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July 14
Motivating Factors

Leave it to DSLReports to get on this beat first, but one of the things that has occurred to me is that in the time since the break-up of the Bell system, as each of the Local Exchange Carriers tries to pick up more services, their interest and focus on "wireline telephone and data service" seems to diminish.

An extremely oft-cited example of this is Verizon, whose outside wiring and the various structures used to connect all of this together is in increasingly bad shape. It's not only old but it's physically dilapidated. There are numerous examples (like, near the point of there being simply too many to talk about) of things such as street pedestals without covers, cross-connect boxes that have been hit by cars, burnt, and then had their covers replaced by trash bags, plus various examples of aerial wiring that has begun to physically fall apart.

Similarly, a lot of people talk about how AT&T is trying to shed its plain old DSL users, either by switching them to U-Verse very aggressively, or letting the lines become irreparably damaged, after getting state regulations changed so that they do not need to offer voice service. Some of it is conspiracy theories, and some of it's not too hard to believe, especially given that AT&T (like Verizon) has a wireless product. New within the last year is that each of them has a wireless product that they feel competes well with the oldest and slowest DSL products.

Unfortunately, they're not wrong and my phone can speed-test at just shy of 20 by 5 megabits in town. That's about as fast as a fairly well-equipped VDSL2 system, and far more upstream throughput than some types are physically capable of, let alone what the better systems can actually achieve. However, achievable speeds and what an ISP will sell are also often different. Because most of the local exchange carriers are made up of several different systems, some of them have lines capable of delivering 24 megabits, where customers can only order 10, or in other situations, a customer may be able to receive 19 megabits, but the tiers are at 12 and 20, so they're stuck at 12. This is another potential merit of an LTE based system – none of the mobile carriers have either figured out or are bothering to artificially limit performance to specific tiers.

The other Bell-and-a-Half, CenturyLink and Frontier, don't have wireline divisions, and don't have anywhere near the type of wide deployment on a video product that AT&T and Verizon have. CenturyLink has PrismTV in some markets (like, four markets) and Frontier bought a few FiOS markets from Verizon, but that's all either inherited or experimental.

What's interesting is to consider whether or not the fact that CenturyLink doesn't have much in the way of a wireless arm makes them more inclined to improve and maintain their wireline infrastructure. It's interesting that Verizon and AT&T are letting their infrastructure lag behind so badly in some places. It would be neat to know what the motivation is. It's said by some that Verizon's current CEO specifically dislikes their wireline copper and fiber networks. This makes some sense, as the CEO came in from Verizon Wireless, which used to be a separate company. It is, however, unfortunate.

I suspect part of why Verizon isn't building out any more FiOS, while AT&T is building out more U-Verse and CenturyLink is building out more of their services is that Verizon has tied the FiOS brand and its fiber-based build-out to the FiOS video service, whereas AT&T's U-Verse product is available in a few different versions, such as the ADSL2+ product that has Internet and can accommodate VoIP or traditional voice service.

"Cable" video service is regulated by the Cable Act of 1984 as a "Title VI" (Later Title III) communications service, the main features of which are that cable providers in a given area need to enter into an agreement with the governing body in that area. Typically, they need to offer the physical interconnection for a public access TV station, and in a few areas, they are required to provide funding to help start a public TV station, if one doesn't already exist.

Verizon FiOS, AT&T U-Verse, and CenturyLink PrismTV (where video is available) are essentially (and regulated) as TV products. The main difference is that FiOS is the brand name for a particular technology – fiber to the premises. U-Verse is one brand for a family of products, but AT&T has been pretty consistent about the deployment of technology, where video is available on VDSL and Fiber, and isn't available on ADSL2+. Prism is only available in some areas, but CenturyLink has also not replaced "Pure Broadband" or "Internet" as product names with it, but has started selling both on a variety of technologies (ADSL2+, VDSL2, fiber).

Mind, CenturyLink doesn't have the appearance of rushing to push fiber further and further out into its service area, re-habilitate or simply replace the oldest copper service areas, or make additional service speeds available in certain territories. Lacking essentially anything else to spend their money on however, CenturyLink does eventually bring service to new area and upgrade some areas.

The challenge is that Verizon and AT&T doesn't bring fiber or VDSL2 to neighborhoods where they don't have permission to sell video, because they want consistent branding, and, well, because they want the video revenue associated with those technologies. This essentially won't change unless Internet (or video, but likely Internet) gets its classification changed, and things start to happen, like broadband gets defined by the government as a "utility" and the minimum speed is set higher. 10 megabits would be a convenient target, because 10 megabits essentially requires that some kind of fiber-fed ADSL2+ product gets deployed, at the least.

This is from the perspective of somebody whose network connection is 1.5 megabits, but I imagine AT&T could make a lot of people in their service area happy by rolling out ADSL2+ U-Verse to a wider population. (ideally, they'd be rolling out fiber-fed Alcatel-Lucent 7330 systems to their entire service footprint, so they can sell ADSL2+ today, and either VDSL, fiber, or a future ADSL technology later on.) Verizon can kind of do that. There are laws in some of their serving states that they must provide DSL services to everybody by a certain time, though whether or not Verizon is designing those services in such a way that they can ultimately be upgraded to FiOS, who knows.

The other possibility, and this is what has been happening already, is that as AT&T and Verizon each decide they're "done" with a given area, they'll just sell it off to Frontier, Fairpoint, or Windstream. I'd suggest CenturyLink could buy, but I think they are a little smarter than that, and Embarq, CenturyTel, and Qwest were all actually profitable when they were rolled into the CenturyLink Empire.

It will be interesting to see these companies improve their deployments. I hear stories on a regular basis of AT&T and CenturyLink upgrading areas, but it just (unfortunately) seems like nothing anybody does will give Verizon interest in their wireline products. FiOS makes them a lot of money, there's almost no way it hasn't already broken even as a deployment investment, but I've seen it described most accurately as in a holding pattern. It's still new enough that most of it just doesn't require a lot of maintenance at the time, but they're not going to put that money into deploying it in new areas yet. AT&T and CL are deploying new areas and upgrading them, but CL isn't holding back and is feeding fiber and dropping in VDSL2 DSLAMs, because of the Big Trio of Bells, they're the one who is willing to sell Internet-only on fibers. Hopefully, something will happen to force the other to hop on that bandwagon. Though, if it's not video services, they'll be suggesting that their customers not in upgraded areas should be buying hotspots or wireless home phone service.

All of this loops back to the fact that the Baby Bells managed to get most of their services deregulated and things like price and profit caps on their companies removed in the 1980s and 1990s. If AT&T and Verizon were still under strict legal obligation to limit their own profits by putting money into the ground and/or lowering prices, something would be different. How, nobody knows, but regardless. It remains interesting to see what motivates these companies. I haven't talked about the cable companies because that's a lot less complicated. All of them have video services, not all of them even have data services, and none of them have their own wireless arms.

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