcement is that the company says it has a new technology that will allow people to keep their old analog devices that worked on copper networks – things like medical monitors and burglar alarms. Telcos that upgrade copper technology face public grief over people who want to keep their old devices running. The technology AT&T is offering is not new and has been around for decades. The device is a emulation device that can create a TDM  bridge from an ethernet connection. Telcos have been offering this technology for decades to businesses that wanted to maintain old PBX and keysystem telephones. What’s new is that AT&T has condensed the technology to a small box that can be set next to a home router.

Why Customers Choose FWA

It’s been interesting to watch cable companies downplaying FWA cellular wireless. For example, in September, Comcast President Mike Cavanaugh said that FWA wireless is a ‘near term’ issue that is competing for the lower end of the market. CEO Brian Roberts was quoted this year about competing against FWA saying, “Three companies are all simultaneously within a short period of time are all offering a home connectivity product by their own admission a lower speed, more easily congested network.”

And yet, the carriers selling FWA continue to sell at astounding numbers. AT&T, T-Mobile, and Verizon have consistently added 900,000 customers per quarter since the second quarter of 2022. The big cable companies have been fighting back by significantly lowering the prices of their slowest bandwidth products, and this seems to be stemming the losses due to FWA. But those lower prices come with a cost with lower margins and average revenues per customer.

I think that what has been missing from the discussion of FWA of how the technology compares to the alternatives. Consider the following table that shows average speed tests for a 12-month period in three rural counties for all broadband technologies. There is nothing unusual about these counties – they are just three places where I happened to recently do some analysis. Each county has a county seat and a few towns with cable broadband and some fiber, but rural areas are largely still not served with any fast broadband.   It’s not hard to understand why FWA is so competitive in rural counties. It’s generally faster than fixed wireless and Starlink, and with generally a lower prices. FWA is being priced at roughly the same level as DSL in many markets.

The big limiting factor for FWA in rural markets is the broadband footprint and good speeds like those shown in the above table are only available within a few miles of cell towers. In all three counties, the FWA providers cover only roughly one fourth of the geographic footprint of the county.

Comparative speed tests are always interesting. Each county is served by a different cable company, and yet each is delivering almost the same average speeds – likely because each is operating similar DOCSIS 3.1 networks.

There are some noticeable difference in these counties that require local knowledge to explain. For example, fiber speed tests are lower in County 2 due to a fiber provider that offers a very affordable 100 Mbps fiber product that pulls down the average speed. FWA speeds are also slower in County 2 due to households still using cellular hotspots from cell sites that haven’t been upgraded to FWA.

Starlink speeds are consistent with the national average numbers I’ve been seeing – but Starlink has the most erratic variance in speed tests with a range of tests between a few Mbps and several hundred Mbps. In the three counties, the speeds on fixed wireless (from WISPs) are relatively slow since the WISPs have not upgraded to faster radios. There are counties where WISP speeds are much faster. The speed that might surprise some folks is DSL. As the copper networks have emptied of customers, the remaining customers are seeing faster speeds than just a few years earlier.

Ten Years Ago

As a country we have a very short memory when it comes to broadband. Anybody in their late 40s or older clearly remembers twenty-five years ago when the predominant form of broadband was dial-up and we were seeing the first DSL and cable modem trials in the market. But I think most people have forgotten about the state of broadband just ten years ago.

I admit I have the same time bias. I was cleaning out some old bookmarks, and I ran across several articles from ten years that surprised me.  The big difference between 2014 and now is broadband speeds. Consider the following map that was published in the Washington Post in early 2014. This shows the average broadband download speed in the U.S. was 18.2 Mbps. The maps shows the parts of the country where speeds were faster or slower than average.

To put these speeds on this map into context, the FCC adopted the updated definition of broadband of 25/3 Mbps in 2015 – updated from 4/1 Mbps. At the time, there were critics who said that 25/3 Mbps was a ridiculously high definition, which can be understood when seeing the large parts of the country on this map where average speeds were under 10 Mbps. The map is an interesting way to see where fiber had already been widely built in 2014, mostly in Verizon FiOS markets in the Northeast and some of the PUDs in Washington. Many other smaller areas had fiber, but are not large enough to be seen on a map at this scale.

In 2014, the national broadband penetration rate was around 80% of households, up from 20% of homes ten years earlier. 2014 is the year when the 18-34 age group spent more time online than watching television (the first this had ever happened for any age group).

Video streaming was becoming a big deal, and Netflix had 48 million customers by the end of 2014. In looking back at blogs and articles, there was widespread complaints about pixelated video streams. Livestreaming was still in its infancy and the Superbowl was livestreamed in 2014 by NBC along with a Verizon mobile app.

Video conferencing was also in its infancy, and before 2014 most videoconferencing required specialized hardware. Skype became the predominant software-based videoconferencing platform, in 2014, but was mostly used for business meetings. Apple users had been using FaceTime for one-on-one video conferencing since 2010.

Ten years ago is also when the cable company first started to lose customers. The year ending March 31, 2013 was the first 12-month period where the big cable companies collectively lost net cable TV customers. At the end of 2013 there were over 8 million homes that had cut the cord, but the cable companies had continued to add new customers to replace those who were leaving.

Apple sold 40% of cellphones in 2014 and Samsung had a 21% market share. BlackBerry still held a 5% market share.

How many of you remember the broadband speed you were buying in 2014? In 2013 I was served by a WISP that delivered about 5 Mbps. In 2014 I moved and subscribed to Comcast, but I can’t recall the speed they provided – my fuzzy memory says it was 30 Mbps.

The bottom line from this look back is a recognition of the extraordinary strides we’ve made with broadband speeds in just ten years. Cable companies now routinely offer gigabit speeds and millions of new fiber passings are being built every year. FWA cellular is bringing pockets of 100+ Mbps all around the country. New fixed wireless radios now have big bandwidth capabilities. I don’t think anybody in 2014 could have predicted where we are today with broadband.

Are There Superior Technologies?

It’s easy to fall into a lazy mental habit and say that some technologies are better than others. I know I tend to do this. It’s easy to say that fiber is better than cable technology or fixed wireless when in real life, broadband customers make this decision.

My firm does a lot of broadband surveys every year, and we find customers who are happy with most broadband technologies. I say most because I don’t think I ever found a customer who praised their cellular hotspot of high-orbit satellite service on HughesNet or Viasat. But other broadband technologies and the ISPs that deploy them have their fans.

As an example, we recently talked to a bunch of businesses in a community that buy broadband from the cable company. This is a small rural town where the cable company is still using the older DOCSIS 3.0 technology. Speed tests show download speeds at a maximum of 150 Mbps download and less than 10 Mbps upload. Most of the businesses complained about the cable company. They said that service was spotty and was sometimes good and sometimes bad. They complained about the inability to perform functions that needed upload speeds, such as using cloud software, making Zoom calls, or using VoIP.

But there were several businesses that were happy with the cable company. They said they rarely had problems and had nothing negative to say about the cable company. There are two possible reasons for this. First, the happy customers might not be using the broadband in the same way as other businesses. However, the satisfied customers included a law firm and an insurance agent, who both said they worked all day with cloud software.

There is another possible reason why these customers are happier. There is a chance that the network in their part of town performs better than other parts of the network. We tend to think of networks as ubiquitous, but that is not the case. The neighborhood with satisfied customers might have fewer customers sharing a node. It might have newer coaxial cable. It might not be configured with a lot of amplifiers. It might have a faster fiber connection feeding the node. It might have suffered fewer cable cuts over the years. It might be superior in a number of ways to the parts of the network serving the businesses that complained about service.

Fiber is not always great. I have an ISP client that built one of the first fiber BPON networks. BPON delivered 622 Mbps download and 155 Mbps upload bandwidth to share with up to 32 customers. Over time, this network got full and many PONs were completely subscribed. Before this ISP finally upgraded, the network performance grew terrible. PONs with business customers delivered terrible speeds in the daytime, and residential PONs bogged down badly in the evenings. Fiber does not automatically mean a great network – any network where there is more demand for broadband than is being delivered will see big problems and unhappy customers.

I still find business customers who are happy with DSL. They live close to the DSLAM core, and their part of the network isn’t oversubscribed. Telcos are delivering as much as 100 Mbps download speeds to selected DSL customers for a decent price.

The same goes for fixed wireless. I run across customers who hate the technology and others who love it. A lot of this difference is the underlying philosophy and customer service of the local WISP. Some WISPs  do everything right while others oversubscribe sectors, try to sell more bandwidth than is available, or try to serve customers who are too far away from the tower.

I’ve found the same with Starlink. There are customers who love the service and others who tried and dropped it. I’m already starting to see this same dichotomy with FWA cellular wireless, with customers who love it or hate it.

The bottom line is that any broadband technology or ISP that a customer likes is good for them. For a customer to remain happy for a long time requires technology that works, customer service that is responsive, and a price that customers are happy with. ISPs often build a new network and wonder why they don’t instantly get a huge penetration rate. Some of this is due to customers who don’t want to put any effort into changing ISPs – but other customers are happy with the quality, service, or price of the existing broadband.

Are there superior technologies? Some networks clearly outperform competitors in a given neighborhood. But the superior technology for any given customer is the one they choose to buy that they are satisfied with. Who am I to argue with a happy customer?

The Trajectory of the Broadband Industry

For well over a decade, it was fairly easy to understand the trajectory of the broadband industry. In the residential market, cable companies snagged all of the growth while telcos shrank as customers abandoned DSL. Other technologies like fiber or fixed wireless gained customers but were a blip on the national scale. In the business market, a dozen large companies competed fiercely for large business customers while smaller businesses were stuck with the same technologies used to deliver home broadband. There was no suspense in predicting where the industry was headed from year to year.

But the broadband industry is now in total turmoil. Within a short time, cable companies have stopped growing. Currently, all of the industry growth among big ISPs is coming from FWA cellular wireless. Last-mile fiber networks are being built across the country. WISPs finally have the radios and enough spectrum to be serious competitors.

When I talk about trajectory, I’m not talking about predicting 2024. The challenge is to guess where the industry is headed over the next five years. Who will be the winners and losers over that time? The easiest way for me to think about this is to look at each industry segment.

Let me start with the cable companies. You can’t have this conversation without first acknowledging that Comcast and Charter together have over 50% of all broadband customers today. That puts a big target on their backs because they have the customers that everybody else is chasing. The cable companies have clearly lost the perception war – the general public seems to have accepted that fiber is better than coax. The cable companies got blindsided by the pandemic when millions of people suddenly cared about upload bandwidth, and a lot of people got a bad taste for the cable companies. The companies are now scrambling to implement mid-split technology to boost upload speeds to 100-200 Mbps. Most are talking about implementing DOCSIS 4.0 much earlier than they had originally planned. The big unknown is if these two upgrades will be enough to turn public perception. Cable companies don’t help their case by having the highest broadband rates in most markets that continue to increase each year. The one advantage the big cable companies have is aggressive bundling with low-price cellular.

Fiber overbuilders are now everywhere. Big fiber overbuilders like AT&T talk about achieving a 30% penetration rate in a few years and reaching 40% after 4-5 years. But the telcos also have to overcome a public perception problem since they did such a poor job of customer service over the last decade while pushing the clearly obsolete DSL. Smaller fiber overbuilders don’t have this history and are aiming higher, and have penetration rate goals of 50% and beyond. Fiber gains don’t only come from cable customers, and a lot of fiber gains are from converting the remaining DSL customers. In five years it’s not hard to believe that fiber will have half of the customers in neighborhoods with fiber.

The big unknown is FWA cellular wireless. Already today, this product has picked up all of the industry growth over the last 18 months, and that trend looks to continue for a while. It’s a real mystery where the carriers are getting most of the growth. I can tell by looking at detailed speed test data that a lot of the growth is coming in rural areas where customers within two miles of a cell tower finally have a solid and fast broadband product faster than 100 Mbps. Any gains in cities are probably coming from customers who care most about price – FWA is much cheaper than cable broadband. But over the long run, this technology faces challenges. In rural markets, FWA will compete against faster WISPs and with fiber networks that will be built by BEAD grants. The wildcard for the industry will be the impact of using C-Band spectrum. That is supposedly going to at least triple the speeds – again within relatively short distances from towers. But FWA technology has a big long-term constraint in that cellular networks were never designed to deliver steady-use home broadband. While carriers might love this new income, one would think they are not going to be dumb enough to endanger their cellular customer satisfaction, which is their real source of revenue.

WISPs have a rosier future through the combination of better radios that minimize interference and the use of new spectrum, particularly 6 GHz, which can mean gigabit speeds in ideal circumstances. It’s really hard to predict the trajectory of this sector. In many rural areas, WISPs will be competing against fiber networks funded by grants and operated by highly popular ILECs and cooperatives. But in other markets, WISPs might become the virtual monopoly provider if they can win the broadband grants. That makes it hard to judge the overall trajectory in rural markets. WISPs will always face challenges in urban markets where they can’t serve more than a small percentage of homes and where frequency interference is rampant.

We can’t forget satellite broadband. Starlink has done well by bringing broadband where nobody else would – but that is also going to change due to the rural grants. Starlink’s prices are already a barrier for many potential users. The big unknown in the industry is what Jeff Bezos and Amazon will do. The company finally launched test satellites and might be aggressive with non-traditional bundling and affordable prices.

All of this competition will be happening in an environment where households will use 20% more bandwidth each year. Any technology that has overall bandwidth constraints will eventually feel this pinch. This will affect FWA cellular and satellite broadband the most but can hit any ISP that hasn’t built a robust enough network.

What does all of this mean in five years?

  • Fiber will continue to eat away at cable companies, and in five years, the cable companies might not have a choice and will have to bite the bullet and convert to fiber to compete. It’s hard to envision a future where cable companies don’t lose customers annually for the next five years.
  • DSL will finally die, and its market share will be absorbed by FWA and fiber.
  • FWA companies will continue to grow at a rapid pace for the next couple of years. Low prices will always find a market. But if the carriers can’t find a way to guarantee bandwidth at peak times, a lot of homes will lose faith in the product. FWA will see a lot of competition in rural markets. I think the industry will eventually reach a market equilibrium – at some level higher than today’s DSL penetration.
  • WISP’s success will be market by market and will depend upon the other competition and local conditions – the technology will always struggle in places with rough terrain like Appalachia.
  • Satellite broadband will still be the technology of choice for the most remote places. Satellite’s real long-term markets are in the parts of the world that don’t have other good rural ISPs. But Amazon might find a bundling option that will still make the company a serious player in the U.S.

Shutting Down Obsolete Technologies

There was an interesting statement during the recent Verizon first quarter earnings report call. The company admitted that shutting down the 3G cellular networks cost it about 1.1 million retail cellular customers along with the corresponding revenues.

This was long expected because there are still a lot of places where 3G technology was the only cellular signal available to rural customers living in remote areas. There were also a lot of people still happy with 3G flip phones even where 4G was available. Some of these customers will likely come back with 4G phones, but many might be angry with Verizon for cutting them off and go elsewhere.

Verizon has been trying to shut down the 3G network for at least five years. Its original plans got delayed due to discussions with the FCC and then got further delayed because of the pandemic – it didn’t seem like a good idea to cut folks dead when cellular stores were shuttered.

This change was inevitable. The bandwidth that can be delivered on the 3G networks is tiny. Most of you remember when you used 3G and a flip phone to check the weather and sports scores. Cellular carriers want to repurpose the spectrum used for 3G to support 4G and 5G. This is something that is inevitable – technologies become obsolete and have to be upgraded or replaced. The 3G transition is particularly abrupt, because the only possible transition is to cut the 3G signal dead, and 3G phones become bricks.

All of the technologies used for broadband and telecom eventually become obsolete. I remember when we used ISDN to deliver 128 Kbps broadband to businesses. I remember working with n-carrier and other technologies for creating data connections between central offices. Telephone switches took up a big room instead of being housed inside a small computer. The earlier version of DOCSIS technology were largely abandoned and upgraded to new technology. BPON became GPON and is now becoming XGS-PON.

Most transitions to new technologies are phased in over time. You might be surprised that there are still working ISDN lines chugging along that are being used to monitor remote sensors. There are still tiny rural cable companies operating the early versions of DOCSIS. But the industry inevitably replaces ancient technology in the same way that none of you are reading this blog on an IBM 5150 or a Macintosh 128k.

But some upgrades are painful. There were folks who lost cellular coverage when 3G was cut dead since they lived in a place that might not be able to receive the 4G replacement. A 3G phone needed only a tiny amount of bandwidth to operate – at levels that newer phones would perceive to be far under one bar of service.

The other painful technology replacement that keeps getting press is the big telcos killing off the copper networks. When copper is cut off in an area, the traditional copper landlines and DSL go dead. In some cases, customers are offered to move to a fiber network. The price might be higher, but such customers are offered a good permanent technology replacement. But not every DSL customer in a city that loses copper service is offered a fiber alternative. Customers find themselves likely having to pay $30 or $40 more to move to the cable company.

In rural areas, the telcos often offer to move customers to wireless. For a customer that lives within a decent distance from a cell tower, this should be an upgrade. Fixed wireless delivered for only a few miles should be faster than rural DSL. But like all wireless technologies, there is a distance limitation around any given tower, and the FWA signal isn’t going to work for everybody. Some customers that lose rural copper are left with whatever alternatives are available – because the telephone company is basically abandoning them. In many rural areas, the broadband alternatives are dreadful – which is why many were sticking with slow rural DSL.

I hear a lot of complaints from folks who lose traditional copper who are upset that they lose the ability to use services that work on copper technology, such as fax machines and medical monitors. It may sound uncaring, but these folks need to buy something newer that works with today’s broadband. Those are the kind of changes that are inevitable with technology upgrades. Just like you can’t take your old Macintosh to get fixed at Best Buy, you can’t keep using a technology that nobody supports. That’s an inevitable result of technology getting better over time. This is not a comfort to the farmer who just lost his 3G cell coverage – but there is no way to keep older technology operating forever.

Should DSL Cost Less Than Fiber?

As I was going through my pile of unread articles, I found an article from the Associated Press that asked how big ISPs can get away with charging the same prices in urban areas for both slow and fast broadband. The article was about Shirley Neville, in New Orleans, who found that she was paying the same price for 1 Mbps DSL from AT&T as other city residents are paying for a fiber connection.

It’s a great question, and I was surprised that I hadn’t thought to write about it before. I investigate broadband prices around the country, and it’s not unusual to find the price for fiber broadband in a city set close to the price charged for DSL.

It would be easy to justify charging the same price for both technologies if AT&T was in the process of converting everybody in New Orleans to fiber. In fact, if that was the reason, I’d be impressed that AT&T wasn’t charging more for the technology upgrade. But this is not the situation. It’s clear that the AT&T fiber business plan is to build fiber to small pockets of cities, but not everywhere. The chances are high that Shirley Neville’s neighborhood and many others will not be getting fiber soon from AT&T, if ever. For every neighborhood that gets fiber, there will be many that will never see AT&T fiber.

Another possibility is that AT&T’s low price for a fiber connection is an introductory price to lure people to switch from Cox, the cable company. Perhaps when the introductory price expires the fiber price will be higher than DSL. This still doesn’t feel like a great answer to Shirley’s question since AT&T is willing to give a fiber customer a big break.

The most likely answer to the question is the ugliest. AT&T doesn’t feel like it needs to reduce the price of DSL in the city because DSL customers are a captive audience. Cox has some of the highest broadband prices in the country, and that gives cover for AT&T to charge whatever it wants for DSL as long as the price is lower than Cox.

Another reason that AT&T can charge the same for DSL and fiber is that there isn’t anybody to tell the company that it shouldn’t do so. The FCC eliminated broadband regulation and the Louisiana Public Service Commission doesn’t assert any authority over broadband prices. Folks like Shirley Neville don’t have anybody looking out for them, and the big ISPs can overcharge customers with impunity.

As the article points out, Shirley’s question is germane today because of the FCC’s investigation of digital discrimination. The article cites an investigation by The Markup, which analyzed over 800,000 broadband offerings from AT&T, Verizon, Earthlink, and CenturyLink in 38 cities across America and found that the four ISPs regularly offer broadband speeds at 200 Mbps or faster at the same price as broadband with speeds under 25 Mbps.

The Markup analysis shows that the neighborhoods with the worse speed options have lower median household incomes in 90% of the cities studied. Where The Markup could gather the data, it also looks like the big ISPs offered the worst deals to the least-white neighborhoods.

USTelecom responded to the issue by stating that the high cost of maintaining old copper networks justifies high prices for DSL. The article cites Marie Johnson of USTelecom writing that “Fiber can be hundreds of times faster than legacy broadband—but that doesn’t mean that legacy networks cost hundreds of times less. Operating and maintaining legacy technologies can be more expensive, especially as legacy network components are discontinued by equipment manufacturers”.

That’s exactly the response I would expect to defend monopoly pricing. Nobody expects the price of DSL to be hundreds of times less than fiber – but DSL should cost less. The big telcos have argued for decades that it costs too much to maintain copper networks. But they never finish that statement by telling us how much money they have collected over the years from a customer like Shirley Neville – possibly hundreds of times more than the cost of her share of the network.

A Last Gasp at Regulating Copper

The Minnesota Public Utilities Commission recently ordered a series of public hearings to investigate the quality of service on the CenturyLink copper networks. The hearings were prompted by a complaint filed by the Communications Workers of America (CWA). The complaint listed the failures of CenturyLink to meet state service standards due to the deterioration of the copper network. CWA also noted that CenturyLink is planning to eliminate half of the remaining technicians who work on copper.

Similar inquiries by other state regulators have been instituted in the last few years against CenturyLink and Frontier. I feel sorry for any customers left on deteriorating copper networks, but proceedings like this one feel like the last gasp of regulators trying to score points by beating up on the telcos that still operate copper networks.

Not that CenturyLink doesn’t deserve a lot of criticism. Its copper networks are in dreadful condition and are in the process of dying. The poor condition of the networks is due in large part to the decades-long lack of maintenance and repairs. We know this is the case because copper networks of a similar age are still operating much better in Europe. The big telcos like CenturyLink, Frontier, Verizon, and AT&T stopped caring about copper networks back in the 1990s, and the networks have been in a steady decline since then.

But U.S. copper networks are truly near the end of life. It’s impossible to neglect maintenance for over twenty years and somehow suddenly make the networks perform better. It’s hard to fathom the intentions of having regional hearings on the topic for any purpose other than letting people vent their frustration with CenturyLink. It’s hard to imagine anything changing as a result of these hearings that will improve service. There might be new fines levied on CenturyLink, but that’s less costly for the company than trying to make the copper work.

Some big telcos are working to convert copper networks to fiber. Frontier and Windstream are building a lot of fiber – and I assume they are overlashing the new fiber wires on the old copper. AT&T and Verizon are selectively expanding fiber in neighborhoods where the cost of construction meets some internally set cost test – but these two companies are quietly moving most copper customers onto cellular connections.

CenturyLink has been up and down on the decision to overbuild residential fiber. It currently looks like the company is only building ‘strategic’ fiber, which I interpret to mean business districts and large apartment complexes. It seems unlikely that CenturyLink will overbuild much more of its residential copper in Minnesota or elsewhere with fiber.

I would bet that if CenturyLink could wave a magic wand and be rid of copper, it would do so. It’s harder each year to maintain copper networks, and a move to eliminate half of the remaining copper technicians shows that the company is finally throwing in the towel. But giving up on copper still means walking away from a lot of revenue.

There are still plenty of customers who want to keep using the copper networks. Say what you want about the inadequacies of DSL, but in most urban markets where my firm does surveys, we still find 10% to 20% of households are still using DSL. These are households for whom the price is more important than broadband speed.

CenturyLink and the other big telcos have recaptured the cost of the copper networks many times over and decided many years ago not to reinvest profits back into new and upgraded networks. We’re now reduced to watching the last death throes of copper networks, and it’s not pretty.

Only Twenty Years

I’ve written several blogs that make the argument that we should only award broadband grants based on future-looking broadband demand. I think it is bad policy to provide federal grant funding for any technology that delivers speeds that are already slower than the speeds already available to most broadband customers in the country.

The current BEAD grants currently use a definition of 100/20 Mbps to define who households that aren’t considered to have broadband today. But inexplicably, the BEAD grants then allow grant winners to build technologies that deliver that same 100/20 Mbps speeds. The policymakers who designed the grants would allow federal funding to go to a new network that, by definition, sits at the nexus between served and unserved today. That is a bad policy for so many reasons that I don’t even know where to begin lambasting it.

One way to demonstrate the shortsightedness of that decision is a history lesson. Almost everybody in the industry tosses out a statistic that a fiber network built today should be good for at least thirty years. I think that numbers is incredibly low and that modern fiber ought to easily last for twice that time. But for the sake of argument, let’s accept a thirty-year life of fiber.

Just over twenty years ago, I lived inside the D.C. Beltway, and I was able to buy 1 Mbps DSL from Verizon or from a Comcast cable modem. I remember a lot of discussion at the time that there wouldn’t be a need for upgrades in broadband speeds for a while. The 1 Mbps speed from the telco and cable company was an 18-times increase in speed over dial-up, and that seemed to provide a future-proof cushion against homes needing more broadband. That conclusion was quickly shattered when AOL and other online content providers took advantage of the faster broadband speeds to flood the Internet with picture files that used all of the speed. It took only a few years for 1 Mbps per second to feel slow.

By 2004, I changed to a 6 Mbps download offering from Comcast – they never mentioned the upload speed. This was a great upgrade over the 1 Mbps DSL. Verizon made a huge leap forward in 2004 and introduced Verizon FiOS on fiber. That product didn’t make it to my neighborhood until 2006, at which time I bought a 30 Mbps symmetrical connection on fiber. In 2006 I was buying broadband that was thirty times faster than my DSL from 2000. Over time, the two ISPs got into a speed battle. Comcast had numerous upgrades that increased speeds to 12 Mbps, then 30 Mbps, 60 Mbps, 100 Mbps, 200 Mbps, and most recently 1.2 Gbps. Verizon always stayed a little ahead of cable download speeds and continued to offer much faster upload speeds.

The explosion of broadband demand after the introduction of new technology should be a lesson for us. An 18-time speed increase from dial-up to DSL seemed like a huge technology leap, but public demand for faster broadband quickly swamped that technology upgrade, and 1 Mbps DSL felt obsolete almost as soon as it was deployed. It seems that every time there has been a technology upgrade that the public found a way to use the greater capacity.

In 2010, Google rocked the Internet world by announcing gigabit speeds. That was a 33-time increase over the 30 Mbps download speeds offered at the time by the cable companies. The cable companies and telcos said at the time that nobody needed speeds that fast and that it was a marketing gimmick (but they all went furiously to work to match the faster fiber speeds).

I know homes and businesses today that are using most of the gigabit capacity. That is still a relatively small percentage of homes, but the number is growing. Over twenty years, the broadband use by the average home has skyrocketed, and the average U.S. home now uses almost 600 gigabytes of broadband per month – a number that would have been unthinkable in the early 2000s.

I look at this history, and I marvel that anybody would think that it’s wise to use federal funds to build a 100/20 Mbps network today. Already today, something like 80% of homes in the country can buy a gigabit broadband product. The latest OpenVault report says that over a quarter of homes are already subscribing to gigabit speeds. Why would we contemplate using federal grants to build a network with a tenth of the download capacity that is already available to most American homes today?

The answer is obvious. Choosing the technologies that are eligible for grant funding is a political decision, not a technical or economic one. There are vocal constituencies that want some of the federal grant money, and they have obviously convinced the folks who wrote the grant rules that they should have that chance. The biggest constituency lobbying for 100/20 Mbps was the cable companies, which feared that grants could be used to compete against their slow upload speeds. But just as cable companies responded to Verizon FiOS and Google Fiber, the cable companies are now planning for a huge leap upward in upload speeds. WISPs and Starlink also lobbied for the 100/20 Mbps grant threshold, although most WISPs seeking grant funding are now also claiming much faster speed capabilities.

If we learn anything from looking back twenty years, it’s that broadband demand will continue to grow, and that homes in twenty years will use an immensely greater amount of broadband than today. I can only groan and moan that the federal rules allow grants to be awarded to technologies that can deliver only 100/20 Mbps. But I hope that state Broadband Grant offices will ignore that measly, obsolete, politically-absurd option and only award grant funding to networks that might still be serving folks in twenty years.