AT&T's Web site engages prospective broadband customers in circular shell game

I recently ran a drill I've been running for the past four years to check wireline broadband availability on AT&T's Web site. The availability search engine would predictably come back with the news that DSL was "unfortunately" not available at my location. Unfortunate indeed since I was ready to order it in early 2003. I was then invited to register to be notified "if" DSL became available. In the meantime, the message suggested, I may qualify for satellite Internet. Newsflash to AT&T: In case you hadn't noticed, I don't live in the Arctic Circle; there's fiber just 1.5 miles from my location. I'll pass.

Then earlier this year, the DSL availability check produced a new message, sans the dubious invitation to go suck a satellite:

You may qualify for AT&T U-verse High Speed Internet and TV. AT&T U-verse is a bundled service of 100% digital high-speed Internet with TV that provides you the ultimate home entertainment experience.

If DSL becomes available at my location, Contact Me

I inquired with AT&T's U-Verse folks to see if I qualified for U-Verse. It should be available in 1-2 months, I was advised in an email. When I noticed no VRADs were being installed to deliver U-Verse's VDSL-based service, I asked about the 1 to 2 month timeframe.

That resulted in another email from Ma Bell:

Although service was estimated back in April to be available 1-2 months, it was just an estimation. Unfortunately, we are not provided with enough accurate information to be “positive” on the feedback we provide.

In the meantime, the latest from AT&T's Web site is I "may" qualify for U-Verse. Bottom line, no DSL and no U-Verse. As usual, the ever equivocal Ma Bell says maybe and that's final. She's all dressed up with nothing tangible to sell.

Update 6/30/08: Ma Bell has changed her mind -- again. Now I no longer "may qualify" for U-Verse as an alternative since DSL isn't offered. It's back to "Go suck a satellite." No wonder some wags have aptly dubbed U-Verse "Re-Verse:"

AT&T High Speed Internet

	Our system indicates that our DSL service, AT&T High Speed Internet, is not available at your location. However let's see if we have another solution for you: You qualify for Satellite Broadband from AT&T Learn More

Among the benefits AT&T touts of satellite is "Wide Footprint" because it can reach people even in remote locations. In my case, remote means two miles from a major U.S. highway with buried fiber cable plant along a frontage road 1.5 miles from my location. Gee, and here I thought I must be residing somewhere in the Arctic Circle.

TheStreet.com: AT&T mulls surcharge for high bandwidth DSL customers

Robert Holmes of TheStreet.com reports today AT&T is considering surcharging high volume DSL customers. "Usage-based pricing is one way to deal fairly with Internet usage, which is very uneven among broadband users," AT&T spokesman Michael Coe told TheStreet.com. According to AT&T, a small percentage of customers account for a large percentage of total bandwidth used, with the top 5 percent of residential DSL subscribers using 46 percent of the total bandwidth and the top one percent consuming 21 percent of bandwidth.

"Broadband use is surging," Coe says. "Based on current trends, total bandwidth in the AT&T network will increase by four times over the next three years."

Ma Bell has two likely motivations for considering the yet to be deterined surcharge, disclosed a little more than four months after she raised most residential DSL pricing tiers by $5 a month. As with the DSL rate increase, the goal is to milk additional incremental revenue out of DSL and secondarily, to drive high bandwidth residential subscribers over to AT&T's higher priced U-Verse bundled service.

Unusual competitive situation develops in the Big D: Verizon plans FiOS overbuild in areas served by AT&T U-Verse

Matt Stump at Onetrak reports Verizon is opting to go head to head with AT&T in the IPTV triple play market for about 60,000 customers in suburban Dallas.

The development is being seen by some such as Telecompetitor as possibly the opening salvo of a competitive war between the two big telco TV players in states such as Texas where the telcos have successfully lobbied for state video franchises. It's also likely a contest of IPTV technology with Verizon betting when it comes to delivering HDTV, it can clean AT&T's clock with its fiber to the home (FTTN) full fiber infrastructure compared to AT&T's hybrid fiber and copper cable VDSL-based plant delivering Ma Bell's U-Verse Internet/TV/phone bundle.

What's also interesting about this overbuild is there's also a cable provider in this same Dallas area, Time Warner Cable, that will now find itself competing not just with a single telco in the usual duopolistic market configuration, but with two.

Onetrak concludes Verizon's move could have significant implications for other states such as Florida, California, Indiana, Washington and Oregon where Verizon operates inside AT&T and Qwest territory.

Higher than expected equipment, lost opportunity costs dog AT&T strategy to retain copper cable plant

AT&T continues to use its decades-old copper cable plant designed for carrying analog voice traffic to distribute Internet protocol traffic via Digital Subscriber Line (DSL) and more recently, its triple play voice/Internet/TV bundled service, U-Verse.

This strategy has allowed AT&T to avoid large expenditures to replace its last mile copper with fiber optic cable while continuing to depreciate the aging copper cable plant. But over time, it could prove to be a costlier strategy. The reason is that it takes a lot of field-based booster equipment — remote DSLAMs in the case of DSL and VRADs for U-Verse — to pump high bandwidth digital signals over old copper.

AT&T has all but abandoned putting in more remote DSLAMs to provide DSL, choosing to concentrate instead on fiber-fed VRADs to distribute U-Verse. However, if DSL Prime has got it right, Ma Bell will need a lot more VRADs than DSLAMS to reach customers. While DSLAMs can reliably propagate DSL service up to 12,000-14,000 feet, the VRADs used to distribute far more bandwidth intensive U-Verse are considerably less robust, not able to reliably serve premises more than 3,000 feet away. According to DSL Prime, AT&T erred in initially believing their reliable service range was 5,000 feet.

If true, that’s going to cost AT&T big time. Both in higher infrastructure costs because it will have to install more VRADs than anticipated and in lost opportunity costs since it will have to turn away droves of potential customers — including many who missed out on DSL and are still relegated to early 1990s era dialup because the telco failed to install enough remote DSLAMs.

For some mired in AT&T broadband black holes, U-Verse could bring long awaited high speed Internet

For some residential and small business customers currently outside the reach of AT&T's underpowered DSL service, there could be an unexpected benefit with the rollout of AT&T's triple play U-Verse advanced service offering. If they are served by central office switches where U-Verse is being deployed, the odds are likely higher they will finally get wireline-based broadband.

Last October, Ralph de la Vega, AT&T's group president, regional telecommunications and entertainment, told Investor's Business Daily the telco plans to phase out its its existing voice network and replace it with a VOIP (Voice Over Internet Protocol) system where U-Verse is being deployed. In other words, swapping out existing legacy voice-based telephone central office (CO) switching equipment with what are essentially souped up Internet servers capable of delivering multiple Internet Protocol-based advanced services including Voice Over Internet Protocol (VOIP), video, and of course high speed Internet access. That's U-Verse.

Since AT&T like other telcos is rapidly losing residential wireline subscribers who are migrating to wireless voice, it could opt to speed up U-Verse deployments since it would allow the company to sell more than just Plain Old Telephone Service (POTs). That would provide revenues to replace lost residential customers as well as gain additional revenues justifying a ramped up rollout. U-Verse not only gives AT&T the opportunity to replace lost residential voice lines, but also to finance upgrades to its copper cable plant so it can reliably provide U-Verse services, which are delivered by VDSL-based remote VRAD terminals fed with fiber optic connections.

An added incentive for AT&T in some of these areas would be the absence of existing competition from cable companies, which would invariably increase the take rate for U-Verse since these broadband-deprived prospective customers are likely to jump at the chance to get off dialup and satellite.

AT&T's failed broadband deployment strategy

AT&T has a bad habit of starting broadband technology deployments with bold declarations of new "projects," but half heartedly following through on them, leaving its infrastructure in disarray and like an unfinished information highway to nowhere.

Near the start of the current decade, AT&T (then SBC Communications) announced Project Pronto. The goal was to speed up the deployment of high speed Internet services — Digital Subscriber Line (DSL) over copper cable and twisted pair — to 80 percent of the phone company’s service area by 2002 and throughout its entire service area by 2006. Both deadlines were missed, with more than one in five residential customers unable to obtain any broadband services from the telco by the end of that year.

Now AT&T has decided to abandon that incomplete project in favor of another -- Project Lightspeed. It eschews the legacy DSL of the failed Project Pronto in favor of faster DSL -- VDSL -- running over a hybrid of fiber to the node (FTTN) and copper to the premises. The purpose of Project Lightspeed is to provide the necessary infrastructure to deliver AT&T's bundled Internet Protocol-based voice, data and video services known as U-Verse.

Like Project Pronto before it, Project Lightspeed/U-Verse appears to be faltering amid various technological and market challenges with the number of subscribers falling far below AT&T's goals and setting the stage for yet another incomplete initiative.

Complicating the picture is AT&T's decision to halt new deployments of its older legacy DSL technology in favor of the new VDSL Project Lightspeed platform, leaving large segments of customers who have been waiting for years for DSL hookups left in the lurch.

AT&T badly needs a management shakeup. It's time for an end to the fits and starts of ill-fated "projects" in favor of a new, long term comprehensive broadband strategy. It should commit itself to a deployment plan that covers all -- and not just selected portions -- of its 22-state service area and see it through to timely completion.

AT&T's customers deserve better. So do its shareholders, whom I believe would have the patience and perseverance AT&T's management has been lacking and would back a comprehensive broadband strategy if management clearly laid out the long term benefits.

The future of AT&T is at stake. It must decide if it wants to enter the digital, Internet telecommunications age or remain a mere "telephone company," content to rest on its laurels and passively depreciate its aging analog copper cable infrastructure while burdening itself with large dividend payments (recently five percent or $1.60 a share) that divert funds from needed investment in technology research and updated delivery infrastructure. If it chooses the latter course, then it shouldn't be surprised if bears and short sellers start stalking the company in the near future.

AT&T's tepid investment in residential market comes home to roost

AT&T is experiencing declining revenues in its residential wireline market segment, the telco's chairman and CEO Randall Stephenson told Citi's Entertainment, Media and Telecom Conference. Wall Street responded by pushing down AT&T's share price 4.7 percent to $39.10 in afternoon trading.

The Associated Press quotes Stephenson as blaming softness in the residential wireline segment on disconnections by consumers struggling to pay household bills.

However, what's likely the real reason is AT&T's own flawed residential strategy. AT&T has stubbornly resisted investing in upgrades to its aging and increasingly obsolete last mile copper-based distribution system. Consequently, the telco is unable to offer high speed Internet services and bundles of voice and broadband within large portions of its 22-state service area to the residential and growing home office-based market segment.

Moreover, AT&T's Project U-Verse rollout offering "triple play" bundles including television service based on a hybrid of fiber optic and copper cable has run into a variety of technological and market-based obstacles, causing the company to consistently miss projections for new U-Verse customers.

Wisconsin lawmaker likes Illinois 90 percent build out standard

Wisconsin state Senator Kathleen Vinehout isn't about to roll over to Ma Bell's proposed advanced telecommunications services regulatory framework that would require a far lower build out standard for AT&T's Project U-Verse product.

Vinehout likes what Illinois has done in requiring the company to build out its hybrid fiber and copper cable U-Verse infrastructure to serve 90 percent of the state rather than the 50 percent build out requirement favored by AT&T that leaves large areas on the wrong side of the digital divide:

Not every state meekly surrendered to AT&T. Illinois passed a bill with real teeth, including very specific consumer protection standards: requirements to bring services to 90 percent of the state, standards for quality, and protection for community access television.

Connecticut should tell AT&T to hit the road

AT&T is at loggerheads with Connecticut regulators that want it build out its infrastructure to serve more residents and businesses as a condition of getting approval to deploy its triple play (voice telephone, Internet access, Internet protocol TV) "U-Verse" offering in the state.

AT&T contends it can't do so profitably and is threatening to pull the plug on U-Verse in Connecticut. Good riddance; this technologically challenged turkey probably won't fly anyway. Connecticut should stick to its guns and tell AT&T in clear terms that building a swiss cheese telecommunications infrastructure filled with broadband black holes is not acceptable.

This is a prime illustration of the need for the locals to take charge and create public-private partnerships with locally owned and operated telecommunications providers and tell the big, out of state corporations who would create broadband winners and losers to hit the road.

Connecticut AG, AT&T clash in court over broadband build out

As this blog reported in early August, Connecticut Attorney General Richard Blumenthal wants to ensure the "connect" in Connecticut means the entire state and not just selected local jurisdictions when it comes to broadband access.

Blumenthal therefore is moving to force AT&T to deploy its triple play U-Verse service under state rather than local regulatory jurisdiction. AT&T is fighting back, taking Blumenthal to court to challenge his order.

This is a high profile legal showdown worth watching as a state AG with a strong consumerist reputation is basically telling the telco/cable duopoly that with market domination comes the responsibility to serve everyone as is current regulatory policy for basic telephone service.

Ma Bell frustrated with doubts over U-Verse

AT&T is apparently growing frustrated with analyst and media doubts that its hybrid fiber to the node (FTTN) and bonded copper pair over last mile "Project Lightspeed/U-Verse" effort can competitively deliver Internet protocol TV (IPTV) programming and HDTV in particular.

Ernie Carey, vice president of AT&T's Advanced Network Technologies, told Reuters at the NXTcomm communications conference in Chicago that AT&T doesn't suffer from bandwidth inadequacy. Instead, Carey spun into a different issue: hiring enough techs to install its IPTV infrastructure.

"Everyone in the media wants to make the bandwidth a bigger issue than I believe it is," he said. "I would tell you my belief is the biggest challenge right now is finding ways to go faster in the build."

Based on AT&T's failed effort to speed deployment of Digital Subscriber Line (DSL) broadband earlier in the decade with its so-called "Project Pronto" and its continued inability to provide broadband to large portions of its service area years later, I think the media and the pundits have good reason to suspect Ma Bell has hatched another flight challenged turkey in U-Verse.

"Video competition" is all about broadband access

The failure of AT&T state "video franchise" legislation in Tennessee last week shows a major discrepancy between AT&T spin and perception. While Ma Bell may claim she wants to bring competition for television programming by offering a cable TV alternative called U-Verse using Internet Protocol over Television (IPTV) technology, local governments and consumer advocates correctly see the real issue isn't about a mere cable TV alternative, but more broadly -- pun intended -- broadband access itself since IPTV by definition requires broadband.

Since U-Verse is deployed only in selected areas, large areas will not only go without IPTV but broadband access altogether since these gaping broadband black holes remain on early 1990s dial up technology or a satellite, a costly, crippled poor broadband substitute. Those living in areas fortunate enough to have broadband by today's standards using Digital Subscriber Line (DSL) service may not in as little as 3-5 years as broadband applications and their bandwidth demand continue to grow.

AT&T says that the bill would have increased competition in the pay-TV sector, by presenting viewers with another option aside from cable and satellite providers.

Opponents of the legislation, however, claim that it would have allowed AT&T to cherry-pick high-income neighborhoods for the service, potentially widening the so called “digital divide” between rich and poor.

Ma Bell pipe dream: $1 billion in ad revenue in 3 years

Seems that everyone wants a piece of Internet-based ad revenue. Now even the companies that provide the "pipes" that carry the Internet want in on the action, including Ma Bell.

John Stankey, AT&T's president for operations support, told the Reuters Global Technology, Media and Telecoms Summit in New York that advertising could bring $1 billion to Ma Bell's top line in three years time. Stankey said AT&T can reach that revenue goal by virtue of being the biggest U.S. broadband provider, a wireless carrier and most recently, a purveyor of Internet Protocol Television Service (IPTV) via its nascent U-Verse video service.

I think Stankey's time line is far too optimistic given the slow pace of AT&T's U-verse rollout whose functionality hasn't yet been demonstrated on a large scale. Also the company's sluggishness in even upgrading large portions of its service area that must continue to use early 1990s dial up modem technology to access the Internet or the so-called "Molasses Net" -- satellite Internet service -- which AT&T is hawking via a reseller deal with satellite provider WildBlue.

Rather than the pipe providers getting into the advertising biz, the more likely scenario is the media giants like Rupert Murdoch's News Corp. and Web portals Yahoo! and Google getting into the pipes business, partnering with other companies to build their own broadband infrastructure after tiring of waiting on the telco/cable duopoly to expand their networks.

Sorry, wrong number: AT&T tells would be residential broadband customers to go suck a satellite

If you're an AT&T residential customer who's been waiting for years for broadband, indications are you're going to have to continue to wait some more. Hapless residential customers who visit AT&T's Web site to check on the availability of AT&T Yahoo! High Speed Internet get this message if it isn't:

AT&T Yahoo! High Speed Internet

	Our system indicates that our DSL service, AT&T Yahoo! High Speed Internet, is not available at your location. However, let's see if we have another solution for you: You may qualify for satellite broadband from AT&T.Learn More If DSL becomes available at my location, Contact Me

The satellite service is from satellite Internet provider WildBlue. AT&T entered into a reseller deal with WildBlue about a year ago to sell the inferior (compared to what AT&T could offer if it chose to seriously invest in its wire line infrastructure), costly satellite service in areas it has written off over the foreseeable for wire line broadband.

Keep in mind this is from the same AT&T that boasts "Your world delivered" and actually believes it can provide television service over the same tired copper cable-based system that can't even support DSL let alone IPTV.

Qwest holds off IPTV in favor of residential high speed Internet access

Qwest CEO Richard Notebaert tells Bloomberg his company is holding off offering video over phone lines, concentrating instead on accelerating residential broadband Internet access.

It's a wise move on Notebaert's part. Residential customers need high speed Internet access first and foremost. Telcos like Qwest should be prioritizing it and speeding deployment considering they didn’t offer DSL in more than 20 percent of their service areas as of mid 2006, according to the Federal Communications Commission.

If and when Qwest wants to offer wire line-based TV service, it would be well advised to follow Verizon and utilize fiber optic cable rather than a hybrid fiber/copper play in the early stages of deployment by AT&T, dubbed Project U-Verse.

High definition TV itself needs about 9Mbs. Getting that much data over twisted copper pair that comprise the last segment of U-Verse that was originally designed to provide plain old telephone service (POTS) packaged with telephone and high speed Internet service could well prove problematic. Notebaert is in a position to watch it fail on someone's else's dime instead of investing his own shareholders' money.

Remotely program my U-Verse DVR? Huh?

A lot of AT&T customers are going to respond with a collective "Huh?" when they read this announcement informing them they can now program their U-Verse DVRs remotely via AT&T's Yahoo broadband portal. Like I said, "Huh?"

First of all, only a small number of AT&T customers can get Ma Bell's IPTV (Internet Protocol TV) service. Second, large numbers of AT&T customers aren't even offered broadband services at all, left twisting in the wind on the wrong side of the digital divide.

Yet another exercise in irrelevancy by AT&T. What planet are AT&T product managers living on?