AT&T has agreed to settle a class action lawsuit that accused the company of selling DSL service at speeds it often never provided to customers.

The case, Robert Schmidt, individually and on behalf of all others similarly situated vs. AT&T and SBC Internet Services, Inc., (d/b/a AT&T Internet Services), was filed in 20o9 when AT&T customers learned the company was configuring some customers’ DSL modems at maximum speed rates below those advertised by AT&T.

AT&T has agreed to settle the lawsuit for a maximum of nearly $100 million, or less depending on the total number of claims received nationwide.

The amount customers are entitled to receive will vary depending on how much of an impact AT&T’s speed limiting configuration had on a their service.  The settlement is also retroactive back to April 1, 1995 meaning longtime AT&T DSL customers could be entitled to several hundred dollars in compensation.  For those dissatisfied with the speeds they received from AT&T’s DSL service, their compensation will be limited to a one-time payment of $2.00.

For some others, the settlement will provide more generous compensation.  The law firm that brought the case, Dworken & Bernstein, will receive up to $11 million in compensation and also get to hand out $3.75 million dollars of AT&T’s money to no less than 20 charities.

Some Background

AT&T provides DSL service to the vast majority of its customers.  This technology works over traditional copper wire phone lines.  Unfortunately, that infrastructure was never designed to carry data, but after years of development engineers found a way to make Ma Bell’s wires work for broadband service.  Unfortunately, the service has never been able to provide consistent speeds to every customer.  The further away you are from the phone company’s central office (where your phone line ultimately ends up), the slower the speed your line can support.  Someone a block away from the phone company office can easily achieve the speeds AT&T promised its customers in its marketing.  But if you are a few miles away, chances are you cannot.

For those more distant, or who live in areas with bad phone lines, your DSL modem won’t be able to maintain a consistent connection at the speeds AT&T sold you.  That will cause the modem to reset itself regularly, trying to re-establish an appropriately fast connection.  That can drive customers crazy because your service will often stop working while the modem tries to renegotiate the connection.  Some phone companies stop the constant reconnection battle by configuring the modem to work at a lower, more stable speed that will work with an individual’s phone line.

For instance, here in Rochester Frontier Communications advertises 10Mbps DSL service.  But for me, more than 10,000 feet away from Frontier’s central office for my area, the line simply couldn’t support that speed.  So Frontier locked the modem to deliver just 3.1Mbps, not the 10Mbps the company markets to customers in this area.

While that practice may seem technically smart, it’s obviously not legally smart, as AT&T has discovered.  Even using the traditional weasel words of “up to” when marketing broadband speeds, AT&T felt it was exposed to charges of false advertising and defrauding customers, and decided to settle the case.  It should be noted AT&T strongly denies any allegations of wrongdoing, but has agreed to settle to avoid the burden and cost of further litigation.

AT&T now faces the prospect of paying compensation to every DSL customer it speed limited in this fashion, and has also agreed to stop the practice.

The Details

Who Gets the Settlement? — Potentially any AT&T DSL customer paying for service after March 31, 1994.  This also includes customers of companies acquired by AT&T:

• SBC Internet Services, Inc., d/b/a AT&T Internet Services
• BellSouth Telecommunications, Inc.
• Pacific Bell Internet Services
• Southwestern Bell Internet Services, Inc.
• Ameritech Interactive Media Services, Inc.
• SNET Diversified Group, Inc.
• Prodigy Communications Corporation
• Oklahoma Internet Online

Many AT&T customers may have already been notified about this settlement through postcards or other mailers sent by AT&T based on customer records.

What Kind of Settlement Will I Get? — For longstanding AT&T DSL customers, the amount could be substantial, so it’s worth your while to participate, even if you are no longer a customer.  For most everyone else, it’s probably worth $2.00.

There are three types of benefits that will be paid to those who submit valid claims under the settlement once it becomes final. Payments will be made by check or by credits on a customer’s bill.

• Group A Benefit. If AT&T’s Records indicate that AT&T configured the downstream speed of your DSL service, for one month or more during the Settlement Class Period, at a level lower than the Maximum DSL Speed for the plan you purchased, you may be eligible to receive $2.90 for each month your service was so configured.  This could add up to hundreds of dollars.
• Group B Benefit. If you are not eligible for the Group A Benefit and AT&T’s Records show that your DSL service may have performed, for one month or more during the Settlement Class Period, at downstream speeds below the following levels, you may be eligible to receive $2.00 for each such month:
  • 200 Kbps, if you purchased a plan with a Maximum DSL Speed of 768 Kbps;
  • 384 Kbps, if you purchased a plan with a Maximum DSL Speed of 1.5 Mbps before October 2008;
  • 769 Kbps, if you purchased a plan with a Maximum DSL Speed of 1.5 Mbps after October 2008;
  • 1.5 Mbps, if you purchased a plan with a Maximum DSL Speed of 3.0 Mbps; or
  • 3.0 Mbps, if you purchased a plan with a Maximum DSL Speed of 6.0 Mbps.

  Because the settlement provides for monthly credits, you could also receive hundreds of dollars in refunds or service credits, making participation in the settlement worthwhile.

• Group C Benefit. If AT&T’s records do not show that either you fall within Group A or Group B but you nonetheless believe that your DSL service has not performed at satisfactory speeds based upon the plan that you purchased, you may still be eligible for a one-time payment or bill credit of $2.00. In other words, if at anytime you were underwhelmed by AT&T’s DSL speeds, you can file a claim and get two dollars back.

AT&T has also agreed to monitor customers’ DSL speeds over a period of 12 months and if service cannot achieve the speeds promised, the company will either make repairs to boost speed or adjust billing.

For AT&T customers in Missouri, Oklahoma, Kansas, Arkansas, and Texas, AT&T’s settlement would replace a similar class action case filed in St. Louis.  Ford and Dunne v. SBC Communications, Inc. and SBC Internet Services, Inc., would have only covered customers after December 31, 2000.

Customers who believe they are entitled to participate in the settlement can get additional information and file an online claim at the DSL Speed Settlement website.

Bell Labs, a division of Alcatel-Lucent, has found a way to extract more speed over aging copper wire most phone companies still rely on to deliver service.  Its latest achievement, in the lab anyway, proved those wires could accommodate 300Mbps downstream speeds, at least if you were within 400 meters (that’s just over 1,300 feet) from phone company facilities.  Further on, the company was able to achieve 100Mbps speeds over a distance of one kilometer (0.62 miles).

Stop the Cap! reader Jeff writes wondering what impact such improvements have when they are measured in distances more commonly associated with a sprinting event.  Phone companies are well aware of the limitations of their legacy networks.  Some, like Verizon, decided the network designed more than a century ago was destined for the scrap heap.  They began to deploy fiber-optic based networks instead.  Others are trying to extract as much as they can from copper, as cheap as they can for as long as they can.

The problem with copper wiring is that the longer the distance, the slower the data speed those lines will support.  Interference or crosstalk from neighboring cables crammed together into a bundle can also create major problems, especially at longer distances.

Bell Labs says it has devised a way around the crosstalk problem with the testing of its “DSL Phantom Mode” solution:

At its core, DSL Phantom Mode involves the creation of a virtual or “phantom” channel that supplements the two physical wires that are the standard configuration for copper transmission lines. Bell Labs’ innovation and the source of DSL Phantom Mode’s dramatic increase in transmission capacity lies in its application of analogue phantom mode technology in combination with industry-standard techniques: vectoring that eliminates interference or “crosstalk” between copper wires, and bonding that makes it possible to take individual lines and aggregate them.

In the eyes of Alcatel-Lucent, Bell Labs has found an answer to the dilemma of what role phone companies can play in a 100Mbps broadband future.

“We often think of the role innovation plays in generating technologies of the future, but DSL Phantom Mode is a prime example of the role innovation can play in creating a future for existing solutions and injecting them with a new source of value,” said Gee Rittenhouse, head of Research for Bell Labs. “What makes DSL Phantom Mode such an important breakthrough is that it combines cutting edge technology with an attractive business model that will open up entirely new commercial opportunities for service providers, enabling them in particular, to offer the latest broadband IP-based services using existing network infrastructure.”

Before getting too excited, remember these demonstration tests occurred in a laboratory environment.  No squirrels chewed up the cables. No water leaking into cracks in the cable’s insulation or a connection box caused issues.  No aging splices of corroded copper wiring up on poles since the late 1960s were found.  Your home’s own phone wiring was also never part of the equation.

Distance is still a considerable limiting factor in DSL deployments.  Most of the benefits of this research will go to companies like AT&T, which uses a hybrid fiber-copper wire network in its U-verse areas.  The fiber cuts down the distance from a phone company office to a neighborhood.  Once in your neighborhood, traditional copper wires run the rest of the way, right up into your home.  If AT&T can leverage additional speed from its weakest link — the copper-based phone line — it may be able to use the additional bandwidth to boost broadband speed or accommodate more concurrent applications they cannot support today.

For phone companies still dependent on long distances of copper wiring, the expense of bootstrapping Alexander Graham Bell’s century-old network begins to look silly.

Sometimes it’s better to build anew instead of repeatedly trying to fix the old.  And many are doing exactly that.

Hundreds of small independent telecoms, broadband service providers, municipalities and cable television companies have brought gigabit-enabled, all-fiber service to a total of more than 1.4 million North American homes – about a quarter of all fiber to the home connections on the continent – according to the Fiber-to-the-Home (FTTH) Council.

The FTTH Council noted in a recent study more than 65 percent of small independent telephone companies that have not upgraded to FTTH said they would very likely do so in the future, with another 11 percent saying they were somewhat likely. More than 85 percent of those that have already deployed FTTH said they would be adding more direct fiber connections going forward.

Surprisingly most of this expansion outside of Verizon’s FiOS service comes from small family-owned companies, cooperatives, and the remaining independent phone companies not snapped up by Frontier, Windstream, and CenturyLink.

“To continue to meet the rapidly growing bandwidth requirements for emerging applications and services, these companies know that they have to ‘future-proof’ their networks by running fiber all the way to the premises – and that’s why we are seeing all this activity,” says Joe Savage, President of the FTTH Council.

“In many cases, these small telephone companies are longtime family-owned businesses that are deeply involved in local affairs and are responsive to their community needs for faster broadband as a key to future economic development,” said Mike Render, president of RVA LLC and the author of the study. “That’s why so many of these companies are looking to get into FTTH or expand their deployments,” he said.

Average measured connection speed (All graphics courtesy: Akamai)

America is marching backwards with a gradual decline in broadband speeds, according to a new report issued today.

Akamai’s State of the Internet Report for the final quarter of 2009 (report only available with permission from Akamai) rates America 22nd fastest in broadband connections, averaging 3.8Mbps, and declining.  Speeds dropped 0.9 percent for the quarter, 2.5 percent for the year.

Still on top are South Korea, Hong Kong, and Japan, now joined by former Soviet bloc countries Romania, Latvia, and the Czech Republic — all rapidly improving broadband speeds by double digit percentages.

Within the United States, among the top 10 individual states — five rated increased speeds and five measured lower speeds.  Some attribute this to network congestion, others suspect some customers have downgraded service in a poor economy.  But the biggest reason for the speed drop comes from wireless broadband.  Some Americans are increasingly relying on broadband service delivered to smartphones or other wireless devices over slower speed networks.

Overall, 31 states saw average connection speeds increase in the fourth quarter – up from 25 in the prior quarter. Notable gains included South Dakota’s 18 percent jump to 4.5 Mbps. Fourth quarter decreases in average connection speeds were seen in 19 states and the District of Columbia, and included Virginia’s 13 percent drop to 4.0 Mbps. Akamai believes that the significant decline in Virginia was likely due, in part, to increased traffic seen from lower-speed mobile connections that entered the Internet through gateways within those states.

Increased speeds year over year were seen in 29 states, with Hawaii growing 33 percent to 4.7 Mbps.

South Korea’s introduction to the iPhone drove their average speeds down by a whopping 24 percent.  KT (formerly Korea Telecom) is at fault here — the national wireless carrier has slow wireless Internet speeds.

Stop the Cap! readers  in Rochester and Austin should notice both cities made the top ten fastest list, measured by Akamai.

[Thanks to Stop the Cap! reader Rob who sent us details.]

Fastest American Broadband Cities by Unique IP

Fastest Broadband States

Best Average Measured Connection Speeds (not suprisingly most are college towns)

Top 10 States

Verizon FiOS has upped the ad war against Comcast, one of its competitors in several northeastern cities.  In a new series of ads, Verizon is taking on Comcast’s “name change” to Xfinity, implying it’s the same old Comcast just using a new name.

Comcast may be fighting back, but not with a response ad.  Today, Broadband Reports hears word from a Comcast insider the company is planning on boosting broadband speeds later this year.

According to the source, the new Comcast tiers will be 12/2 Mbps, 20/4 Mbps, 50/10 Mbps, and 100/25 Mbps. Current 22/5 customers will be grandfathered, according to the source, and Comcast apparently hopes to get that 100 Mbps tier into about 20% of their footprint this year.

Comcast’s current speeds differ depending on whether you’re in a DOCSIS 3.0 upgraded market or not. Non DOCSIS 3.0 market customers currently have the choice of three tiers: 6/1 Mbps, 8/2 Mbps, and 16/2 Mbps. DOCSIS 3.0 upgraded markets have their choice of 12/2 Mbps, 16/2 Mbps, 22/5 Mbps, or 50/10 Mbps.  Much later this year it looks like Comcast users will also start seeing some faster upstream speeds.

Verizon FiOS has the capability to beat Comcast’s broadband speeds over its entirely-fiber-based network, but not everyone can sign up for FiOS.  Comcast may not want to give away the broadband speed store in areas where the now indefinitely-grounded FiOS service will never go.

[flv width=”640″ height=”500″]http://www.phillipdampier.com/video/FiOS Takes On Xfinitiy.flv[/flv]

Comcast’s new Xfinity brand is the target of a new round of advertising from Verizon FiOS.  (2 minutes)

AT&T has announced it is bringing its U-verse broadband, telephone, and television system to Springfield, Missouri providing residents an alternative to cable service from Mediacom.

“We’re very excited to offer a competitive choice to Springfield consumers,” said Kris Ryan, general manager of AT&T Home Solutions for the greater Missouri region.

Unfortunately, most Springfield residents will have to wait before the service becomes available in their neighborhood.  AT&T has only limited service available in Springfield, Battlefield, Nixa, Republic and parts of Fremont Hills.  The company has a tradition of announcing U-verse, and then slowly deploying service on a neighborhood-by-neighborhood basis over the next several years.

Potential customers noticed, complaining that entire zip codes in and around the Springfield area currently do not have U-verse available.

When the service does arrive, residents can expect pricing ranging from $19 – $167 a month, depending on how many channels and what type of broadband speed is desired.

Mediacom can beat AT&T’s broadband speeds in Springfield, as it upgraded to DOCSIS 3 service, permitting customers to get up to 50Mbps service from the cable company. AT&T’s U-verse tops out at 18Mbps in the Springfield area.

Residents can check to see if U-verse is available at their address by visiting the AT&T U-verse qualification website.

[flv width=”360″ height=”260″]http://www.phillipdampier.com/video/KSFX Springfield ATT Launches U-verse in the Ozarks 3-22-10.flv[/flv]

KSFX-TV in Springfield reports on the unveiling of U-verse in the greater Springfield area.  (1 minute)