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AT&T Fails to Sell Aging DSL Markets, May Upgrade
Sorry AT&T DSL Users -- Nobody Wants You
by Karl Bode 09:09AM Friday Jun 01 2012
Like Verizon's FiOS, AT&T has frozen all U-Verse expansion, meaning that if you didn't get upgraded on the first go round, you're out of luck. These freezes leave millions of customers on last-generation DSL lines that the carriers (whose focus is on wireless and $10 per gigabyte overages) don't feel like upgrading. You might recall that back in March AT&T and its investors were weighing the idea of selling off most of these markets. Despite a plethora of growing VDSL advancements, AT&T's CEO "didn't see a solution" for upgrades and was shopping nearly half of his customers around to smaller telcos.

Since then, both AT&T and Verizon have been bleeding DSL users at an alarming rate, without either company appearing to care about it. Fast forward three months and AT&T is reconsidering their options. According to a report by Bloomberg, AT&T couldn't find anyone to buy the properties, so they may work on upgrading them:
AT& considering a plan to upgrade its rural phone lines to handle higher-speed Internet service, potentially putting off an effort to sell off the underperforming assets. AT&T would rely on new copper-line technology to offer faster broadband in areas without access to AT&T’s U-verse fiber-optic network, Chief Executive Officer Randall Stephenson told investors last week on a conference call hosted by JPMorgan Chase & Co. The idea is to provide an enhanced version of digital subscriber line, or DSL, technology on existing lines.
Bloomberg goes on to note that AT&T hasn't actually decided anything yet, and will state whether they will sell these users or upgrade them sometime later this year. The problem is that nobody else can afford AT&T's DSL users. Verizon's deals to offload millions of unwanted DSL users to Fairpoint and Frontier ended badly, with those companies saddled in debt and struggling with unrealistic growth ambitions. The remaining contenders for AT&T's users (CenturyLink, Windstream) are fresh off of other deals and can barely offer speeds beyond 3 Mbps to many of their own customers, much less deal with the financial burden of millions of new unwanted customers.

The problem isn't that DSL isn't profitable -- it's just that's it's not profitable enough for the impatient modern investor -- especially in light of the growth opportunities in wireless and even with AT&T's new overage charges. If AT&T does continue upgrades, it's realistic that only a relatively-small slice of AT&T's remaining customers will see them. There's all manner of advancements being made in DSL for AT&T to turn to, using "SuperMIMO" or "Phantom" crosstalk reduction technology. The reality however is that AT&T doesn't really care what happens to these users, and as their aversion to FTTH makes clear, have long fought coughing up the cash for any real next-gen upgrades.

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