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AT&T Stops Selling DSL Service

Phillip Dampier October 5, 2020 AT&T, Broadband Speed, Consumer News, Rural Broadband 3 Comments

AT&T stopped accepting orders for traditional DSL service from customers across its landline service area on Oct. 1, and will no longer allow existing customers to change speeds or transfer DSL service if they move to a new address.

AT&T sells three classes of wired internet service to residential customers:

  • DSL: Traditional, old-fashioned DSL is sold primarily in rural and exurban areas that were never upgraded to AT&T’s U-verse service. Download speed is typically between 1-6 Mbps. This service is no longer available to new customers.
  • U-verse: AT&T’s fiber-to-the-neighborhood service delivers 24 Mbps or faster download speed. AT&T uses fiber optic cables between the central switching office and the customer’s neighborhood, where it connects with existing copper wiring that runs down your street and into your home. Most AT&T internet customers are still served by U-verse.
  • Fiber: About 4.3 million former U-verse customers have been upgraded to AT&T Fiber, the company’s fiber to the home service. This upgrade eliminates the copper wiring that runs to your home, which provides for vastly faster internet speeds.

Only AT&T’s DSL service has been discontinued. The company claims about a half million customers still get DSL service from AT&T as of the second quarter of 2020. Most don’t choose DSL by choice. It is often the only option, because the customer lives in a rural area where no other options for internet service exist. That may leave some new customers with no options for wired internet service at all.

“We are focused on enhancing our network with more advanced, higher speed technologies like fiber and wireless, which consumers are demanding,” AT&T said in a statement. “We’re beginning to phase out outdated services like DSL and new orders for the service will no longer be supported after October 1. Current DSL customers will be able to continue their existing service or where possible upgrade to our 100% fiber network.”

AT&T has been slowly expanding its wireless 4G LTE home internet service in select rural areas, but the service is unlikely to reach all the areas now shut out of DSL service.

While AT&T’s rural customers have been left behind, prices for AT&T Fiber are coming down, at least for new customers. Spectrum and Comcast have offered attractive new customer promotions in areas served by AT&T, and the phone company is now responding with better offers. New customers can now get 100 Mbps from AT&T Fiber for $35 a month, 300 Mbps for $45 a month, and 1,000 Mbps for $60 a month (all promotions good for 12 months and do not include equipment fees or taxes).

AT&T Reportedly Looking for a Buyer for DirecTV, But Some Are Skeptical a Deal Can Be Done

Just five years after buying DirecTV for $49 billion, AT&T is looking to sell the satellite TV service after losing over 10 million customers because of repeated price hikes, network blackouts, and the ongoing shift to streaming online video.

The Wall Street Journal reported Friday that AT&T was in talks with private equity firms, potentially including Apollo Global Management and Platinum Equity about the possibility of acquiring DirecTV and taking the service private.

Regardless of who buys the service, AT&T might lose $30 billion on the five-year-old venture, buying high and selling low at a price that could drop below $20 billion. AT&T is rapidly losing its television customers. More than six million people have dropped TV packages from AT&T’s U-verse TV and satellite provider DirecTV in the last two years. Craig Moffett, an analyst with MoffettNathanson, told the New York Post even at a rumored discount sale price of $20 billion, AT&T may have “overvalued” the “albatross.”

Moffett is skeptical buyers will close a deal, considering AT&T’s remaining 17.7 million television customers are still in the mood to cancel, with an “astounding” 18% of customers leaving each year.

But even with the customer losses, DirecTV moves a lot of money through its operations, making it at least look attractive on certain buyers’ books. DirecTV’s cash flow helped AT&T’s own unimpressive earnings, adding $22 billion to AT&T’s balance sheet since buying the satellite company. A buyout by a private equity firm could further slowly drain DirecTV by saddling it with debt, secured in part by its still healthy cash flow. A buyer could also attract investors by borrowing even more to pay out handsome dividend bonuses. That could leave DirecTV hopelessly hobbled in debt, leaving DirecTV in an “inevitable” position of having to merge with its chief competitor, Dish Network, or face eventual bankruptcy. If that were to happen, rural Americans could face a satellite TV monopoly as their only choice for live video entertainment.

DirecTV customers report innovation at the satellite service seems to have disappeared since AT&T took over. Very little has changed with the service in the past few years, except for AT&T raising prices and getting stingier with promotions. Many rural DirecTV customers still depend on satellite television because of a lack of over the air reception or broadband service. For these customers, saving money on television service means having to bounce back and forth between Dish Network and DirecTV, trying to keep a discounted promotion active on their account. If the two satellite services eventually merge, that will cease.

After AT&T acquired Time Warner (Entertainment), insiders report many of AT&T’s legacy businesses, including DirecTV and U-verse, have become afterthoughts. AT&T’s bigger priorities now lie with its new 5G wireless service and HBO Max, its new online video service. But the company’s most profitable businesses continue to be cell phone service and selling wired broadband internet access, which together now earns the company over $180 billion annually.

Internet Providers Get Ready To Cut Off Past Due Customers Unless They Agree to Payment Plans

Internet providers are preparing to cut off late-paying and non-paying customers as early as June 30, as the Federal Communications Commission’s “Keep America Connected” pledge expires next week.

In March, FCC Chairman Ajit Pai invited providers to agree to waive late fees and put off disconnections and usage overlimit charges for several months as a result of the sudden economic shutdown due to the COVID-19 coronavirus. As the pledge expires, Pai is asking providers not to immediately disconnect customers who are past due, if they agree to enroll in payment plans to pay off accrued balances. But Pai ultimately stood on the side of the nation’s multi-billion dollar phone and cable companies as he expressed his understanding why some customers will be cut off anyway and turned over to collection agencies as early as next week.

“Broadband and telephone companies, especially small ones, cannot continue to provide service without being paid for an indefinite period of time; no business in any sector of our economy could,” Pai said in a statement.

Some customers have accumulated past due balances of over $1,000 in the past four months, when one combines wireless, cable-TV, internet, and landline charges. As a result, some large providers recognize the need for long-term repayment plans if they hope to preserve customer relationships. With unemployment over 13%, even their most loyal customers may find it difficult to keep up on bills that often exceed $100 a month, and are often much more.

Those customers that lose service for non-payment may forfeit future participation in low-cost internet programs for those on public assistance, and cannot restart service without coming to terms on past due balances. That could leave desperate customers at risk of losing access to job-seeking information, education, and news about the ongoing pandemic.

Some providers are gradually announcing new programs designed to keep service on, but only if customers contact providers and agree to commit to a repayment contract.

AT&T: The company disclosed 156,000 customers are currently enrolled in Keep America Connected-related programs. AT&T expects full payment of past due charges as early as June 30, or up to 90 days after the first past-due notice was issued, whichever is later. Customers can also keep service turned on by contacting AT&T and setting up an alternate payment arrangement.

Charter/Spectrum: The company has announced it will forgive a portion of past due balances and not require full repayment, if the customer or his/her job was directly impacted by the coronavirus. Spectrum’s offer of 60 days of free internet service introduced in March was accepted by at least 400,000 customers. But for most, the offer has since expired. Spectrum has worked to convert those at the end of the free offer into paid customers, but won’t disclose how much success they have had.

Comcast: Customers enrolled in the Xfinity Assistance Program are being given the option of repaying past due amounts in up to 12 equal monthly installments. After a repayment arrangement is made, some customers are persuaded to downgrade service to more affordable plans until past due amounts are repaid. Comcast’s offer of 60 days of free internet service has ended for most customers that enrolled shortly after it was introduced. Comcast has not announced a date when its 1,000 GB usage cap is scheduled to return in most service areas.

T-Mobile: For many, service will terminate if an account is well past due. Customers who want to keep their service must call T-Mobile to make payment arrangements, but T-Mobile did not disclose any formal repayment plans or payment forgiveness. It is imperative that customers call and discuss past due accounts before service is switched off.

Verizon: Verizon will continue service for “hundreds of thousands of customers” that enrolled in the Keep America Connected pledge program, as long as they agree to make regular payments as part of a special repayment plan that will be introduced for these customers in July. Customers will be billed a portion of their past due amounts along with current service charges until repayment has been made in full.

Of the country’s largest providers, only Charter/Spectrum has agreed to forgive some past due balances outright. Others will expect to be repaid and are likely to suspend service quickly if repayment plans also fall past due.

Maryland Sues Cricket Wireless, AT&T For Selling Phones That Stopped Working A Year Later

Cricket Wireless and AT&T are being sued by Maryland Attorney General Brian E. Frosh for allegedly selling phones both companies knew would stop working on Cricket’s network a year after the two companies merged.

Frosh announced the lawsuit on Monday, claiming both wireless companies violated the Maryland Consumer Protection Act.

Cricket formerly operated its own mobile network, which relied on CDMA technology. Customers were required to use devices compatible with that mobile standard to access the Cricket network. In July 2013, AT&T agreed to acquire Cricket Wireless’ parent, Leap Wireless, for $1.2 billion. The FCC approved the acquisition in March 2014. Cricket, now under AT&T’s ownership, continued to sell CDMA mobile devices to consumers for the next year. Frosh contends both companies knew AT&T was planning to decommission Cricket’s cellular network and move customers to AT&T’s own network, which uses GSM technology incompatible with CDMA.

Frosh

That left customers with devices that stopped working with their Cricket service, requiring many to purchase new phones compatible with AT&T’s GSM network. Other customers discovered their Cricket phones were locked exclusively to Cricket’s network, and the company refused to unlock the phones so they could be used on a competitor’s network. Many customers complained their costly smartphones were less than a year old before they stopped working. Cricket’s only solution was to buy a new device, often costing hundreds of dollars.

“Cricket and AT&T continued to market and sell a product to consumers they knew wouldn’t work after their merger was complete,” said Frosh. “This practice, we allege, was undertaken to maximize profit from the sale of expensive smartphones without regard for the harm it would cause consumers.”

The lawsuit is seeking restitution, an injunction preventing Cricket and AT&T from engaging in unfair or deceptive trade practices, as well as civil penalties and costs.

A hearing on the matter is scheduled for Wednesday, September 9, 2020, at the Office of Administrative Hearings in Hunt Valley, Md. For more information, Maryland residents can call the Consumer Protection Division hotline at 410-528-8662 or toll free at 1-888-743-0023.

AT&T’s Lawyers Use Media Reports Critical of Company’s Throttle Policy in Defense of Throttling Customers

AT&T throttles

How low can AT&T go? Customers retaining “unlimited data plans” that were discontinued in 2010 were throttled to as little as 127 kbps after using just 2 GB a month.

AT&T’s lawyers are asking a judge to accept media coverage exposing the company’s allegedly “secret” speed throttling policy for some of its wireless customers as a valid defense in a 2015 class action case that seeks to compensate some AT&T customers for misrepresenting its “unlimited data plan.”

AT&T last month asked the judge to have the long-running case thrown out, claiming AT&T well publicized its new speed throttling policy it imposed on a legacy unlimited data plan the wireless company stopped selling in 2010, but allowed existing customers to keep. By 2011, some customers still subscribed to the grandfathered unlimited plan started noticing data speeds plummeting to near dial-up if they used a lot of data. At first, AT&T appeared to impose a speed throttle on customers using over 10 GB of data per month, but by 2012, AT&T was accused of speed throttling unlimited customers after they used as little as 2 GB of data during a billing period.

The resulting class action lawsuit, filed in California, alleged that AT&T misrepresented its unlimited data plan as ‘unlimited,’ when in fact in practical terms it was not. The plaintiffs are seeking damages from AT&T to discourage the company from engaging in false advertising in the future, and to compensate customers that paid for an unlimited data plan that eventually became almost useless after customers used just over 2 GB a month.

AT&T’s defense partly relies on the company’s claim it extensively publicized changes to its legacy unlimited data plan as early as 2011, and the plaintiffs should have been aware of it. The Federal Communications Commission was aware of AT&T’s actions and just a month before the class action case was filed, the regulatory agency issued a notice of apparent liability to AT&T proposing a $100 million fine for unwarranted speed throttling.

AT&T’s attorneys have worked hard to stop the lawsuit over the last five years. In addition to claiming customers were notified of their excessive data usage through text messages and billing notices, AT&T last month sought to introduce a dozen media reports covering its speed throttling policy into the court record to convince U.S. District Judge Edward Milton Chen the plaintiffs don’t have a case and to get the lawsuit dismissed.

One of the news articles cited in AT&T’s May 14 filing was written by former DSL Reports’ author Karl Bode, who has been roundly critical of AT&T’s data caps for over a decade. Ironically, AT&T’s defense team is arguing Bode’s report, “AT&T Wages Quiet War on Grandfathered Unlimited Users” offers proof AT&T was not keeping its speed throttling policy “secret,” as at least one plaintiff claimed. Bode suggested AT&T had engineered its speed throttling plan to push grandfathered unlimited data plan customers off the plan in favor of more profitable plans offering a specified data allowance and overlimit fees.

Bode

“In other words, pay $30 for “unlimited” service where you’re actually only getting 2 GB of data before your phone becomes useless, or sign up for a 3 GB tier for the same price so you’re in line to get socked with the usage overages of tomorrow,” Bode wrote at the time.

His views have not changed in 2020.

“For nearly a decade AT&T has tap danced around the fact it misleadingly sold an ‘unlimited’ data plan packed with confusing limits. No amount of legal maneuvering can hide the fact that AT&T lied repeatedly to its customers about the kind of connection they were buying,” Bode told Stop the Cap! “Instead of owning its mistake, learning from it, and moving forward, AT&T’s now trying to point to critical news coverage from the era to falsely suggest consumers should have known better. It’s utterly nonsensical and speaks volumes about the lack of ethical leadership at a company that routinely sees some of the lowest customer satisfaction ratings in American industry.”

AT&T’s lawyers are not prepared to concede, however. Since the lawsuit was filed, AT&T’s legal team attempted to force the case into arbitration in 2016. That effort was successful until a 2017 California Supreme Court decision in another case gave the plaintiffs ammunition to claim that it was against California law to force consumers into arbitration. The Ninth Circuit court agreed, and the case reverted to district court, where AT&T immediately began efforts to have the case dismissed outright.

AT&T is not alone throttling so-called “heavy users” that have either legacy or current unlimited data plans. All major cellular companies enforce fine print policies that allow speed throttling after customers consume as little as 20 GB of wireless data during a billing cycle. The fact companies still advertise such plans as “unlimited” irks Bode.

“An unlimited data connection should come with no limits. If giant wireless carriers can’t respect the dictionary, they should stop using the word entirely,” Bode told us.

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