In May of last year AT&T confirmed
that at the end of 2011 they'd effectively be stopping their deployment of U-Verse upgrades, with 30 million homes passed (not necessarily served), leaving about 40-45% of their footprint on older, slower technologies. On their recent earnings call AT&T again confirmed
that the U-Verse build is "largely complete," and the focus now is on ramping up adoption in deployed areas. As we recently noted, Verizon has also frozen any additional FiOS expansion
outside of large city franchise agreements, leaving roughly 40% of their customers without upgrades.
AT&T CEO Randall Stephenson, who last year insisted that DSL was "obsolete
" (a problem since that's all AT&T offers) also touched on the plight of the rural user during the recent call. In short, AT&T claims that despite consistent, healthly profits and recently having started charging data overages
, they just can't find a financially appealing way to upgrade millions of users, and won't anytime soon:
"Our U-verse build is now largely complete, so we have in place an IP video and broadband platform that reaches 30 million customer locations, which gives us significant headroom now to drive penetration," Stephenson said. "We have been apprehensive on moving, doing anything on rural access lines because the issue here is, do you have a broadband product for rural America? And weve all been trying to find a broadband solution that was economically viable to get out to rural America and were not finding one to be quite candid."
Forgotten is the fact that AT&T
(see update) played major roles in passing state laws
that ban many of these communities from wiring themselves -- even if the telcos won't. Unlike smaller telcos, it's not that AT&T doesn't have the resources or funds to upgrade more users to VDSL or FTTH, they simply lack the long-term patience for serious network reinvestment. Quarterly returns and executive compensation trump network health, customer satisfaction, and product quality. Like Verizon, AT&T's solution for many of these rural customers will be for them to sign up for expensive (up to $10 per gigabyte in overages) LTE service, assuming it's available.
While the big loser here is consumers, the big winner is the cable industry, who doesn't have to worry about any real competition from faster speeds in a significant chunk of their markets. In more than half of their markets companies like Time Warner Cable get to "compete" with sluggish DSL (in many cases still topped out at 3 Mbps) for the next decade. The lack of telco upgrades for millions of users has meant huge subscriber gains for cable
, whose executives should be thanking phone company executives for treating telco network reinvestment like a diabolical cancer -- despite their core product being broadband
. Updated 2/22
to note Verizon informs us they no longer lobby for state level anti-municipal bills.