Tag Archives: att

Judge allows AT&T to buy Time Warner, no strings attached

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A federal judge decided yesterday that AT&T may buy Time Warner’s video and motion picture content companies, including HBO, CNN and the Warner Brothers movie studio. Judge Richard Leon, who was appointed by president George W. Bush, put no conditions on the acquisition. He simply ruled “the government’s request to enjoin the proposed merger is denied”.

The 172 page decision does an excellent of outlining the current state of the video distribution market. AT&T wants to buy Time Warner so its DirecTv and other video services – delivered via satellite and mobile and wireline networks – can better compete with the likes of Netflix, Comcast (which also owns an extensive stable of content companies) and Amazon. Leon’s decision picks apart, and ultimately rejects, the federal justice department’s claim that the deal would “substantially lessen competition in the video programming and distribution market”.

What the decision doesn’t do is examine AT&T’s ability to use its monopoly/duopoly control over consumer Internet access in the U.S. to freeze out competing programming and online content distributors, and to raise prices for captive subscribers. That concern is particularly high this week, with the end of federal network neutrality rules that might have prevented that kind of harm.

AT&T will use its online muscle to make the most of this $85 billion purchase, as Leon’s decision makes clear

AT&T witnesses testified that they believe the company’s future lies in the use of online and mobile wireless connections to access premium video. As John Stankey, the AT&T executive who will be tasked with running Time Warner should the merger proceed, explained, AT&T acquired DirecTV in 2015 not in an effort to double down on the satellite business—a concededly mature and indeed declining asset—but to “pick up a lot of new customers that we could work on migrating” to new, innovative products necessary to compete in the future.

It’s possible that the federal justice department will challenge Leon’s decision, and could ask an appeals court to put the deal on hold while it’s under review. That’s all speculative, though. As of now, AT&T and Time Warner can close the sale next week as planned.

FCC allows more time to debate the death of independent ISPs

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An attempt by incumbent telephone companies to cut off competitors’ access to leased lines was slowed down a bit by the Federal Communications Commission on Friday. The deadline for reviewing a request by telco lobbyists that has the potential for killing off many, if not most, independent Internet service providers was extended by two months.

USTelecom, a lobbying front for big telcos, such as AT&T and Frontier Communications, as well as small incumbents, asked the FCC to eliminate rules that require telcos to lease copper DSL circuits and other facilities on a wholesale basis to “competitive local exchange carriers” (CLECs). The lobbyists invoked a fast track procedure – a petition for forbearance – that skates around some of the FCC’s usual due process when major decisions are made.

It would be a major decision. Without wholesale access to telco copper, most independent ISPs, which typically register as CLECs, would be left without a wireline pathway to subscribers.

The FCC is still considering a motion made by another lobbying group, Incompas, which represents a variety of content, equipment and independent telecoms companies. It asked the FCC to simply dismiss USTelecom’s petition, because it didn’t include the complete set of back up information that the fast track process requires.

The California Public Utilities Commission seconded that request, at least to the extent that “all of the data USTelecom relies on to support its petition…must be in the record”. Yesterday, Central Coast Broadband Consortium (CCBC) filed a letter with the FCC, also asking it to toss out USTelecom’s maneuver

In its petition, USTelecom proposes a radical overhaul of telephone industry regulation. Extraordinary conclusions require extraordinary evidence. USTelecom’s petition3 is a mundane recitation of self-interested opinion backed by the barest summary of cherry picked data. Full disclosure of all underlying data is essential for proper consideration of its request.

Full disclosure: I drafted and filed the CCBC’s letter.

Additional information and comments are now due on 6 August 2018, with rebuttals due a month after that.

Telcos ask FCC to kill broadband competition

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Wireline telephone companies, big and small, don’t want to be forced to share their lines with competitors. So last month, their lobbying front in Washington, D.C. – USTelecom – asked the Federal Communications Commission to scrap rules that require them to sell wholesale lines and other services to smaller companies that don’t own infrastructure.

These competitive local exchange carriers (CLECs) resell those services to retail customers, usually after adding their own equipment or other resources to the mix. You might not think of them as competing telephone companies, though. These days, they lease copper lines to provide Internet service, most commonly via some flavor of DSL, but also using other, more advanced technologies. Competitive, independent Internet service providers would be a better label.

USTelecom is using a fast track procedure called a petition for forbearance. If the petition is “complete as filed” – in other words, includes all the supporting data behind the request – then the FCC has 15 months to accept or reject it. If the clock runs out, it’s automatically granted. So the FCC tends to set short deadlines for public comments. In this case, the FCC allowed about a month for opponents and supporters to weigh in, and another two weeks for rebuttals.

That’s an awful short time for such a major decision. If the FCC goes along with the incumbent telcos’ request, it will put a lot of CLECs out of business, and dramatically change the competitive landscape, such as it is, for broadband service.

There’s another problem: the rules requiring telcos to lease out DSL and other broadband-ready lines on a wholesale basis are really telephone rules, designed to create a competitive market of sorts for POTS – plain, old telephone service. USTelecom is correctly claiming that fewer and fewer people are using POTS, preferring (or at least accepting) mobile phones and VoIP (voice over Internet protocol) service delivered via unregulated landlines as a substitute. If it so chooses, the FCC can kill an entire sector of the broadband market by simply accepting USTelecom’s argument that legacy POTS doesn’t matter anymore.

Comments on USTelecom’s petition are due next Thursday, and rebuttals two weeks after that. The California Public Utilities Commission will file comments – California law requires it – but it’s requesting a three month extension to gather information from telcos. As a memo adopted by the commission yesterday puts it, “contrary to what USTelecom argues, the effect might be to freeze the smaller…CLECs out of a number of markets”.

Other groups are similarly asking for more time, and challenging the completeness of USTelecom’s filing – it’s long on rhetoric and simple graphs, but lacks the kind of detailed data one might wish the FCC to examine.

Assuming, of course, that the FCC hasn’t already made up its mind.

Santa Cruz gets more fiber, more gigabit service

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AT&T’s recent fiber to the home (FTTH) upgrades in Santa Cruz mean that Cruzio isn’t the only Internet service provider bringing gigabit class infrastructure into town (unless you have a sneaking suspicion that it’s a competitive response – in that case you can thank Cruzio for it too). U.C. Santa Cruz’s Jim Warner tracked it down…

AT&T has been working on an FTTH deployment in parts of west Santa Cruz. The work has progressed to the point where some addresses are showing availability of gigabit service in AT&T’s on-line service availability tool. When you enter a “good” address – one where gigabit service is already available – you see, among other things, a web offer for “fiber” service at 100 Mbps and 1,000 Mbps download and upload speeds (subject to the usual disclaimer: “actual customer speeds may vary and are not guaranteed”).

The 100 Mbps packages is capped at 1 terabyte a month; the gigabit package offers “unlimited data”.

An example of what FTTH looks like “on the pole” is in the picture above. The thin curved lines that appear to loop back into the new tap are not fibers. They are simply plastic retainers to keep the protective caps from falling to the ground. To be ready to serve any address, one of the taps needs to be placed on almost every pole.

It is harder to see what’s going on underground. We need to wait for details about the project to know if areas where utilities are underground (rather than on poles) will be included.

The quality of AT&T’s craftsmanship is highly variable and not all of it looks as clean as in the picture presented. So far, I’ve seen FTTH work in the area bounded by Walnut Ave., California St., Almar Ave. and King St. This is a poor way to gauge the scope of their project, though. I visited the AT&T retail store but discovered staff get no special advance information about what the company is working on.

Wireline carriers, such as AT&T and Comcast, each get one foot of vertical space on each pole for their service. AT&T has attached their new fiber network to their legacy copper network to avoid needing to completely rearrange the pole or pay for another foot of pole space.

If you don’t stop it, fix it, justice department tells AT&T-Time Warner trial judge

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It’s up to a federal judge to decide whether or not AT&T can buy Time Warner, and all the content and video channels that come along with it. The federal justice department tried to make the case that the deal would be anti-competitive and should be blocked. AT&T, naturally enough, claimed it wasn’t.

Some experts who followed the trial closely thought AT&T made the better case. The justice department has to prove that a vertical merger – when a company buys its supplier – would have the same destructive effect on competition as a horizontal one, when a company buys a competitor. That’s a tough sell, and it seems that justice department lawyers aren’t counting on total victory. In its closing brief, the justice department offered Plan B: a “targeted divestiture” – either allow AT&T to buy some of Time Warner’s content assets (HBO and Warner Brothers, but not Turner channels) or force it to give up ownership of DirecTv.

Usefully, the justice department argued strongly for a “structural”, rather than a “behavioral” remedy. The difference is that a structural solution involves a permanent change – divesting DirecTv or not acquiring Turner, for example – while a behavioral change only involves a promise not to do bad things in the future…

While structural relief eliminates the risk of harm, behavioral relief assumes regulatory conditions can effectively constrain a business’s natural incentives to maximize profits…Behavioral relief is also less effective at protecting competition than structural market-oriented remedies because it “can hardly be detailed enough to cover in advance all the many fashions in which improper influence [over the acquired company] might manifest itself.”

Just so. Behavioral remedies require ongoing oversight by regulators with little experience or interest in the business at hand, and lead to perpetual evasion by corporate execs and lawyers with all the incentive and resources in the world.

A decision is expected by mid-June.

Unless it’s AT&T or Verizon, telco capital investment is at life support levels

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As with subscriber numbers, there’s a big gap between the two biggest telcos in the U.S. – AT&T and Verizon – and the rest of the field when it comes to capital spending. Both companies are planning multi-billion dollar investments in their networks in 2018, according to a story by Sean Buckley in FierceTelecom, with AT&T planning to spend $25 billion on capital upgrades in 2018, while Verizon is looking at the $17 billion to $18 billion range.

That includes spending on their mobile networks as they move toward 5G upgrades. It’s a much different story for pure wireline plays.

Number three on the list – CenturyLink – barely hits a dime on the dollar versus AT&T, with $2.6 billion spent last year and a 2018 capital budget pegged at 16% of revenue, whatever that turns out to be. Its priority will be integrating newly acquired Level 3 Communications into its overall operations. According to the FierceTelecom story

“We have to keep driving profitable growth,” said Glen Post, CEO of CenturyLink during the fourth quarter earnings call. “Most of it will be success based. The allocation of capital [will] shift harder in making sure it’s for return profiles that are higher, take advantage of our on-net footprint, and are predictable whether it’s a cost reduction or driving profitable margin growth.”

Translation: regardless of what we said in order to get regulatory approval of the deal, we’re going to bundle Level 3’s long haul fiber assets into CenturyLink’s monopoly business model. Adios dark fiber.

Frontier is a distant fourth, with a 2018 capital budget of between $1 billion and $1.5 billion and a number one priority of “finding ways to reduce costs”. In other words, it’s going to spend money on its infrastructure only when it absolutely has to – replace burnt out poles in Santa Barbara County, maybe? – or to meet self liquidating commitments, such as those it made to get $2 billion in federal Connect America Fund subsidies. Given Frontier’s possible plans to exit California, that might well be the best it can do.

Wyoming’s legislature bows to telco, cable lobbyists, but not as deeply as California’s

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Following California’s lead, Wyoming lawmakers grabbed their ankles and took what cable and telco lobbyists gave them: a law that subsidises broadband infrastructure, but only to the extent that incumbents want. Even so, Wyoming is not buying into the 1990s service levels that lobbyists for Frontier Communications, AT&T, Comcast and Charter Communications bribed convinced Californian assembly members and senators to accept.

As described by Phillip Dampier in Stop the Cap, what started out as an effort to give communities the option of pursuing their own broadband projects turned into an incumbent right of first refusal, secretly rewritten by lobbyists for Charter and CenturyLink. Which prompted a sharp response from Cheyenne mayor Marian Orr…

The substitute bill is substantially different than the original bill. And it wasn’t posted on-line or anywhere for anyone except insiders to have access to. CenturyLink and [Charter] are bullies. It’s wrong, and they are hurting Cheyenne and other WY communities from gaining affordable access.

Orr pushed back, but it wasn’t enough. According to Karl Bode, writing in DSL Reports, Wyoming legislators approved the bill this week.

That said, Wyoming’s legislators did not completely prostrate themselves, as California’s did. If no private ISP is interested in serving a Wyoming community, even with subsidies, then a local government can step in.

Perhaps even more importantly, Wyoming’s residential broadband standard is pegged at 25 Mbps download and 3 Mbps upload speeds. That’s equal to the federal agriculture department’s minimum for rural communities, and the Federal Communications Commission’s benchmark for “advanced services” capability. In larger communities, the standard for business service is even higher – 50 Mbps down/5 Mbps up.

California’s lawmakers thought that was too generous. Blindly accepting the campaign cash poor mouth arguments offered by AT&T, Frontier and cable companies, they decided last year that 6 Mbps down/1 Mbps up is good enough for every Californian.

State of Wyoming, Senate File No. SF010, Economic diversification-broadband services

AT&T CEO explains why net neutrality is necessary

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Randall Stephenson, AT&T’s chief executive officer, offered a hell of good example of why he can’t be trusted to do the right thing and refrain from using his position as a dominant, monopoly-centric broadband service provider to benefit his equally hefty video content business.

In an interview with CNBC, Stephenson complained that his online competition is beating him up…

“Reality is, the biggest distributor of content out there is totally vertically integrated. This happens to be something called Netflix. But they create original content; they aggregate original content; and they distribute original content. They have 100 million subscribers,” Stephenson said on CNBC. “Look at Amazon. They’re doing the exact same thing. Amazon Studios, creating, aggregating, distributing; Google, YouTube, Hulu, this thing is prolific.”

Reality is, Stephenson has a choke hold on their necks. AT&T is a gatekeeper – for hundreds of thousands of Californians, the only gatekeeper – between those online video platforms and their subscribers.

He intends to make good use of that power, too. The “Internet bill of rights” that AT&T published, and claims to honor, conspicuously fails to include paid prioritisation on the list of network management tactics it promises not to use. Voluntarily promises not to use – there’s nothing preventing it from posting another version of what, reality is, a declaration of AT&T’s rights.

Even if all AT&T does is play the paid prioritisation game, it will gain a big competitive advantage over video platforms that don’t share the top-to-bottom supply chain control it hopes to gain from its proposed purchase of Time Warner’s content and distribution business. AT&T can raise the price of Internet fast lanes to the point where it forces the likes of Netflix and Amazon to either reimburse it for any profits lost to the competition they present, or concede the fight to DirecTv Now and other in-house content engines. Even if the established players can adjust, new video ventures would be blocked. High prioritisation prices won’t matter much to AT&T – it’ll just shift money from one pocket to another.

Reality is, what reality is.

AT&T’s FirstNet deal means more but slower broadband in rural California

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Governor Brown’s decision to join the federal FirstNet public safety radio system has pluses and minuses for rural broadband development in California. The system is intended to provide data connectivity and interoperable communications for police, fire and other first responder agencies across the U.S. The federal government awarded a $6.5 billion contract to AT&T to build and operate it.

As a part of the deal, AT&T is getting 20 MHz of spectrum in the 700 MHz band. It’s allowed to use it for consumer broadband service so long as public safety communications have priority. The company plans to combine the FirstNet build out with deployment of its rural fixed wireless broadband service, which runs on a similar slice of spectrum in the 2.3 GHz band and promises 10 Mbps download and 1 Mbps upload speeds.

Both FirstNet and AT&T’s wireless local loop service are based on 4G LTE technology, and not the next generation 5G standard that’ll be the basis for urban mobile broadband service upgrades.

On the plus side, it means that AT&T has to extend its wireless broadband reach to pretty much every remote corner of California. AT&T will likely lease existing facilities or contract out operations in some cases, but it will be doing a lot of construction work too. Since the core technology it’s deploying supports both public safety and consumer users, any place it plants a FirstNet tower should also get at least a minimum level of wireless broadband service. Should.

On the minus side, the deal will turbocharge AT&T’s campaign to rip out rural copper networks and replace them with low speed wireless broadband systems. The federal government is already subsidising that effort with its Connect America Fund program. The combination of FirstNet’s extra dollars and spectrum, and the regulatory grease that comes with public safety projects makes it even cheaper and easier for AT&T to fence off rural communities from competition while offering substandard service at monopoly prices.

AT&T still fails at FTTH, but slowly figures out how to make it work

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AT&T hasn’t fully embraced fiber to the home service yet. At least not judging by my experience setting it up in a newly built, fully fibered apartment complex. But they are making progress.

Originally, AT&T only offered homes in FTTH islands the same service packages that they offered to surrounding copper customers. That still might be going on in single family home developments or in redlined neighborhoods, but they’ve developed genuine fiber packages of up to a symmetrical gigabit for multi-dwelling units. Unfortunately, their customer service reps and installers aren’t all onboard.

Since this wasn’t for my primary residence, I wanted AT&T’s cheapest, bare bones Internet service, in this case, 50 Mbps download and 10 Mbps upload with no contract, at $50 per month and a $99 installation fee, as their website led me to believe. No surprise, AT&T made it hard for me to buy it. As it turned out, they didn’t even sell it.

No contract service isn’t available online, even when you try to order it via an online chat. The call center reps are nearly as clueless. After the obligatory up sell attempt, The first rep I spoke with took my order and told me it would cost $40 per month. That set off alarm bells, since that’s the 12-month contract price. I asked her if that’s the no-contract price and got an uh-hum in return.

Anytime a call center rep answers with uh-hum, it means I don’t know but I’d like you to assume I’m saying yes.

I asked to speak to a supervisor and, after some argument, finally got one. He confirmed what I thought: the $40 rate came with a contract and no-contract service was $50 for 50 Mbps, symmetrical as it turned out. Done deal. A installation appointment was set.

I could expend a couple thousand words describing what came next. The highlight was a surprise early morning service call from an installer who tried to tell me the optical network terminal he had was the WiFi equipped modem I’d ordered. When I pointed out he was installing it in a metal cabinet without an ethernet connection, he just said “it’s pretty powerful”. Right.

Six truck rolls later, I had Internet.

A week after that, I had a bill for $70. It took several phone calls, each more unpleasant for all involved than the last, to establish that 50 Mbps symmetrical service is $70 on a no contract basis, and all $50 gets you is 5 Mbps symmetrical.

Which is what I now have. And it works, although how it will perform when the complex finally fills up is an open question. AT&T’s FTTH service is a good product. They just need to learn how to sell and install it.