Tag Archives: att

Led by AT&T meltdown, big U.S. pay TV companies take a dive in second quarter

by Steve Blum • , , , ,

AT&T’s video businesses bled out in the second quarter of 2019, losing nearly a million net subscribers. Its two old school linear platforms, the DirecTv satellite service and the DSL-based Uverse service, hemorrhaged 778,000 subscribers while its DirecTv Now streaming platform took a 168,000 subscriber hit.

Actually, it’s the DirecTv Then platform – its new name, announced yesterday, is AT&T TV Now.

It’s a similar, if less gruesome, story for the other three major U.S. pay TV companies. DISH, which is positioning itself for a run at the mobile telecoms sector, lost 79,000 satellite subscribers but picked up 48,000 Sling streaming customers, for a net loss of 31,000 monthly accounts. That’s better than expected – analysts had predicted a net loss of 252,000 subs – and better than the two big cable companies.

Comcast lost 224,000 video subs, and Charter Communications had a net loss of 141,000, with residential cancellation offset a bit by a gain in business accounts.

All up, the major legacy pay TV companies lost 1.3 million subscribers between April and June of 2019. The second quarter of the year is traditionally a tough time for the subscription video business, as people take advantage of summer to move from one home to another, or to just take off and shut down utilities for a few weeks.

Even so, this year’s second quarter losses are “freaking ugly”, as one Wall Street analyst put it.

It was especially ugly for AT&T, though. It lost more than twice as many subscribers as the other three combined. It comes during a period when AT&T is trying to enter the video and motion picture business in a big way, with its acquisition of HBO, the Warner Bros. studios and the Turner networks. So far, it’s misplaying its hand. Grafting businesses driven by artistic and marketing creativity onto a monopoly model telco is a losing proposition.

It’s going to take more than an uninspired rebranding to make AT&T pretty again.

Money talks or AT&T broadband walks, CPUC study shows

by Steve Blum • , , , ,

Haas att broadband study

How much money you and your neighbors make determines whether or not you have access to modern broadband service and infrastructure. The network practices study released on Monday by the California Public Utilities Commission cites conclusive evidence of aggressive redlining by AT&T. It is a major – and actionable – report that makes the case against the two companies, but its conclusions come as no surprise.

A study done in 2017 by U.C. Berkeley’s Haas Institute for a Fair and Inclusive Society found that…

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.

On the other hand, the median household income of homes served only by AT&T’s 1990s legacy DSL technology is $53,186, according to the Haas Institute. The CPUC study found the same divide between haves and have nots…

Whether deliberate or not, AT&T’s investment policies have tended to favor higher-income communities, and have thus had a disproportionate impact upon the state’s lowest income areas. For example, the weighted average 2010 median annual household income for wire center serving areas that had been upgraded with fiber optic feeder facilities to support broadband services was $72,024, vs. only $60,795 for wire centers without such upgrades Using 2010 US Census data, we find a clear inverse relationship between household income and all of the principal service quality metrics.

The report leaves it up to the reader to decide if AT&T’s income-based redlining is deliberate, but makes it clear that AT&T’s financial strategy is aimed at extracting the maximum dollars possible from communities trapped in legacy monopoly systems…

Persistent disinvestment, extensive affiliate transactions at self-serving transfer prices, extraordinarily large rate increases, and deteriorating service quality all point to “harvesting” as AT&T California’s overarching strategy for its legacy services and customers…The potential gains that AT&T California can realize by raising prices and curtailing investment and maintenance expenditures far exceed any financial penalties it might suffer from persistently poor service quality.

AT&T is not alone. I found a similar pattern in Charter Communications’ investment choices. Until the CPUC forced it to do otherwise, it held low income communities captive in analog-only systems that offered limited television service at exorbitant prices.

When Californians are trapped in monopoly telecom markets, AT&T and Frontier take the money and run

by Steve Blum • , , , ,

Leaning pole

Competition matters. When telephone or cable companies face a competitive threat – either from each other or from an independent Internet service provider, they respond by upgrading infrastructure and service, and by cranking up the volume on promotional discounts. The converse is true: no competition means no infrastructure investment or service upgrades or marketing love.

That’s a lesson I’ve learned time and again with municipal and independent broadband projects. When a city or an independent credibly threatens to enter the market, incumbents respond. Santa Cruz is a good example. When the City of Santa Cruz partnered with Cruzio, a local ISP, to build a muni fiber-to-the-premise system, Comcast upgraded its infrastructure. The deal didn’t come to fruition, but Cruzio’s subsequent solo fiber build out gave AT&T an incentive to upgrade neighborhoods with sufficient revenue potential to FTTP status.

It’s also a major conclusion of a report just released by the California Public Utilities Commission. It shows competition determines to a large degree where AT&T and Frontier Communications invest what money they’re willing or able to spend in California. According to the study, Frontier allows its facilities to decay in communities where it has monopoly control…

Wire centers with the smallest decrease in POTS lines fared far worse in terms of most service quality metrics. The deterioration in service quality in these small wire centers, generally serving communities with the fewest number of competitive providers, suggests that the company has been devoting more of its resources and efforts to those communities most impacted by competition for traditional POTS services.

The study found the same pattern in AT&T’s territory, concluding that it’s pursuing a “harvesting strategy” – a polite way of saying milking the cash cow by relying “upon successive price increases and customer inertia to maintain its declining [legacy telephone] revenue stream”, despite continually worsening service quality.

The study recommends increasing the amount of fines imposed by the CPUC on AT&T and Frontier for substandard service, as a substitute for competition – make the fines match the losses that the two companies would otherwise suffer if competitors were present. That’s difficult because 1. figuring out the proper amount is a fraught exercise, and 2. thanks to cynical maneuvering by outgoing president Michael Picker, the CPUC doesn’t actually fine telcos. It lets them keep the money so long as they claim they’re spending it on “incremental” service improvements.

AT&T redlines poor and rural Californians because it can, Frontier because it can’t afford otherwise, CPUC study says

by Steve Blum • , , , ,

History of the World, Part 1 - Piss Boy

Corporate choices made by AT&T and Verizon, and Frontier Communications’ dire financial condition created the growing divide between relatively modern telecoms infrastructure in affluent urban and suburban communities, and the decaying infrastructure in poor and rural ones. The result is “deteriorating service quality”, “persistent disinvestment”, an “investment focus on higher income communities” and an “increased focus on areas most heavily impacted by competition”, according to a study done for the California Public Utilities Commission by a Boston-based consulting company.

The report paints a contrasting picture of the corporate attitudes of AT&T and Frontier, but neither is flattering. The conclusions are, and should be, devastating for both companies. The report speaks for itself:

  • Both AT&T California and Frontier…[are] in effect, disinvesting in infrastructure overall, and [the disinvestment is] most pronounced in the more rural and low-income service areas.
  • AT&T has the financial resources to maintain and upgrade its wireline network in California, but has yet to do so. Frontier has a strong interest in pursuing such upgrades, but lacks the financial capacity to make the necessary investments.
  • AT&T wire centers that have been upgraded with fiber optic facilities and other broadband-related investments disproportionately serve higher income communities.
  • The AT&T wire centers serving areas with the lowest household incomes tend to exhibit the highest trouble report rates, the longest out-of-service durations, and the lowest percentages of outages cleared within 24 hours.
  • AT&T and Frontier appear to have focused most of their attention in those communities where competition and the potential for loss of customers is greatest.
  • The quality of AT&T and Frontier voice services has steadily declined over the 8-year period from 2010–2017…with the number of outages increasing and the service restoration times getting longer.
  • AT&T no longer actively markets legacy Plain Old Telephone Service (“POTS”) and is instead actively promoting broadband service to customers in order to maintain and grow its revenue steam. As a result, AT&T has allowed POTS service quality to degrade over time.
  • Investments that were made have been primarily directed toward supporting new broadband services…In locations where such investments have been made, POTS service quality has improved.
  • This study provides evidence of a strong relationship between significant adverse weather conditions and an increase in the number of service outages. This pattern suggests that the networks of AT&T and Frontier are not as robust as they need to be.

This study almost didn’t happen. CPUC president Michael Picker, who is resigning and likely will chair his last meeting on Friday, tried to block it. He bowed to “vociferous opposition” from AT&T and Verizon, which later sold its fiber and decaying copper systems to Frontier. Two former commissioners – Catherine Sandoval and Mike Florio – put a counter proposal on the table, which passed by a vote of 4 to 1, with Picker the only no vote.

There’s apparently more to come – yesterday’s report was only the executive summary, and there’s much more detailed data and analysis behind it. There’s also the question of whether the CPUC will take action – much will depend on incoming president Marybel Batjer – and whether the California legislature will allow it. Assembly bill 1366 would effectively wind down the CPUC’s oversight of telecoms in California.

Examination of the Local Telecommunications Networks and Related Policies and Practices of AT&T California and Frontier California, Economics and Technology, Inc., April 2019 (published 22 July 2019)

Table of Contents

For more background documents, click here.

Note: except for bracketed text, the bullet points above are direct quotes from the report, but the order of the quotes was changed.

Tahoe’s broadband speeds lag far behind California’s average

by Steve Blum • , , , ,

Southlaketahoe2019grades

Broadband infrastructure in South Lake Tahoe, and the Tahoe basin in general, is poor. Based on the latest broadband availability information released by the California Public Utilities Commission, no city or unincorporated community around Lake Tahoe gets an infrastructure grade of better than F+.

In a presentation to the South Lake Tahoe city council, I discussed how the city ended up with an F on its broadband report card. The two primary wireline broadband providers are AT&T and Charter Communications, and their service reports clearly show that, as of 31 December 2017, neither had upgraded their facilities to the Californian average and were unable to deliver even a minimum acceptable speed level to consumers.

Except for a handful of neighborhoods where it still relies on ageing 1990s DSL equipment, AT&T is stuck in the mid–2000s with ADSL facilities that top out at 18 Mbps download and 768 Kbps upload speeds. That compares to the VDSL infrastructure that AT&T uses to offer 100 Mbps down/20 Mbps up service – the minimum acceptable level determined by research conducted by the Monterey Bay Economic Partnership and the Central Coast Broadband Consortium – to more densely populated areas of California, and to the 30 Mbps download/5 Mbps upload benchmark it exceeds (at least as advertised) for the majority of Californians in its service area.

Charter’s infrastructure in South Lake Tahoe supports faster service (at least as advertised) than AT&T, but it still lags far behind Comcast’s claimed DOCSIS 3.1 upgrades. Its 100 Mbps download/5 Mbps upload speeds are slower than what it offers in many other California communities, and doesn’t meet the MBEP/CCBC minimum or the Californian cable average of 400 Mbps download/20 Mbps upload speed. Or the 300 Mbps download capability that the CPUC directed Charter to offer in most of its Californian service area by the end of this year.

Don’t expect fast rural broadband from AT&T or Frontier, lobbyists tell CPUC

Ernestine

Judging from presentations made by AT&T and Frontier Communications lobbyists at a California Public Utilities Commission workshop on Monday, the companies have no plans for significant upgrades to rural broadband service, comparable to urban improvements, despite taxpayer subsidies. Which doesn’t bode well for a $2 trillion infrastructure spending deal announced yesterday in Washington, D.C.

Rural broadband infrastructure was one of the few specific items that came out of a meeting yesterday between president Donald Trump, house speaker Nancy Pelosi and senate democratic leader Chuck Schumer. But there’s good reason to wonder whether the $2 trillion promised for broadband infrastructure for “our great farmers and rural America”, as Trump’s press secretary put it, will be spent in a useful way.

On Monday, Ross Johnston and Charlie Born, staff lobbyists for AT&T and Frontier Communications respectively, talked about ongoing efforts to upgrade infrastructure using federal Connect America Fund (CAF–2) subsidies. While repeatedly ducking direct questions from commissioner Martha Guzman Aceves and others about what their employers are doing (as did lobbyists for Comcast and Charter Communications) they made it clear that the best they’ll commit to is the slow 10 Mbps download and 1 Mbps upload (10/1) speeds required by the Federal Communications Commission. Which they won’t have to deliver consistently, according to FCC specs.

Johnston said AT&T is working to upgrade 141,000 rural Californian homes and businesses to 10/1 service by next year’s CAF–2 deadline, but more than half of those customers – 84,000 locations in 40 counties – will be stuck with low capacity fixed wireless links, instead of improved wireline connections. Born didn’t mention Frontier’s plans to do the same, but he likewise wouldn’t promise anything better than 10/1, even though he claimed the company is deploying advanced VDSL and fiber technology that should be capable of much faster speeds.

The CAF–2 program was designed by the FCC to funnel subsidies to incumbent telcos, at least to the extent that they were interested in taking the money. It is apparently the blueprint for a new $20 billion rural broadband program vaguely announced by FCC chair Ajit Pai during his moment in the oval office sun a couple of weeks ago. Although Pai embraced the higher 25 Mbps down/3 Mbps up standard adopted by the federal agriculture department last year, it’s by no means certain that any new money would go towards service at even that level.

AT&T, Comcast blamed for stonewalling burnt out Paradise residents, as CPUC approves broadband grant pilot

by Steve Blum • , , , ,

California wildfire ruins

The California Public Utilities Commission decided to be more generous with broadband construction subsidies for low income home owners and tenants yesterday, but also took aim at AT&T, Comcast and other big telecoms companies that refuse to take advantage of state broadband subsidies or cooperate with communities that need service. Commissioners voted to raise the proposed limit of $5,300 on line extension program grants to $9,300 per household, as they unanimously approved implementation plans for the $5 million pilot project, paid for by the California Advanced Services Fund (CASF).

Commissioner Martha Guzman Aceves, who is in charge of the overall CASF program re-write, criticised the major players for not using it to upgrade infrastructure in communities that lack adequate broadband service. One example, she said, is the town of Paradise, which was largely destroyed by a deadly wildfire last year and which she recently visited…

One of the main areas they wanted to raise with us was the telecommunications needs in the town, and they expressed a lot of the difficulty with the lack of communication during the response and warning time. But also now, in trying to get real, concrete commitments from both AT&T and Comcast in what the rebuild looks like. There was concern that, given that even prior to the fires not all the community was served, that after the fires there’s nothing really requiring them, for all the community to be served, still. And certainly nothing requiring the type of infrastructure and technology upgrades that all Californians need today. So I did want to highlight and invite AT&T and Comcast to utilise the underutilised CASF grant program for these types of infrastructure needs, including the line extension program that we just approved today, and encourage them to take this state subsidy to really build out, not just in the community of Paradise, but in many of the communities that find themselves in a similar situation.

That’s the big question yet to be answered: will those big, incumbent ISPs will participate and build out facilities to unserved, low income homes? The line extension program was originally proposed by Comcast, as a way of laundering state grant money through residents so it wouldn’t have to answer directly to the CPUC, which is anathema to cable companies. The ball is now in their court.

The other substantive change to the first draft, which was published last month, include boosting the percentage of costs covered by the grants from 95% to 100% of construction budgets – the remaining 5% would have been paid by Internet service providers who ultimately received the money. AT&T didn’t like the idea of paying anything, and none of the Internet service providers who commented – which also included Frontier Communications and Comcast’s and Charter Communications’ lobbying front organisation – liked the $5,300 limit. The final, approved version raised it to match the amount allowed for staff-level approval of other broadband infrastructure grants from CASF.

More information and key documents about CASF broadband infrastructure, public housing and other grant programs are here.

AT&T hides 4G digital divide behind 5GE facade

by Steve Blum • , , , ,

Opensignal att 5ge 22mar2019

AT&T’s 5GE scam is unravelling. Measurements taken by an independent testing company, OpenSignal, show that slapping a phony 5G label on upgraded 4G LTE service does not make the user experience any faster.

According to OpenSignal’s blog post

Some AT&T users in the U.S. have recently seen “5G E” appear on the status bar of their existing smartphones, replacing 4G. This move has sparked controversy because AT&T is using updated 4G network technologies to connect these smartphone users, not the new 5G standard…

Analyzing Opensignal’s data shows that AT&T users with 5G E-capable smartphones receive a better experience than AT&T users with less capable smartphone models…But AT&T users with a 5G E-capable smartphone receive similar speeds to users on other carriers with the same smartphone models that AT&T calls 5G E. The 5G E speeds which AT&T users experience are very much typical 4G speeds and not the step-change improvement which 5G promises.

If anything, AT&T’s attempt to jump the 5G gun seems about to backfire. The tests show that real 4G improvements have been made by AT&T, as well as Verizon and T-Mobile. Combining upgraded LTE infrastructure with current generation smartphones produces significantly faster download speeds. But instead of trying to capitalise on 4G success, AT&T is positioning itself as an evolved 5G failure.

To a large extent, AT&T’s future is built on expanding its portfolio of 4G systems. It’s using federal subsidies to build a 4G-based national public safety network and to deploy its 4G-based wireless local loop technology to replace rural copper networks. It will be building true 5G systems over the next five to ten years in urban markets where money and customers are thicker on the ground, but not in rural communities where 5G equipment will be relegated to an “infill” role, if it’s deployed at all.

Slapping a 5G label, with or without the microscopic E, on everything is an attempt – doomed, hopefully – by AT&T to disguise the growing divide between digital haves and have nots.

AT&T has an odd way of turning anti-trust victory into market domination

by Steve Blum • , , , ,

In the wake of a federal appeals court victory, AT&T moved quickly to consolidate control over the Time-Warner media companies it now owns. The apparent strategy is to meet Netflix head on as a content competitor. The initial signs are not encouraging.

As well reported by Jessica Toonkel in The Information, the top executives of HBO and Turner, two of the three Time Warner divisions acquired by AT&T (the third is the Warner Bros. studio), are gone. According to Toonkel’s article, AT&T wants to crank up the content production pace…

HBO is one of Time Warner’s crown jewels, the top ranked premium cable channel long known for hit shows ranging from “The Sopranos” to “Game of Thrones.” But the growth of Netflix has spotlight how little HBO has evolved in recent years. The company makes a handful of shows, compared to the hundreds made by Netflix. It resisted small changes, such as putting all episodes of its shows on the air at once, unlike Netflix. Shortly after the AT&T takeover, AT&T executives began signalling they wanted HBO to make more shows.

I worked with HBO in the mid-nineties, as the company I was working for – U.S. Satellite Broadcasting – was launching what eventually became DirecTv, another AT&T acquisition.

HBO has evolved over the past 25 years, but its core remains unchanged: it’s a video packaging and distribution company that produces a relative handful of marquee jewels, but relies on the broader industry for most of its content. The same might be said of Netflix, except that its hand is a lot bigger and its tolerance for imperfect gems is a lot higher.

Netflix produces excellent films and series, but that’s fuelled by a blockbuster budget – $13 billion in 2018 by one estimate – that’s higher than any mainstream studio. It also has a reputation for giving producers and directors a free hand, with little interference from the suits.

Money and creative freedom are two of three essential ingredients to success in Hollywood. The third is personal relationships, something the old HBO excelled at building and maintaining. The business doesn’t work like a car factory. You can’t just add a second shift and send in the bean counters. With neither the budget or the corporate culture to match Netflix, AT&T is taking a huge risk by disrupting those relationships.

Is AT&T too big and scattered to succeed?

by Steve Blum • , , , ,

Att vans

With the acquisition of Time Warner’s movie and TV production companies, AT&T theoretically has the assets to become a vertically integrated content creation, packaging and delivery behemoth. But not all of its assets – including its management team – are necessarily well suited to the task.

AT&T’s challenge is to avoid outrunning its ability to manage three very different types of businesses: entertainment production, subscription-based linear video distribution and a huge heterogeneous telecoms network. Two of those businesses – subscription video and telecoms – are changing rapidly, and AT&T needs both vision and capital to stay in the game.

So far, it appears to be short on both. There’s a limit to what you can do with a satellite video network. DirecTv will never be interactive, so it can’t leverage its distribution investment to create on demand services that mimic over the top (OTT) providers in the same way cable companies can.

AT&T’s telecom business is also showing the strain. It’s holding back on 5G and fiber upgrades, and increasingly relying on its existing 4G infrastructure and technology. AT&T is replacing copper networks in rural and other less lucrative communities with 4G-based fixed wireless service , in part by relying on federal public safety and universal service fund subsidies. It’s also investing in marginal 4G upgrades and labelling it 5G. Well, 5Ge. But, as AT&T intends, it’s easy to miss the little e.

Outside of the limited areas where it’s investing in fiber upgrades, AT&T’s networks are taking a back seat to more specialised players in its footprint. Cable companies can deliver faster broadband service more widely and have a plausible chance of creating OTT-like video services that are only available inside a provider’s own network, via fast lanes that are isolated from the public Internet. OTT companies are sucking up consumer viewing hours and pure play, or near pure play, mobile companies could move more quickly towards true 5G service (although Verizon has put its early and much hyped pre–5G deployments on hold).

It will take an exceptionally talented and diverse executive team to pull these ill-fitting assets together into a unified programming and telecoms juggernaut. AT&T’s “fix” for HBO, for example – simply telling everyone to start producing more great stuff – and its disingenuous, if not downright deceitful, mislabelling of 4G service indicates that it doesn’t yet have the management and vision it needs to prevail over the long run.

For AT&T, success might end up defined as simple survival.