AT&T Drops Copper Network

AT&T's CEP and chairman, Randall Stephenson, announced last week that the company is seeking to disuse its copper telephone network and copper DSL business. AT&T believes that an all-IP network is best suited for making larger profit in the future. Millions of users rely on the copper telephone lines and copper DSL products; and $14 billion fringe benefit AT&T has been offered to customers and regulators who may be surprised at the company stopping its investment in copper.

Over the next three years, the $14 billion will be invested by AT&T into wireless, business services and the fiber-to-the-node U-verse product; these make up 81 percent of AT&T's revenue and are increasing collectively at 6 percent annually. $8 billion will be spent on wireless initiatives and $6 billion for wireless initiatives. Around $22 billion is predicted to be spent in whole over the next three years.

It should be noted: only the stand-alone DSL product and not the U-Verse (which is copper-based at the last mile) will be invested in by AT&T.

Others are concerned with regards to their own ability to access communications, and AT&T have stated that its LTE network will reach 300 million people or 99 percent of the U.S. with its new investment. The wireless U-Verse network will expand 75 percent to cover customer locations of about 57 million people. LTE broadband will therefore be subscribed to by the remaining 25 percent; this will be more expensive and has onerous caps which DSL access and AT&T phone lines do not have.

For those in more rural areas, this move will prove particularly unhinging, especially in terms of broadband. Stephenson says that in an IP age, wireline broadband will still make a profit in those markets with “reasonable density.” Stephenson added: “The best service is delivered through an IP-only service with a streamlined product set,” and this does not appear to include copper telephone lines and DSL.

Americans living in more remote areas depend heavily upon wireline copper-based telephones for burglar alarms, emergencies and fire alarm systems. In numerous regions, competitive local exchange carriers will wonder how products will be distributed over the company's copper pipes. AT&T will instead use its fiber network and LTE to deliver broadband to smaller cities and towns. Network upgrades to the copper network will therefore also be disused, but it remains uncertain how Ma Bell will resolve this issue. It will also have to gain regulatory approval.

It is now for the Federal Communications Commission to study the effects of the loss of copper on both consumers and the marketplace. For AT&T, this is certainly a good move financially, and will get rid of an expensive product which brings in low revenues; it will also allow for the streamlining of its network and decrease the complexity of the applications and networks. Rather than simply selling off its DSL business (like Verizon has done), the company is engaging the FCC. All that remains to be seen is how other companies react to this shift. (CY) Link