AT&T seems to have suddenly discovered it has millions of rural customers who are making due with the company’s poorly-rated, slow speed DSL service AT&T pondered selling off to somebody else.

In a sudden turnaround, CEO Randall Stephenson has decided it might be better to upgrade the company’s service instead of ditching it altogether.

Stephenson’s apparent decision not to jettison rural AT&T landlines on the open market may have more to do with the current regulatory climate than what’s best for shareholders in the short term. AT&T may also find few buyers for the millions of rural landlines the company has no plans to upgrade to its U-verse fiber to the neighborhood platform. The most likely would-be buyers are preoccupied with their current operations:

• Frontier Communications, which purchased rural assets from Verizon Communications, is facing an enormous debt payment in 2013 and a declining stock price;
• FairPoint Communications, which owns former Verizon landlines in northern New England, is still trying to make its business plan work after an earlier bankruptcy filing;
• CenturyLink is still attempting to absorb former-Baby Bell Qwest into its network;
• Windstream may be too small to buy the millions of customers in multiple states AT&T seemed to no longer want until recently.

Stephenson told investors at a Sanford C. Bernstein conference that the company is now considering keeping its rural customers and upgrading DSL technology to better serve them.

A DSLAM reduces the amount of speed-slowing traditional copper phone wiring between the telephone company's "central office" (CO) and your home's DSL modem.

With 15 million AT&T customers having no prospect of getting AT&T’s U-verse service, and 5 million without any AT&T broadband options at all, Stephenson says investment in Internet Protocol Digital Subscriber Line Access Multiplexers, better-known as IP DSLAMs, could extend service and also improve speeds for existing DSL customers, and not cost the company a fortune.

Stephenson noted the cost of the equipment needed to extend service has dropped considerably, in part because demand for DSL has been in decline as customers seek faster broadband, often from cable operators. The two largest phone companies in the country — AT&T and Verizon — had also shown little interest in further expanding their DSL networks.

For a reasonable investment on service upgrades, AT&T could bring speeds of 10Mbps or more to certain customers who now live with 6Mbps or less.

The challenge AT&T faces is reducing the amount of legacy copper telephone wiring between the phone company’s switching office and the customer. Customers who live more than 10,000 feet from a central office make due with very slow DSL speeds. Replacing some of that copper wiring with fiber optics can dramatically increase speeds.

AT&T U-verse works on a similar concept, except AT&T’s most advanced service needs as little copper phone wiring as possible. AT&T’s newest proposal for its rural customers would represent a middle ground — extending fiber to a handful of DSLAMs at distant points from the central exchange, with copper phone wiring carrying the signal the rest of the way to the subscriber’s home. This would open the door to DSL for customers who could not purchase the service before. It would also boost speeds for existing customers.

The decision marks a departure from AT&T’s interest in “solving” the rural broadband problem with heavily usage-limited wireless Internet access over its 4G network. Verizon Wireless is currently testing its own wireless broadband service designed for home users, but it costs $60 and only provides 10GB per month of usage.

While Stephenson has not backed away completely from selling off rural customers outside of U-verse service areas, he told investors he now has a more optimistic view of AT&T’s rural folk in light of marketplace changes.

“We are giving this a hard look,” Stephenson told investors on a recent JPMorgan conference call. Already-available DSLAM technology “brings broadband capability in a more cost-effective manner, with a better revenue profile than perhaps we would have thought two years ago.”

Verizon FiOS standalone broadband customers choosing the company’s standard service will see rate increases of $10 a month starting June 17, but those upgraded to the company’s premium speed tiers, which are getting much faster, may not see any rate hike at all.

The Verge received word from an anonymous Verizon employee who passed along the rate hike information that will apply to broadband-only customers:

• Standard 15/5Mbps service: (Was $54.99/mo) now up $10 to $64.99
• 50/25Mbps service: (Was $74.99/mo for 25/25Mbps) remains $74.99
• 75/35Mbps service: (New offer) $84.99
• 150/65Mbps service: (Was $94.99/mo for 50/20Mbps) remains $94.99
• 300/65Mbps service: (Was $199.99/mo for 150/35Mbps) now $204.99

All new pricing requires a two-year contract (month-to-month service costs $5/mo more) and home phone service with Verizon (or pay a $5/mo surcharge). Speeds of 150 or 300Mbps require a 2-4 hour service call and upgrade fee of $100 for new equipment unless you are on a two-year contract, are a new customer, or already have Verizon’s 150Mbps service. Customers living in multi-dwelling units served by VDSL and not fiber-to-the-apartment will pay the new higher price for standard service, but cannot receive the new enhanced speed tiers.

With the majority of Verizon customers paying only for standard speed service, Verizon will pocket significantly higher revenue for broadband. But customers need not pay for more expensive a-la-carte broadband. Verizon offers significant discounts for customers who sign up for triple play packages on phone, Internet, and television service. Bundled customers continue to get the most bang for the buck, but not if you don’t use the services Verizon wants to sell.

Jonathan Takiff, a columnist for the Philadelphia Daily News says he isn’t buying at the prices Verizon is charging.

I also was disappointed with the announcement that Verizon will continue to offer entry level FiOS Internet running at  15/5 Mbps. If the operation has such superior technology and capacity, why not flaunt it and give us casual users more headroom?  Even with its old school coaxial cable network, Xfinity service starts at 20 Mbps down.

Clearly, Verizon hopes  to up-sell customers to a higher, more profitable tier. And they’re using that grandiose 300 Mbps offering as an attention getter, to get folks thinking more aspirationally. Kinda like the way a car company throws a high powered, ridiculously priced, super flashy sports car into the showroom mix. Makes you go for the bigger engine in the econobox.

[…] What’s a good deal for Internet service on a global basis? In front-running Japan, the  average service runs at 61 Mbps and costs 27 cents per megabit, per month. While not quite as dramatic,  Internet services in South Korea, Finland and France also make U.S. providers look like stingy bastards.

This scrap copper wire is as good as gold

While telephone companies continue to suffer repeated outages from copper wire thieves, the growing problem of copper theft has now begun to impact cable-TV providers and even electric service in some areas.

Over the Memorial Day holiday, thieves were busy stripping phone, cable, and electric wiring from utility poles, underground conduit, and even buildings. Windstream suffered significant losses in the greater Tulsa area late last week when thieves sliced through wiring supporting phone, television, and broadband service, quickly spooling it up on pickup trucks to be hauled to copper recyclers, often to finance drug habits.

Windstream reports the problem of copper wire theft is growing and becoming more widespread, especially in out of the way places where thieves are not likely to be caught in the act. The Tulsa-area copper capers are characterized as semi-professional because thieves are starting to use professional tools to quickly slice through wiring and can scoop up 1,000 feet or more of cable in minutes.

Copper theft has even become a problem in office parks, where thieves are stealing high voltage electrical cables, often at the point where they attach to buildings. One Albuquerque radio station was off the air for nearly 14 hours after thieves ripped the radio station’s electrical wiring right off the building and out of the underground conduit.

[flv width=”360″ height=”290″]http://www.phillipdampier.com/video/KOKI Tulsa Thieves cut copper and knock out cable 5-25-12.mp4[/flv]

KOKI in Tulsa takes a look at the latest wave in copper cable theft — stealing cable television -and- telephone wires that disrupt phone, TV and Internet service all at once. (Warning: Loud Volume) (2 minutes)

[flv width=”480″ height=”290″]http://www.phillipdampier.com/video/KOB Albuquerque Copper thieves knock local radio station off the air 5-30-12.mp4[/flv]

KOB in Albuquerque talks with a nearby radio station taken off the air when cable thieves cut the building’s electrical wiring and yanked some of it right out of the ground.  (2 minutes)

Upgrade or else.

AT&T is now forcing some of their customers relying on the company’s traditional DSL service to upgrade to AT&T U-verse or face service suspension.

The latest customers impacted by AT&T’s forced upgrade are in parts of Connecticut.

“This is a reminder that within the next 30 days, your current service will change to AT&T U-verse High Speed Internet,” reads the letter mailed to customers facing the mandatory transition. Unfortunately, customers have to call AT&T to arrange for new equipment if they want their service to continue uninterrupted — existing DSL modems don’t work with U-verse.

Callers who dial the toll-free number in the letter get to order the U-verse equipment for free, but they routinely endure a hard sales pitch selling U-verse video and phone service as well, at a corresponding higher price. Customers are sent self-install kits at no charge and are offered the same rate they currently pay for DSL, sometimes with faster speeds on the U-verse network. But after one year, regular U-verse prices apply, and they are often significantly more expensive than traditional DSL service.

A Broadband Reports reader in Conn. shared a copy of the AT&T U-verse upgrade letter posted on that site's AT&T forum.

The promotional prices offered to Stop the Cap! reader Ralph were not as good as what he was currently paying for basic DSL on a promotion he purchased earlier.

“I am now paying $14.95 a month under the promotion I am on now and AT&T first tried to sell me a plan that cost $5 more,” Ralph writes. “They quickly agreed to keep my current promotional price after I told them about it, but what they will not tell me is what I will pay after the one year is up, nor can I find U-verse regular pricing on AT&T’s website.”

This special offer bundle comes with a surprise after the promotion ends -- a much higher bill.

AT&T is currently promoting Internet-only promotional pricing as follows: Basic Internet: $19.95, Express Internet: $19.95, Pro Internet: $19.95, Elite Internet: $24.95, Max Internet: $29.95, Max Plus Internet: $34.95, Max Turbo Internet: $44.95. We could not find a disclosure of what the regular prices would be after the one-year contract expired, and that bothers Ralph.

“I realize they are going to match my 3Mbps service on U-verse, but somehow I suspect the regular U-verse price is going to come higher than the DSL service I have been using,” he says.

Ralph’s intuition is correct. Stop the Cap! called AT&T at the number provided on the letter and spoke with a customer service representative at the AT&T Web Sales Center. Although AT&T will ship the required equipment (a wireless router/modem combo) at no charge, AT&T will eventually make that money back charging customers higher prices for Internet service.

Current regular pricing for Ralph’s DSL service after his promotion ends will cost him $24 a month for 3Mbps service.  U-verse charges $38 a month (off promotion) for the same speed service — a $14 monthly difference.

“That sucks,” Ralph said after we shared the news. “Why should I have to change what works fine right now?”

AT&T says keeping DSL in certain U-verse upgrade areas is not possible. In fact, AT&T’s letter warns, if customers do not call to arrange for the U-verse “upgrade” by a certain date, their broadband service will be suspended. That could be a problem for customers who also use their broadband account with an Internet-based phone line.

“There goes 911 or any other emergency calling,” Ralph reminds us. “Thanks, AT&T.”

Some customers who have completed their U-verse upgrade report AT&T messed up their subsequent billing, charging full price instead of an agreed-upon promotion. Slickdeals members report AT&T often requires constant reminding to fix billing errors that generally hand customers higher bills than they expected.

“I am trying real hard to figure out how this represents the ‘next evolution of communications’ AT&T writes about in their letter,” Ralph concludes. “All I am going to eventually get is a much higher bill for a service I don’t want or need. I guess it’s time to call the cable company again.”