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AT&T Better Hope 100 Meg Does Not Become De Facto Anytime Soon

11/09/2012 9:49 AM

How fast will your Internet need to be in three years?
AT&T is crossing its fingers that mainstream broadband users will not need speeds in the neighborhood of 100 Megabits per second -- because it won’t have a solution to bring to market anytime before 2016.
The telco’s $14 billion Project Velocity IP investment program doubles down on U-verse, which is fiber-to-the-node and then DSL to the customer premises (see AT&T to Expand U-verse to 33 Million Homes and AT&T Opens Checkbook, and There Is Joy in Techville).
That will max out at 75 Mbps; in other areas, AT&T will deploy “IP-DSLAMs” that deliver up to 45 Mbps.
Cable operators, thanks to DOCSIS 3.0, and Verizon (which bit the fiber-to-the-home bullet several years ago) are already out marketing way beyond that. Today, nationwide, Comcast can deliver 305 Mbps and FiOS has a 300 Meg residential tier, although those pricey services are more about bragging rights. And there's also Google's blue-sky FTTH project in Kansas City to deliver a whopping 1 Gigabit per second.
But AT&T will be stuck with its hybrid fiber/DSL architecture for the time being.
Futhermore, for about 25% of its wireline footprint, AT&T basically said it will not invest in upgrading the wired network. Instead, it’s planning to deliver high-speed data and voice to those approximately 19 million homes with 4G LTE.
Meanwhile, AT&T had some fuzzy math in how it was counting homes covered under the Project VIP plan, according to Sanford Bernstein analyst Craig Moffett.
The new U-verse target is 33 million customer locations -- versus 30 million previously -- but AT&T touted that as an increase of 8.5 million, Moffett pointed out in a research note Friday. What gives? AT&T said about 20% of the homes in the previous 30 million number were not marketable, leaving only 24.5 million.
The only real change is that the U-verse TV footprint will be increasing by 8.5 million “customer locations” (which now includes apartments), while U-verse broadband will expand by “closer to 7M (treating ‘real’ U-verse as distinct from U-verse-branded IP DSLAM),” Moffett wrote. “Relative to 132M housing units in the U.S., that's small potatoes.”
So, AT&T’s announced expansion of wireline IP broadband service “is not much of an expansion at all. Cable and satellite investors should breathe a sigh of relief,” Moffett wrote.
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