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.

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.

Cheaper equipment to give fast copper broadband a boost | PCWorld

Cheaper equipment to give fast copper broadband a boost | PCWorld: G.fast promises up to 1G bps over existing copper telephone wires, but only over distances up to about 100 meters. The technology is now being designed to work at distances up to 250 meters, and it looks like ITU will have a full set of standards by early next year, according to Johnson.

Here we go again with the nutty idea that copper isn't obsolete for IP-based telecommunications. No matter how much throughput one can achieve with this decades-old POTS (Plain Old Telephone Service) infrastructure, as this story shows it will always be limited by distance.  The faster the speed, the shorter the distance -- not a good trend as customers expect faster connections.  With such short distances of 1 gigabit connections over copper, it has to be fed by fiber connections so close to customer premises that it makes more sense simply to run fiber all the way to the premise. 

Copper culprits hasten obsolescence of twisted pair

The obsolescence of twisted pair copper cable is being hastened by thieves who want to quickly resign it to the scrap heap in order to recycle the valuable metal and put money in their pockets.  By comparison, the tiny glass strands of the modern standard for telecommunications -- fiber optic cable -- offer no such market incentive to copper culprits.

Check out this Fresno Bee story that reports that the crooks have gotten so brazen they are toppling utility poles in order to get at AT&T's cables.

Another downside to legacy copper plant: cable thieves

One of the best known weaknesses of legacy copper telecommunications plant is its limited carrying capacity compared to fiber optic cable. It also has another downside: it's vulnerable to theft by those hoping to sell the metal to scrap dealers as this BBC story illustrates.

Another sign of the coming end of AT&T's U-Verse

In late September, this blog predicted AT&T will abandon its Project Lightspeed/U-Verse deployment sometime in the first half of 2010 as part of a general retreat from the wireline-based residential/home office market segment.

Another sign of the coming end of the U-Verse universe emerged this week when AT&T pushed back -- again -- the rollout of VDSL copper pair bonding technology to extend the range and throughput of its bundled IP-based U-Verse product. The new target date is sometime next year, the second delay after a planned late 2007 deployment was pushed back a year.

The obstacle is the same one that has plagued AT&T 's ADSL service: not enough good, clean copper in the telco's last mile cable plant, much of it put in place decades ago to support POTS (Plain Old Telephone Service) and never expected to support advanced digital services like ADSL let alone U-Verse. Telephony Online explains:

Perhaps a more pressing limitation, however, is the simple requirement for extra pairs of existing copper, which are not in plentiful supply in AT&T’s network outside the territory of the former BellSouth, where extra pairs were deployed extensively in the 1990s to accomodate dialup and fax services.

AT&T sees WiMAX as solution for less densely populated areas of U.S.

As AT&T's copper plant has been neglected outside of metro area cores, there has been much speculation about the big telco's future plans for it. Particularly since much of it is too deteriorated and unreliable to support weak Digital Subscriber Line (DSL) signals that degrade quickly over distance. In addition, AT&T has not been upgrading its copper plant to support its fiber/copper hybrid Project Lightspeed/U-Verse IPTV/voice/data bundled service outside of the limited metro areas where it's deploying U-Verse.

AT&T's new technology chief John Donovan is making AT&T's view of the future its aged copper cable plant in these regions more clear in a published interview with USA Today: It's a costly, obsolete albatross -- a legacy of the analog era of plain old telephone service (POTS).

Now that AT&T defines itself more as a wireless than wireline carrier, wireless is naturally viewed as the logical copper cable replacement strategy. At the top of the list, USA Today quotes Donovan as saying, is WiMAX, which AT&T apparently sees as a longer range and more robust solution for both fixed and mobile voice and data services outside of densely populated areas. In the latter, the telco will likely deploy its planned 4G Long Term Evolution (LTE) cellular service that is expected to provide far faster Internet connections than its current 3G system that itself isn't universally deployed in AT&T's 22-state territory.

Donovan told the newspaper WiMAX appears particularly well suited to rural areas of the U.S. where it's becoming prohibitively expensive to maintain copper.

Reports last year suggested Ma Bell planned to ramp up her WiMAX deployments starting earlier this year after initial rollouts in the Fairbanks, Alaska area and parts of the former Bellsouth territory AT&T acquired at the end of 2006.

Telecompetitor speculates that AT&T's interest in WiMAX as a replacement for copper cable represents the start of a "coordinated rural market divestiture strategy."

AT&T: Aerial copper cable theft at "almost epidemic levels"

A little more than a year ago, Alaska Sen. Ted Stevens told the Senate Commerce Committee that America's legacy copper telecommunications cable designed for an era of analog voice communications poses a major obstacle to the wider deployment of fiber optic-based digital broadband infrastructure that the nation needs now and in the future.

Legacy copper cable is also creating a choke point for emerging wireless broadband providers who can't get sufficient backhaul over 1970s era copper T-1 lines that provide a narrow pipe of only 1.5Mbs.

While certainly not by design, the recent rapid run up of the price of scrap copper could help expedite the needed transition from copper to fiber and speed the deployment of fiber. The reason: high copper prices have spawned a wave of theft of aerial copper telecommunications cable that an AT&T official told American Public Media's Marketplace program today is "almost at epidemic levels" and getting worse.

Semiconductor firms hope for better broadband over copper

One might think with the price of copper on the rise, telcos would be better off selling their aged copper cables for scrap metal and using the proceeds to defray the cost of installing "future proof" fiber optic cable allowing them to offer more advanced services over the so-called "last mile" to the customer.

On the other hand, they may be hoping that R&D efforts to increase the ability of copper cable -- which was designed to handle analog voice signals and not far more delicate, digital broadband traffic -- to carry DSL and IPTV signals farther and faster with fewer errors, permitting copper lines to stave off obsolescence.

Xtendwave announced today it received patents for technology that improves broadband and HDTV service by increasing the speed, capacity and distance of signals traveling over existing copper phone lines. The company claims the technology enables broadband providers "to far surpass the limits of their existing DSL services without re-engineering, replacing or upgrading their existing network infrastructure."

Separately, Portland, Oregon-based Rim Semiconductor Company announced this week that it has developed an Internet Protocol Subscriber Line™ specification that it claims provides fiber-like speeds over the existing copper telephone lines. According to the company, its proprietary Cupria™ processor is able to crunch data traffic at 40 megabits per second (Mpbs) over 5,500 feet (1.67km) on 26AWG (0.40mm) telephone wire. Existing technologies are able to achieve just 15 mbps at this distance on this wire type, the company claims.

Aging copper cable plant drives — and limits – DSL

AT&T is facing a broadband conundrum brought on by the company’s historical reluctance to invest in upgrading its aging copper cable plant.

In El Dorado County, California, for example where your blogger resides, there are few good pair remaining in large stretches of the cable that in some cases is reportedly three to four decades old. Demand for additional lines from existing and newly arrived residents and businesses taxes the cable’s capacity, resulting in two subscribers ending up on the same line as well as noise and static when summer heat expands the cable and when winter rains penetrate it.

In an ironic twist, Ma Bell’s cable capacity crunch is driving the deployment of Digital Subscriber Line (DSL) service to some neighborhoods, particularly where fiber optic trunk lines are nearby.

Last year AT&T deployed DSL to the remote El Dorado County community of Grizzly Flat, about 25 miles east of Placerville. What prompted this unlikely move was the lack of good pair left in copper cable in the community. The capacity shortage was being exacerbated by people ordering second lines in order to not tie up their phone line with dial up modems — their only option to access the Internet — and for fax machines. Since AT&T already had a fiber optic cable running to Grizzly Flat from Placerville to serve a school there, the company decided to reduce the demand for additional lines by placing a remote terminal in the community fed by the fiber and capable of supporting DSL. DSL runs over a subscriber’s existing phone line and doesn’t require a second line.

That solved one problem but led to another. DSL signals are notoriously weak and prone to attenuation over distance. They require “clean” copper cable in good condition in order to carry the DSL signal reliably. Aged, deteriorating cable on the other hand is a suboptimal carrier, which is exactly what AT&T faces in Grizzly Flat and elsewhere in El Dorado County. Consequently, some Grizzly Flat residents complained, they couldn’t get DSL service because DSL propagated over a shorter than normal distance and their homes were too far away to get service. Poor quality cable also limits customers to AT&T’s lower speed DSL packages since the cable cannot reliably support higher speeds.

A scenario similar to Grizzly Flat appears to be playing out in my neighborhood. DSL wasn’t even on the radar screen here until an infill lot was recently developed. The new resident needs a broadband connection for his home office and ordered up a dedicated T-1 business class data line. That turned out to be the proverbial straw that broke the back of the antiquated cable plant that has been barely able to support plain old telephone service (known in the industry as POTS).

Consequently, AT&T recently installed a remote terminal and may begin offering DSL in the near future pending further testing. As in Grizzly Flat, fiber is available and provides the “backhaul” connection upstream. However, an AT&T planner I spoke with is downplaying the remote terminal’s DSL capabilities. It’s salvage equipment (the faded graffiti on the side of the cabinet is a clue), is not AT&T’s standard DSL remote terminal equipment and may not provide the typical 14,000 foot range. Moreover, if testing shows the copper cable plant needs to be upgraded in order to reliably carry DSL, the planner warns, that would add to the cost of the deployment and increase the odds the bean counters at AT&T corporate will nix it.

AT&T Worldnet founder predicts universal residential wireless broadband by 2012

For those of you wondering when you'll ever get DSL, AT&T Worldnet founder Tom Evslin has a prediction: probably never. The reason: residential land line service will all but disappear by 2012 as telcos abandon the foundation of the U.S. telecommunications system, copper cable.

Rather than wimpy DSL that can't reliably propagate more than three miles from the phone company central office, Evslin prognosticates, homeowners will get broadband via WiFi-enabled mobile phone services. “Trust me, by 2012 we’ll all have wireless hotspots in our homes by one means or another,” Evslin wrote.

Evslin points to the high cost of maintaining copper cable in less densely populated areas and the continuing decline of residential land lines as people migrate to mobile phones as their primary telephone number.

Evslin could be onto something. Just last week, AT&T sent out a market research survey to gauge interest in a potential product called Unify that would combine voice and Internet service and chose either a wireline or wireless broadband connection depending upon the subscriber's location.