AT&T’s overall television subscriber count is down, despite the strong growth of of its online video service, DirecTv Now. That’s according to a federal securities and exchange commission filing by the company. Even though it signed up 300,000 new online viewers to DirectTv Now in the third quarter of this year, its total video subscription count dropped by 90,000 according to the filing…
The video net losses were driven by heightened competition in traditional pay TV markets and over-the-top services, hurricanes and our stricter credit standards.
The growth in over-the-top TV viewing is actually the major reason AT&T’s total video subscriber numbers are falling, according to an article by the Washington Post’s Brian Fung…
“DirecTV, like all of its cable peers, is suffering from the ravages of cord-cutting,” said industry analyst Craig Moffett in a research note this week. Moffett added that while nobody expected AT&T’s pay-TV numbers to look good, hardly anyone could have predicted they would look “this bad.”
Cord cutting is also driving down cable revenues. The solution, according to an article by Daniel Frankel in FierceCable, is to raise Internet service prices…
“MSOs would need to raise standalone broadband pricing to $80, or more, in order to break even from a contribution perspective,” UBS analyst John Hodulik said.
The good news (for operators, but not consumers, that is)? Cable companies can probably get away with it, the analyst noted.
“We find that this level of pricing (non-promo) exists in some markets already, though pricing will vary,” Hodulik explained.
Cable companies have it easier than telcos. They’re losing video revenue, but are better at hanging on to subscribers. Cable companies generally offer download speeds of 100 Mbps or (sometime a lot) more for prices comparable to what telcos will charge for a tenth of that service level. A household that wants to get TV programming via the Internet is going to be more interested in those faster speeds.
Taxes not included. Except in my bonus check.
AT&T says it’s official: they are launching slow, expensive wireless Internet service in rural California, and other undefined “underserved” areas, instead of upgrading ageing copper networks to modern levels. The technology is designed to support 10 Mbps download and 1 Mbps upload speeds, although there are no guarantees.
The California Public Utilities Commission, on the other hand, decided to go in the opposition direction and unanimously endorsed the higher standard of 25 Mbps down/3 Mbps up yesterday. That’ll have no effect on AT&T’s fixed wireless roll out though, whenever that actually happens.
There seems to be a different between making it official and making it real. Using the link in the press announcement, I checked a dozen locations in California where AT&T has claimed federal Connect America Fund subsidies – where its wireless local loop service is targeted – and all came back with “AT&T fixed wireless Internet isn’t in your area yet”. I got the same response when I entered the zip codes for a couple of the Texan counties that AT&T specifically called out as ready for fixed wireless service in a separate press release.
California was on a list of nine new states, bring the total where AT&T claims to offer its 10 Mbps down/1 Mbps up wireless substitute service to 18 states.
According to Ars Technica, the base rate for the service is $70 a month, or $60 a month with a contract. AT&T isn’t disclosing the monthly rate on its website, but it does helpfully point out that the base service only includes 160 gigabytes a month. Anything over that costs $10 per 50 GB, up to $200, for a total max charge of $270 a month.
This fixed wireless service is what the California legislature voted to back with $300 million of taxpayer subsidies. Whether it happens or not depends on governor Brown, who has until 15 October 2017 to approve or veto assembly bill 1665.
The City of Louisville, Kentucky can impose one touch make ready rules on utility pole owners, and maybe a lot of other cities can too. A U.S. district court judge threw out AT&T’s challenge to Louisville’s pole attachment ordinance on Wednesday (h/t to Ars Technica for finding the ruling). It was passed in 2016 to help clear the way for Google Fiber to begin hanging cables on poles occupied by AT&T in Louisville
Before Louisville passed its ordinance, independent ISPs had to wait for incumbent telecoms companies, like AT&T or Comcast, to move or otherwise readjust their wires to make room for the new guy – in other words do the make ready work on their own stuff. Google complained that incumbents were stalling, in an attempt to block competition. The Louisville city council listened, and passed an ordinance that said that Google, or any other new ISP, could rock up to a pole and do all the necessary work – move existing wires and install its own – all at once. Without asking permission from incumbents.
According to the City of Louisville, that single-step – one touch – rule for make ready work was justified by Kentucky law which allows cities to manage public right of ways. And the judge agreed…
The ordinance mandates a one-touch make-ready approach, and a one-touch make-ready approach inherently regulates public rights-of-way because it reduces the number of encumbrances or burdens placed on public rights-of-way. It is undisputed that make-ready work can require blocking traffic and sidewalks multiple times to permit multiple crews to perform the same work on the same utility pole. The one-touch make-ready ordinance requires that all necessary make-ready work be performed by a single crew, lessening the impact of make-ready work on public rights-of-way. Louisville Metro has an important interest in managing its public rights-of-way to maximize efficiency and enhance public safety.
AT&T can appeal the decision, but hasn’t said whether it will.
Because this ruling comes from a federal court, it could have implications in California, which, like Kentucky, directly regulates utilities in general and pole attachments in particular, rather than relying on the Federal Communications Commission to do it. California and Kentucky law differs, though, so it’s not a green light for cities here to follow Louisville’s lead. But there’s no red light either. Call it a flashing yellow: proceed with caution.
AT&T and the primary union representing its employees – the Communications Workers of America – finally crossed the finish line in their marathon negotiations in California and Nevada. The rank and file voted to approve the latest deal by a 58% to 42% margin. That comes after the first deal they struck was rejected by the membership in July, on a 53% to 47% vote.
According to Fortune, the deal was sweeter the second time around…
Like the original agreement, the revised contract included wage hike totaling 11% over four years and some job security promises, but also increased employees’ healthcare contributions to cover insurance premiums to 29% by 2020.
Since last year’s seven-week strike at Verizon (VZ, +0.08%) led to workers there getting a better contract offer, labor tensions have been rising across the telecommunications industry. Increasing healthcare costs and job security against outsourcing have been among the most difficult issues.
It was a long and difficult process, with the union and AT&T going 16 months without a contract. At one point in May, CWA members walked off the job for three days to protest the slow pace of talks. Wireless employees also joined that mini-strike, but they’re not covered by the agreement that was ratified this week – that only takes in landline and DirecTv workers. Negotiations on a contract for the wireless workforce continue.
It’s the first time that employees who came in to AT&T via the DirecTv acquisition have been covered by the contract. Bringing them in under the CWA/AT&T umbrella was just one of the challenges. Over the years, AT&T and CWA have built up a structure that treats different groups of employees differently, even ones that do similar, or in some cases largely identical, jobs. Those splits within the workforce were one of the major factors behind the rejection of the first contract in July.
Fiber claims but copper service levels.
There’s something odd about the broadband availability data that AT&T submits to the California Public Utilities Commission. While doing research for the Broadband Infrastructure Assessment and Action Plan I recently completed for the City of West Sacramento (and from which this blog post liberally borrows), I noticed that AT&T claims to provide fiber-to-the-premise service (FTTP), and only FTTP service, in 31 West Sacramento census blocks, which represents 6% of AT&T’s service area.
These census blocks generally correspond to recently developed areas or areas that are targeted for future development. The kind of greenfield construction work where AT&T and other telecoms companies routinely use fiber. But it seems that FTTP coverage in these blocks is partial at best, and many, if not most, homes still receive service via copper wires.
In effect, AT&T is inaccurately reporting that all 31 of these census blocks are completely served by fiber infrastructure, and is not reporting the other types of technologies present. By contrast, in census blocks where only copper-based service is available, AT&T will report multiple technologies, for example VDSL and legacy DSL, if both are present.
A couple of things might be going on. It’s possible that AT&T is just being lazy and only reporting its marquee service levels in any given census block. But it’s also possible that it reflects the new and misleading “Fiber” brand it’s slapping on copper-based service. Or rather foreshadows it, since the reports predated the rebranding. The rationale appears to be that the service is delivered via fiber to central locations within neighborhoods – often referred to as nodes – with the final link accomplished using copper wires. But that’s fiber-to-the-node – FTTN – and not FTTP.
It’s probably a lost cause to try to get AT&T and other telecoms companies from playing these kinds of word games, but that doesn’t mean everyone else has to play them too. Insist on the truth.
Never give a sucker an even break.
AT&T’s federally subsidised wireless Internet service is costly, compared to what wireline customers pay. The fixed wireless service has supposedly been offered in Georgia for a couple of months, and AT&T announced it was expanding it to rural customers in eight more states immediately, with nine others, including California, slated to get it by the end of the year. It’s difficult to tell whether or where AT&T is actually delivering it, though. Entering zip codes into its “Check Availability” web page gets you a “AT&T Fixed Wireless Internet isn’t in your area yet” response, even in previously launched Georgia counties.
Pricing and service levels are reasonably clear though, at least as clear as such things ever are. If you want the nominal 10 Mbps download/1 Mbps upload speeds that AT&T is required to provide where it’s getting federal Connect America Fund (CAF) money, the rack rate is $99 to have it installed and then $70 a month for the first 160 GB of data. Every 50 GB (or fraction thereof) of data over that cap will cost an extra $10, up to a a maximum overage charge of $200.
It’s costly bandwidth, compared to the standalone ADSL2-based wireline service I get from AT&T. I pay $57 a month for “up to” 12 Mbps download speed, with a 1,024 GB cap and no currently defined upload speed. Do the math: customers getting the federally subsidised wireless service would have to pay $250 per month for the same amount of data I get, at a lower advertised speed.
Signing up for bundled DirecTv service or for a term contract can bring the monthly price down, but that’s true for wireline subscribers too.
There’s also reason to question whether AT&T will actually deliver on the required 10 Mbps down/1 Mbps up service level. As is typical, the AT&T web page touting the wireless service qualifies its promise of “at least” 10/1 by adding “data speeds can vary depending upon various factors”. Right. Like trees, weather, and your neighbors streaming House of Cards on Netflix.
AT&T and Frontier Communications have scooped up the CAF money on offer in California. Frontier hasn’t provided any information yet on how or if its federally subsidised service will differ from the norm, but it’s clear that AT&T is using the money to lock rural Californians into service – for decades to come – that’s slower and more expensive than what their urban and suburban cousins enjoy.
Gamblers or exiled royalty?
I’ve commented on a couple of university studies recently, one critical of municipal broadband’s business model and the other ripping AT&T’s infrastructure upgrade redlining in California. In neither case did I write about who picked up the tab for the work. That’s because I thought that both analyses stood on their own. But it’s a fair question to ask and, for the muni broadband study at least, it’s a significant one because the source of the money was the primary basis for challenging the work.
The AT&T study was done by U.C. Berkeley’s Haas Institute for a Fair and Inclusive Society, but was largely paid for by the Communications Workers of America, which is the primary union representing the company’s employees. And which was in the middle of a major contract dispute at the time.
The University of Pennsylvania’s report was published by its Center for Innovation, Technology and Competition, which gets its funding from several self-interested contributors, such as AT&T, Comcast, Verizon and lobbying fronts for the cable and mobile industries. But there’s also representation on the list from players who often end up on the other side of the table, including Facebook, Microsoft and the Internet Society.
But that’s the way the system works in academia, as The Economist notes…
Derek Bok, a former president of Harvard, once observed that “universities share one characteristic with compulsive gamblers and exiled royalty: there is never enough money to satisfy their desires.” This is a bit hard on compulsive gamblers and exiled royals.
The way to challenge an analysis done by a reputable institution – and I’m not generally including Washington think tanks in that category – is on the basis of the methodology and data used. In both studies, the method was solid. I can’t fault the Haas Institute’s work – they ran the same kind of analysis on CPUC and FCC data that I regularly do, and came to very similar conclusions. Likewise, there was no reason to fault the methodology in the Pennsylvania report. It was pretty basic comparative analysis of financial results.
There were problems with the data in both studies, but that’s not the fault of the authors. Muni fiber to the home results are not published with the same rigor as those from publicly traded companies, if they’re published at all. The CPUC data that the Haas study looked at is only so granular – it gives a pixelated view of broadband availability at the census block level, but no better.
Where high income households are thick on the ground, AT&T builds out fiber to the home systems, but does minimal upgrades for middle income areas and leaves low income communities with 1990s-style legacy DSL or nothing at all. That’s the top line conclusion from a study done by U.C. Berkeley’s Haas Institute for a Fair and Inclusive Society…
- The median household income of California communities with access to AT&T’s fiber-to-the-home (FTTH) network is $94,208. This exceeds by $32,297 the $61,911 median household income for all California households in the AT&T wireline footprint.
- In contrast, the median household income of California communities for whom the most advanced broadband technology available from AT&T is its slower U-verse fiber-to-the-neighborhood (FTTN) network is $67,021, which is $27,187 (28.9 percent) lower than the median household income of fiber-to-the-home households.
- Approximately one-quarter (27.6 percent) of households — about 2.7 million households —in AT&T’s California footprint are stuck with slow DSL. The median household income for California households for whom DSL is the most advanced broadband technology available from AT&T is $53,186, which is $41,022 (43.5 percent) lower than the median household income of fiber-to-the-home households.
There’s also a distinct urban/rural divide in AT&T’s broadband infrastructure deployment strategy. While metropolitan areas get fiber and VDSL upgrades, rural areas are ignored. According to the study, almost no homes in 14 rural counties have access to AT&T broadband at the FCC’s minimum standards of 25 Mbps download/3 Mbps upload speeds and one-third lack access at the CPUC’s minimum of 6 Mbps down/1.5 Mbps up. In its overall service territory in California, 252,000 homes do not have access to AT&T broadband service at all.
In many respects, the report’s findings are no surprise. AT&T has been very clear that fiber infrastructure would only be going into high potential areas and that it plans to rip out copper networks in rural California and replace them with wireless service.
The study recommends that policymakers, and the California legislature in particular, should demand greater accountability from AT&T and promote more equitable high speed broadband deployment. Unfortunately, the California assembly has not taken the study’s findings or recommendations to heart. It just voted to lower California’s minimum broadband speeds, specifically to accommodate the substandard technology that AT&T maintains in rural and lower income communities.
It’s a warning shot, not a full on strike, but even so thousands of AT&T employees left work yesterday and don’t plan to come back until Monday. According to the Los Angeles Times, 17,000 members of the Communications Workers of America, which is the primary union representing AT&T employees, walked off the job in California and Nevada, where they’ve been working without a contract for 13 months.
They’re part of a total of nearly 40,000 workers that went on strike Friday. DirecTv techs and AT&T store employees are among them, according to the Times…
The strike includes about 2,000 technicians who work in California and Nevada installing and repairing equipment for the satellite television service DirecTV. The union said the walkout marked the first time that AT&T wireless workers in 36 states have gone on strike, which they said could result in some closed retail stores this weekend. Only company-owned stores, not so-called authorized retailers, would be affected…
The two sides have been laboring over a new agreements to replace ones that expired in April 2016 and earlier this year. Workers have complained that AT&T has cut sick leave and disability benefits and asked them to to pay more for their healthcare. Union members also have been worried about the stability of their jobs, contending that AT&T has cut more than 10,000 call center workers since 2011 and moved those jobs to countries with cheaper labor.
The three-day mini-strike came as frustration grew over contract talks that don’t seem to be going anywhere. It follows a one-day strike here in California in March, the result of a dispute over work rules, which was quickly ironed out.
But so long as the big questions remain unresolved, the threat of a indefinite strike, like the 45-day walkout against Verizon last year, remains.
Give me the money!
Big telecoms companies don’t want California broadband infrastructure subsidies to go to potential competitors, and they don’t want to be pushed into spending any more capital on upgrades than they’ve already budgeted. AT&T, Frontier Communications and the cable industry’s California lobbying front took a defensive posture in comments regarding broadband development priorities drafted by the California Public Utilities Commission. It was in response to a staff white paper that took a first shot at a quantitative analysis of how to get the greatest benefit out of the roughly $60 million still available for infrastructure grants in the California Advanced Services Fund.
AT&T wants the CPUC to put middle mile projects at the bottom of the list and to turn a blind eye to last mile technology. The former is not surprising, since last mile competition flows from middle mile projects, and competition is the last thing that AT&T wants in rural and inner city markets where it has monopoly control. With that kind of dominance in rural and inner city areas, AT&T plans to rip out copper networks and replace them with wireless systems, which is why it wants the CPUC to look kindly upon that kind of technology. If it loses its monopoly grip, though, competition would severely dent, if not kill, its wireless local loop business model.
Both Frontier and the cable industry’s Sacramento lobbyists also want the CPUC to back away from funding potentially competitive projects, although they express it in terms of avoiding areas where promises have been made to eventually upgrade service or where federal programs will subsidise broadband infrastructure. Substandard broadband service, it should be noted. The 10 Mbps download/1 Mbps upload speeds allowed under the Federal Communication Commission’s program are below the CPUC’s current minimum, and far less than the FCC’s own 25 Mbps down/3 Mbps up standard for advanced service. Which is what the, um, California Advanced Services Fund is supposed to be about.
Rural telephone companies, aka small LECs (local exchange carriers), take a warmer approach to the CASF program overall, and had generally good things to say about the criteria and methodology used in the white paper. Echoing others’ comments, including the response I wrote on behalf of the Central Coast Broadband Consortium, the small LECs asked the CPUC to apply any new criteria to future projects, and not toss out the current batch of proposals, most of which have been languishing for more than a year. They urged a more qualitative approach – not surprising since the quantitative, bang-for-the-buck analysis in the draft largely leaves out their sparsely populated service territories.