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Verizon Communications Inc
Cablevision Systems Corp
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As someone whose first home broadband experience was a 256-kilobit-per-second connection from Verizon’s (VZ) grammy Bell Atlantic, I have always retained a soft spot for DSL technology. Sure, I was jealous of my friends who got @Home Network cable-based broadband and its 1 Mbps service, but in Manhattan of the ’90s, DSL was the only game in town. If you saw the cables in my East Village apartment block, you too would feel incredulous: How do these creaking, aging old copper wires bring fast broadband? As time went by, the speeds increased.
Cable broadband suffered from too much popularity—too many people shared an infrastructure, and as a result the speeds delivered to the home were actually a fraction of what was advertised. When I moved to San Francisco, I decided to stick with DSL and used Pacific Bell’s (now AT&T) connections. Somewhere in the mid-2000s, however, things started to change.
DSL speeds, though nearly 15 times faster than my first connection, started to fall behind cable broadband speeds. DSL performance became spotty, and I switched to Comcast (CMCSA). Today, I live in the future—I have a 200 Mbps fiber connection, thanks to my local independent ISP, Webpass. It costs a lot less than what the cable company wants from me. And it’s a heck of a lot faster than what AT&T (T) has to offer.
Like me, a whole bunch of people have switched from the dragging DSL to faster connections. I’ve been writing about the slow migration away from the classic DSL offering for a long time. People have converted in big numbers to cable companies, particularly those who offer better quality and higher speeds, such as Comcast and Cablevision (CVC).
DSL owners have switched to faster offerings from their own phone companies—Verizon FiOS, for example—as the demand for consumer bandwidth has exploded, thanks to the growing popularity of Web services such as Netflix (NFLX) and social networks including Facebook (FB). The growing number of in-home devices has also influenced our need for more bandwidth.
AT&T and Verizon, two of the largest DSL providers in the world, didn’t quite keep up with the times—or the speeds—like their European peers did. The reasons were complex: For starters, our geography was a disadvantage compared with very compact cities in Europe. But most important, the Baby Bells wanted sops from the elected officials.
Whatever the reasons, we didn’t really see speed bumps on DSL like we saw from the likes of Free in France. AT&T built U-verse, a hybrid fiber-copper network, and Verizon built FiOS, but mostly for their richer constituents—the people who could afford to pay a couple of hundred a month for a triple-play service. That focus on higher-end customers meant the classic DSL was left to die on the vine.
The market, too, was speaking loudly—people were leaving AT&T, and that did indeed threaten the phone company’s whole existence. As DSL sales swooned, AT&T customers went to Comcast and Cox Communications and Time Warner (TWX). AT&T couldn’t sell switchers a phone service, a declining business to begin with. It couldn’t sell them a television connection, either. The lure of a wireless connection packaged neatly with everything wasn’t a reality anymore.
Today, AT&T essentially put the nail in the coffin for DSL technology when it announced it was going all-in on IP-based networks and IP technologies. As Stacey Higginbotham reported earlier this morning, Dallas-based AT&T is spending nearly $14 billion to completely switch from last century’s technologies and put its old, copper-based network out for pasture. Here’s what the company said in a press release:
U-verse: AT&T plans to expand U-verse (TV, Internet, Voice over IP) by more than one-third or about 8.5 million additional customer locations, for a total potential U-verse market of 33 million customer locations. The expansion is expected to be essentially complete by year-end 2015.
U-verse IPDSLAM: The company plans to offer U-verse IP-DSLAM service (high-speed IP Internet access and VoIP) to 24 million customer locations in its wireline service area by year-end 2013.
Speed Upgrades: The Project VIP plan includes an upgrade for U-verse to speeds of up to 75Mbps and for U-verse IP-DSLAM to speeds of up to 45Mbps, with a path to deliver even higher speeds in the future.
These investments are a realization of a harsh reality AT&T—and to some extent, Verizon—is living in: Everything is going IP. Voice is an app. Video is an app. Even the thermostat is an app. The puny Internet speeds they continued to offer via the old DSL has no part of this bandwidth-hungry future. And even with these upgrades, AT&T is still lagging behind its fiber-based competitors. The need for bandwidth isn’t going away—and for Ma Bell, that’s the reality. AT&T needs to figure out how to live with it.
For me, this is a bittersweet moment—for I can only remember being blown away by the 256 Kbps speeds and dreaming of a future when I could have 100 times the speed.
AT&T Goes All IP: We are parsing the news in a series of posts, for we believe this is an end of an era.
Here are our two stories on the topic so far:
Also from GigaOM:
Why LTE in the iPhone Matters (subscription required)