AT&T teases a $5 Internet service to help seal the DirecTV deal - The Washington Post

AT&T teases a $5 Internet service to help seal the DirecTV deal - The Washington Post: AT&T will offer cheap Internet to food-stamp recipients if the Federal Communications Commission approves the telecom company's big acquisition of DirecTV.

In a regulatory filing, AT&T says it's prepared to make two plans available to low-income consumers. The first would provide speeds of up to 5 megabits per second (or roughly half as fast as the current national average) for $10 a month. After the first 12 months, that price would rise to $20 a month.

The other plan would be offered in places where AT&T lacks the infrastructure to provide faster speeds. In those areas, poorer Americans would be able to buy a 1.5 Mbps plan starting at $5 a month for the first 12 months. At that point, the price would increase to $10 a month.

It's hard to see how this will influence the FCC's review or what relevance it has given the FCC earlier this year set a minimum standard for Internet connectivity at 25/3Mbps. The proposal also is based on the inappropriate concept of Internet service as a consumptive utility like electric power, natural gas or water and that low income households thus should be offered a low cost consumption option to ensure they have service.

Accelerating implosion of pay TV will hasten AT&T exit from residential wireline

The accelerating implosion of subscription pay TV offerings will hasten AT&T’s exit from the residential wireline market segment and could also result in the telco’s withdrawal of its planned acquisition of satellite provider DirecTV announced in 2014.

AT&T offers video packages with its U-Verse-branded triple play Internet-video-voice product. With the DirecTV deal pending regulatory approval, AT&T hopes to expand its audience of potential viewers and consequently, boost its purchasing power with TV programming providers as negotiations with the programming providers have hardened in recent years.

Viewers have historically regarded the TV programming packages as a poor value for the money since they typically watch only a handful of a few hundred channels. Now they can stream only the video programming they desire via their Internet connections, disrupting the triple play revenue model.

In addition, AT&T’s U-Verse product is delivered to residences over its aging legacy last mile copper cable plant that offers far less bandwidth headroom -- much of it consumed by video -- than hybrid fiber-coax (HFC) cable plants. To keep technologically abreast of cable, AT&T would have to replace its copper plant with fiber. But it is unable to easily do so, constrained by shareholder expectations for earnings and high dividends that militate against substantial capital expenditures.

That leaves AT&T with only one viable option – to continue to sell off chucks of its residential market as it did in December 2014, spinning off its Connecticut residential landline unit, including Internet and TV services to Frontier Communications for $2 billion.

AT&T ramps North Carolina FTTP workforce to battle Google Fiber's impending entry - FierceTelecom

AT&T ramps North Carolina FTTP workforce to battle Google Fiber's impending entry - FierceTelecom: Just days after Google Fiber (NASDAQ: GOOG) announced it would bring its fiber-to-the-premises (FTTP) service to a number of major North Carolina towns and cities, including Charlotte and the Triangle area, AT&T (NYSE: T) is ramping up its workforce to support its own fiber network push in the state.

After launching its 1 Gbps FTTP GigaPower service in December in Carrboro, Cary, Chapel Hill, Raleigh and Winston-Salem, the service provider said it is committing capital dollars to hire nearly 100 new technician positions to support the service rollout. The service provider also is planning to bring the 1 Gbps service to Durham, Charlotte and Greensboro.

As Google Fiber and the legacy incumbents try to do each other in with duplicative and wasteful parallel fiber to the premise (FTTP) telecommunications infrastructure (like having a premise served with two power lines, two gas lines, and two water lines) in a few select metro areas, the bulk of the United States continues to lack a comprehensive plan to build FTTP. Does it make sense for some Americans to have multiple fiber connections while most others have none?

Back to the future: How Title II litigation could spark antitrust actions against AT&T and Verizon

In 1984, AT&T was split into seven regional companies under a consent decree to settle a 1974 antitrust lawsuit brought by the U.S. federal government, United States v. AT&T, aimed at busting Ma Bell’s monopoly over local and long distance telephone service. Three decades later, AT&T has through a series of mergers and acquisitions reassembled itself into a telecommunications behemoth, rivaled in size only by Verizon, which was formed out of NYNEX and Bell Atlantic, two of the AT&T regional operating companies.

Now as the U.S. Federal Communications Commission considers classifying Internet-based telecommunications as a common carrier utility service under Title II of the Communications Act, the stage is being set for another potential massive antitrust court case.

Here’s how it might play out. Both AT&T and Verizon vow they will litigate to block the FCC if it opts to put in place common carrier regulation as recently urged by President Barack Obama. If that happens, it could spark complaints to Obama’s Justice Department from core content providers like Netflix and transport layer providers like Level 3 Communications that the monopolies that AT&T and Verizon enjoy over residential Internet service in their respective service territories violate the Sherman Antitrust Act and restrain interstate commerce. The Justice Department could then opt to initiate antitrust lawsuits as logical counter actions to the telcos' lawsuits against the FCC.

In the antitrust actions, the complainants could conceivably point to disputes with the two big telcos over interconnection arrangements and allege the telcos are engaging in anti-competitive behavior by deliberately degrading services delivered to their end user consumers while wholly denying other consumers services by redlining landline-delivered Internet services in selected neighborhoods and streets. They could demand the courts order the FCC to require the telcos to open their last mile networks to competitors pursuant to the 1996 amendment of the Communications Act. Or sell them off to smaller regional providers or local governments or telecom cooperatives.

Incumbent misapprehensions and myths: Time to get real

Fiber fight: Broadening broadband Gig City touted as model in broadband debate | Mobile TFP: In its filing with the FCC, AT&T notes that many municipal broadband networks never got off the drawing board, putting taxpayers are risk, while others have pre-empted private investment.

"Although many government owned networks (GONs) have failed, or at least failed to live up to expectations, GONs can nonetheless discourage private sector investment because of understandable concerns by private sector entities of a non-level playing field," AT&T attorney Christopher Meimann said.

A natural monopoly like telecommunications infrastructure cannot and will not ever be a "level playing field." Whoever is on the field holds a monopoly advantage. Incumbents have used that advantage to pick winners and losers by building Internet telecommunications infrastructure to serve some neighborhoods but not others.

"Any policy that risks diminishing private sector investment would be short-sighted and unwise."

AT&T wants incumbent, private telecom providers to have a "right of first refusal" to deploy high-speed broadband before a government utility starts such a competitive service.

It's entirely appropriate for government to construct telecommunications infrastructure given market forces alone cannot ensure all homes and businesses have access to modern fiber optic telecommunications service. Private sector investment has already been substantially diminished insofar as millions of U.S. premises remain unserved by landline-delivered Internet connections even under current U.S. "light touch" regulatory policy. 

Where service is not available, phone companies and cable providers suggest broadband can be subsidized through the FCC's Connect America Fund, which is targeted at the 18 million Americans living in rural areas with no access to robust broadband infrastructure.

In theory yes. But legacy incumbent telephone and cable companies have largely shunned the Connect America Fund subsidies because they are incompatible with their market segmentation strategies that concentrate their capital investment in high density, metro areas.

CWA's support of AT&T/DIRECTV merger based on fallacious logic

CWA says AT&T-DIRECTV merger will advance broadband buildout, help consumers, Workers | Speed Matters - Internet Speed Test: The AT&T/DIRECTV merger will improve the economics for AT&T’s investment in high-speed broadband, the critical infrastructure for the 21st century, CWA said. Video is the major driver of broadband expansion, producing the revenue stream to support investment in high-speed networks. As a stronger video competitor, a merged AT&T/DIRECTV will have the economic incentives to increase investment in the high-capacity networks that are so essential to drive economic growth, jobs, and the social benefits enabled by high-speed digital technology.

So asserts the Communications Workers of America in comments filed with the U.S. Federal Communications Commission in support of AT&T's acquisition of DIRECTV.

The problem is the logic does not hold up. AT&T's deriving additional revenues from DIRECTV video services does not necessarily mean those additional funds will be invested in landline Internet infrastructure.

And why should that be the case, AT&T will likely ask itself once the deal goes through, when satellite does the job of delivering video content to residential premises? Instead, any video revenue bump from the deal will likely be plowed into earnings and dividends, not CAPex.

LTE Reinvigorates the Broadband Wireless Access Marketplace, According to ABI Research - Yahoo Finance

LTE Reinvigorates the Broadband Wireless Access Marketplace, According to ABI Research - Yahoo Finance: LTE has turbocharged the mobile Internet experience for end-users, which has reflected in rapid adoption of LTE-capable smartphones along with other mobile devices, but it has also reinvigorated the broadband wireless marketplace. According to ABI Research, 1.26 billion households do not have DSL, cable, or fiber-optic broadband. Fixed and mobile telcos are looking to LTE to make the connection.

This is more an aspirational than realistic scenario. Radio spectrum lacks the bandwidth necessary to serve premise demand where there are typically multiple devices and heavy use of video streaming. In addition, the business and pricing models of the mobile space players like Verizon and AT&T are not designed to serve premises with "bandwidth by the bucket" pricing tiers and consumption caps.

AT&T falls short on California landline infrastructure upgrades

AT&T California has not met requirements for the build out of infrastructure to make Internet-based video services available to at least 50 percent of its California telephone service area as of year-end 2012. 

That’s according to the California Public Utilities Commission’s Sixth Annual DIVCA Report for the year ending December 31, 2012 (issued July 31, 2014). DIVCA – the Digital Infrastructure and Video Competition Act of 2006 – specifies a five-year build out period of 2008 through 2012. (The relevant reference is at page 9 of the report.)

AT&T California qualified for relief from the five-year infrastructure build out requirement under a DIVCA exception in cases where a provider has been unable to sell Internet video services to at least 30 percent of households in its telephone service area.

This in turn has resulted in a significant customer quality issue. Many households in AT&T California’s telephone service territory are unable to order landline-delivered Internet services since AT&T video services (branded as U-Verse and which includes bundled Internet access and voice service) are delivered over decades-old copper cable plant. Instead, these customers are offered only substandard, obsolete dialup Internet service that cannot support the delivery of video services.

AT&T's dubious "wireless local loop" strategy to boost Internet reach if DirecTV deal blessed by regulators

AT&T’s hard sell on DirecTV: A new type of broadband network - Yahoo Finance: AT&T, however, still owns those 2.3 GHz airwaves in the Wireless Communications Services (WCS) band. In fact, it recently consolidated its WCS holdings across much of the country. And through a compromise with the satellite radio industry, it managed to clear the interference issues that previously made the band useless for wireless data services.

AT&T has said it will use WCS for LTE, but it’s beginning to look like it won’t build the same kind of LTE network it uses to connect phones, tablets and cars. Broadband spectrum analyst Tim Farrar believes AT&T plans to use those 2.3 GHz frequencies for its planned air-to-ground in-flight network. It may choose to use WCS for its fixed wireless network as well. Instead of transmitting to a plane in the sky, the network could link to an antenna. And that antenna could be conveniently mounted on a DirecTV satellite dish – all part of a bundled broadband and TV package.

This is more of the same 23rd century Star Trek quantum subspace channel magical thinking to rationalize an ABF (anything but fiber) infrastructure deployment strategy. Frequencies in that band may work in relatively flat terrain like AT&T's home state of Texas. But they can't penetrate more rugged and forested portions of AT&T's service territory where many premises are still only offered antiquated 1990s dialup Internet. A small New Hampshire wireless Internet service provider explains the problem in this item:

“The challenge with our technology is the land, the hills and valleys,” says Foucher. “The amount of trees is the other major factor. We might be able to connect one person, but their next-door neighbor might be behind a stand of trees that absorb the signals"

And consider this excerpt from a Wall Street Journal item on AT&T's Federal Communications Commission filing on the proposed merger:

If the deal goes ahead, however, it’s unclear how much of an improvement the fixed wireless technology will be. In its application with Federal Communications Commission for the DirecTV deal, AT&T said the transaction makes investing in the technology more feasible, but noted that the service is “relatively untested technology” and “its success in the marketplace is thus unproven.”

Clashing perspectives from core and edge network players show urgent need for Internet policy review

FCC looking into slow Internet download speeds - Yahoo News: "Netflix has been paying (for traffic delivery) since inception. It wants free, I get it, but someone has to pay for it," Jim Cicconi, AT&T Inc senior executive vice president for external and legislative affairs, said earlier this week.

Netflix streaming accounts for nearly one-third of North American web traffic during peak times, according to research by Sandvine Corp.

Netflix vice president for global public policy, Christopher Libertelli, this week said the company already invests money in delivering traffic to the Internet provider.

"We pay a lot of money to drop content at the doorstep of an ISP. All we're really asking is for the ISPs to swing the door open," Libertelli said at the Aspen Institute think tank. "This has become a new choke point."

These statements make clear as day that it's high time for a core to edge review of Internet policy. 

Netflix believes it is adding value to the network edge operators like AT&T by providing core content for their customers. AT&T and other edge providers however hold the exact opposite view -- that Netflix is instead imposing a cost burden to transport that core content to the homes and businesses they serve. Meanwhile, edge providers prevent core provider content from fully reaching all potential consumers with ultra risk averse policies that leave much of the last mile network infrastructure in their service territories only partially constructed.

AT&T already selling DirecTV

AT&T isn't waiting for regulatory approval of its recently announced acquisition of DirecTV to start bulking up the DirecTV subscriber base in order to gain greater bargaining power with television programming wholesalers -- the business rationale for the deal.

AT&T has launched a direct mail campaign pitching DirecTV as "Digital TV from AT&T," targeted at redlined portions of its service territory where it has no landline Internet infrastructure. Reviewing the fine print on the reverse of the direct mail piece reveals the "Digital TV from AT&T" is in fact DirecTV. The direct mail promo also pitches residential POTS (plain old telephone service).

Consumers have been able to get POTS and satellite TV for decades. Without an offer of a new and/or compelling value, the direct mail piece isn't likely to be appealing or gain many new DirecTV subscribers for AT&T. Instead, it's likely to end up in the waste can or junk mail recycling.

LA Times offers flawed analysis of AT&T interest in DirecTV

Pay-TV field could shrink again with AT&T interest in DirecTV - latimes.com: For AT&T, the value and implications of a DirecTV acquisition are enormous.
First, DirecTV's signal and quality are considered far superior to AT&T's U-Verse television service. This could allow AT&T to rely on DirecTV for broadcast, and free up its fiber lines to increase broadband speeds to U-Verse customers.

This last sentence in this LA Times analysis of AT&T's interest in acquiring DirecTV is rubbish. Fiber lines offer enormous carrying capacity; AT&T does not need to offload video to increase it. The likely reason AT&T is eying satellite for TV distribution is because most of the telco's connections to customer premises are twisted pair copper that can't offer a comparable high definition experience that cable companies can deliver. That gap will only grow wider as ultra high definition TV adoption grows and gobbles up more bandwidth, forcing AT&T to compress it even more to squeeze video content over twisted pair and potentially degrading its quality even further. AT&T is reaching the point of technological obsolescence with its existing copper cable plant and is unable to quickly migrate it to fiber to the premise.

Another major reason is programming costs. AT&T already spends nearly $4 billion a year for programming on U-Verse, and it has just 6 million subscribers. DirecTV pays substantially less per-subscriber for channels than does AT&T.

Unlike the first rationale, this one actually makes sense. AT&T is being squeezed on the consumer side by outmoded delivery infrastructure that requires costly upgrades and on the programming side by TV program cartels that have substantial market power vis Internet service providers.

IP Transition Must Advance, CES Panel Says | USTelecom

IP Transition Must Advance, CES Panel Says | USTelecom: Meanwhile, AT&T has been eager to begin moving forward with the IP transition and last year proposed that the Federal Communications Commission begin trials to test the effects of a full network transition, said Bob Quinn, AT&T senior vice president-federal regulatory. The role for FCC is to oversee the "turning off" of the old network, Quinn said. "There will be an enormous amount of policy concerns involved in doing this, and we need to figure out what this new world will look like."

"We've reached the point where the IP network is superior to the old switched network," said Internet analyst and author Larry Downes. "The policy issue is what do we do about people who have not yet made the switch?"

There's also the issue of telephone companies that have not yet changed out their old POTS copper cable plants to fiber optic capable of supporting data and video as well as voice services using voice over Internet protocol (VOIP). This isn't only about consumers who haven't made the transition off wireline POTS for premises service. For many, they don't really have a choice for wireline-delivered voice service.

AT&T and other telcos are hoping consumers will be satisfied with using mobile wireless service for both voice and Internet access since they don't plan to invest in fiber to the premise (FTTP) infrastructure to replace their obsolete copper networks that cannot serve many homes and businesses due to technological limitations. Communities can offer their residents a far better option by building municipal or consumer telecommunications cooperative owned and operated FTTP networks instead of leaving their residents relegated to supbar mobile wireless services that can't provide adequate bandwidth and value.

UK Internet infrastructure subsidization policy reveals split between citizens and incumbent telco BT

BBC News - Rural broadband: How to reach the broadband notspots

This BBC article goes into good detail on the Internet infrastructure deployment difficulties in the UK. As in America with AT&T, the incumbent telco, BT, prefers to deploy slowly over a period of many years, employing FTTN (Fiber to the Node) network architecture (or FTTC as it's called in Britain -- Fiber To The Cabinet). AT&T's analogue is its U-Verse product, which feeds neighborhood nodes with fiber and uses existing copper twisted pair cable designed decades ago for voice service to bridge the final link to customer premises. However, unlike BT, AT&T limits U-Verse to urban and suburban areas.

British households and small businesses left of the Internet are running short of patience with the slow BT rollout after having waiting about a decade to get some form of wireline Internet connections. Some communities see the passage of time and burgeoning bandwidth demand as having technologically obsoleted FTTC and want Fiber to the Home (FTTH) infrastructure.

Government subsidies are available.  As the article notes, a big question is whether they continue to go toward older but less costly FTTC infrastructure favored by BT or FTTH preferred by the locals who don't want to spend more years waiting for modern Internet connectivity and want a greater degree of control over infrastructure deployment in their communities.

How BDUK bungled Britain’s next-gen broadband rollout | PC Pro blog

Interesting dispatch from the UK that portrays the dominant incumbent telecoms provider, BT, as favoring American AT&T U-Verse-style FTTC (Fiber To the Cabinet) over Fiber to the Premise (FTTP), apparently to avoid the higher cost of the latter network architecture.

The UK Government entity charged with overseeing that nation's Internet infrastructure program also allegedly ruled out fixed terrestrial wireless as a viable premises service option. That's consistent with the first point since fiber would have to be deployed to bring it very close to premises in order to achieve high wireless throughput.

Fiber to the Home Council : Blogs : Telcos Saving Serious Money by Upgrading to FTTH, Survey Finds

Fiber to the Home Council : Blogs : Telcos Saving Serious Money by Upgrading to FTTH, Survey Finds: (WASHINGTON) – Small and medium-sized telephone companies that have upgraded their networks to all-fiber are reporting operational cost savings averaging 20 percent annually, according to a study commissioned by the Fiber to the Home Council Americas, a non-profit group of nearly 300 companies and organizations dedicated to expanding the availability of ultra high speed, all-fiber broadband.

The survey of more than 350 telecommunications providers across North America, conducted by the market analyst firm RVA LLC, also pointed to a steady drumbeat of FTTH deployment activity, with the number of homes that can access FTTH networks increasing by 17.6 percent over a year ago to 22.7 million.

While consumers served by these smaller telcos will benefit (as will the telcos with lower OPex costs), there are many more served by large telcos like AT&T and Verizon who won't.  Neither company is upgrading its copper plant to fiber to the premise.

AT&T CEO: We'll piggyback on Google's Fiber rollout plans | Mobile - CNET News

AT&T CEO: We'll piggyback on Google's Fiber rollout plans | Mobile - CNET News

More mutually assured diminished returns threatened by AT&T.  Ma Bell is basically saying she will overbuild Google to obtain a slice of picked over cherry pie, leaving each competitor serving 15 percent of the premises passed at best.

This should put to rest the hopeful, magical thinking of some who claim Google is somehow going to goad legacy telcos to undertake a broad-based upgrade of their obsolete last mile copper plant to fiber.  Not in this lifetime and not with grandma's shareholder dividend.

Look Out Google Fiber, $35-A-Month Gigabit Internet Comes to Vermont - Digits - WSJ

Look Out Google Fiber, $35-A-Month Gigabit Internet Comes to Vermont - Digits - WSJ: VTel’s Chief Executive Michel Guite says he’s made it a personal mission to upgrade the company’s legacy phone network, which dates back to 1890, with fiber for the broadband age. The company was able to afford the upgrades largely by winning federal stimulus awards set aside for broadband. Using $94 million in stimulus money, VTel has invested in stringing 1,200 miles of fiber across a number of rural Vermont counties over the past year. Mr. Guite says the gigabit service should be available across VTel’s footprint in coming months.

VTel joins an increasing number of rural telephone companies who, having lost DSL share to cable Internet over the years, are reinvesting in fiber-to-the-home networks.

As Google targets large metro areas of the United States for fiber rollouts, small incumbent local exchange carriers (ILECs) like this one are upgrading their outmoded copper cable infrastructure with fiber to the premise (FTTP). Nevertheless, significant gaps will remain, particularly in areas of the U.S. served by top tier telcos like AT&T and Verizon that have essentially put their copper networks into runoff mode with no plans to upgrade them with fiber plant as they concentrate their CAPex on mobile wireless services.  Due to their smaller populations, these areas are also unlikely to attract Google fiber and will have to build their own community-based FTTP networks.

Deterrence: AT&T launches pyrrhic war of mutually assured diminished returns against Google

On the heels of Google's announcement it will build fiber to the premise (FTTP) Internet infrastructure serving the Austin, Texas area, AT&T announced it will build its own 1 gigabit FTTP infrastructure to match Google's.

The announcement amounts to a declaration of pyrrhic war by Ma Bell, designed to impose diminished returns on Google since the economics of competing fiber infrastructures could drive down take rates and ARPU for each player. AT&T is sending a message of deterrence to anyone that dares to invade its sovereign service territory with FTTP infrastructure faces mutually assured prolonged ROI and potential losses.

Meanwhile, as Ma Bell and the Googlers engage in a war of attrition in a select few metro battlefields, much of the United States can and should pursue a more peaceful and sane alternative in municipal and cooperatively constructed and owned open access FTTP infrastructure. 

Telecom coops offer much needed alternative to build out U.S. Internet infrastructure

This Wall Street Journal article explores the Faustian bargain AT&T, America's largest wireline telecom provider, struck with the U.S. Federal Communications Commission to begin winding down its obsolete copper Publicly Switched Telephone Network (PSTN):

Mr. Stephenson himself has made it clear that AT&T would rather just sell off its regulated phone territories the way rival Verizon has done. But those sales haven't worked out swimmingly for the buyers, so now buyers can't be found, and neither would regulators likely bless further sales.  AT&T's plan, then, amounts to a compromise: AT&T will spend several billion dollars making undesirable investments if Washington will relieve it of the unsustainable regulatory burdens associated with the old copper voice network.

This is not an optimal solution for either AT&T's shareholders or for the many Americans who despite AT&T's expansion plans would remain disconnected from the Internet and the Voice Over Internet Protocol (VOIP) service it could provide to replace voice telephone service delivered over the nation's aging copper Publicly Switched Telephone Network (PSTN).  An alternative is clearly needed.

The good news is one exists as does its funding mechanism: cooperatives.  In the 1930s, the U.S. Department of Agriculture's Rural Utilities Service (RUS) made funding available to coops to build the needed infrastructure to deliver electric power and phone service.  The RUS remains in place today.  Given the problems investor-owned telcos like AT&T face deploying needed Internet infrastructure as shown in the WSJ story, the RUS should be given a higher profile and adequately funded to facilitate the much needed telecom coop alternative for the construction and operation of Internet infrastructure.