AT&T will spend $14 billion on its wireless and wired broadband networks in an effort to improve service for its urban and suburban customers, while preparing to argue its case for disbanding parts of the century-old landline network.

In a major 90-minute presentation with most of AT&T’s top executives on stage, the company announced its intention to move away from traditional landline service and towards a combination of an enhanced broadband platform and 4G LTE wireless access, especially in the 22 states where it currently delivers landline service.

The investment plan — Project Velocity — is a pivotal moment for AT&T, which has seen deteriorating revenue from its aging rural landline network and has focused most of its investments in recent years on its increasingly profitable wireless network.

But AT&T also hoped to hang on to the enormous revenue it still earns providing traditional home phone service. Its early answer for landline cord cutting came in 2006 with U-verse, an IP-based network platform on which AT&T can sell video, voice, and broadband service with a minimum of regulatory oversight. U-verse succeeded attracting high-paying customers who either stayed with or returned to AT&T. But now company officials hope U-verse can help the company achieve victory in its next public policy fight: to abandon traditional landline service altogether.

That emerging battle is likely to pit urban and suburban customers enjoying enhanced U-verse service against rural AT&T customers deemed unsuitable for wired broadband. AT&T is seeking to decommission up to 25% of its rural landline network as part of the strategy announced today, shifting affected customers to its 4G LTE wireless voice and broadband service, which comes at a higher cost and includes draconian usage caps.

Critics contend such a move could leave AT&T largely unregulated with monopoly control over its networks, with few service requirements or access concessions for competitors. It would also leave rural customers relegated to a wireless Internet future, perhaps permanently.

Landline/Wired Broadband: Good News for Some, Scary News for Rural America

AT&T plans to expand and enhance its broadband network to 57 million consumers and small businesses across its 22-state operating area, reaching 75 percent of customers by the end of 2015. AT&T will operate three broadband networks going forward, while gradually decommission its existing ADSL network.

• U-verse: AT&T’s triple play package of TV, Internet, and Voice over IP phone will be expanded by more than a third to reach an additional 8.5 million customers by the end of 2015. This will make U-verse available to 33 million customers in AT&T home phone service areas. Most of the expansion will be in urban and suburban areas bypassed during the initial U-verse construction phase. To remain competitive, AT&T will also increase available broadband speeds for existing customers up to 75Mbps;
• U-verse IPDSLAM: An additional 24 million customers will be offered a combo voice-broadband package that could be called “U-verse Lite.” It will offer speeds up to 45Mbps and is primarily intended as a replacement for the company’s DSL service in exurban and semi-rural areas. Arrives by the end of 2013;
• Fiber to Multi-Tenant Business Buildings: AT&T plans to expand its fiber network to reach more commercial buildings, but also lay the foundation to use these facilities for future distributed antenna systems and small cell technology that will create mini-cell sites serving individual neighborhoods, cutting down the demand on existing cell towers.

Customers living in rural, open country in AT&T service areas in states like Texas, northern Mississippi, western Tennessee and Kentucky, central and northern California and Michigan, and the rural areas of the Carolinas may eventually find themselves using AT&T’s wireless network as the company seeks to decommission its landline infrastructure.

A number of AT&T customers living in areas shown in red may see red if and when AT&T begins trying to force rural Americans to its more profitable wireless networks.

But AT&T officials also admitted in a Wall Street Q & A session that the company planned nothing special for rural landline customers transitioned to wireless. Those customers will be sharing service with traditional mobile customers. If AT&T’s service plan resembles that of Verizon, customers will pay around $60 a month and limited to just 10GB of usage per month. If AT&T decommissions its existing landline infrastructure, no other wired provider is likely to take its place.

Most remaining regulations enforcing a level playing field for telecommunications networks remain with legacy copper-wire landline Plain Old Telephone Service. AT&T’s plan would effectively banish that network in its entirety through a series of regulatory and service-transition maneuvers:

• U-verse customers actually no longer have traditional landline service. U-verse offers barely regulated Voice over IP service, free from most state regulations and pricing oversight;
• U-verse IPDSLAM customers will also quietly forfeit their traditional landlines. This product works over an IP network, which means telephone service is Voice over IP;
• Wireless service is already barely regulated and not subject to price oversight or universal service requirements that landline providers must meet to deliver service to all Americans.

AT&T proves you have to spend money on network upgrades to make money from customers purchasing the enhanced services they offer.

4G LTE Mobile Broadband: 99% Coverage Across 22 AT&T Landline States, Up to 300 Million Americans Served by the End of 2014

The majority of AT&T’s planned investment in its network will once again go to its highly profitable wireless division. At least $8 billion will be spent on bolstering AT&T’s 4G LTE wireless coverage area, especially in rural sections across its 22 state landline service area. That investment is necessary if AT&T hopes to win approval to decommission traditional landline service for rural customers.

• 4G LTE Expansion: AT&T plans to expand its 4G LTE network to cover 300 million people in the United States by year-end 2014, up from its current plans to deploy 4G LTE to about 250 million people by year-end 2013. In AT&T’s 22-state wireline service area, the company expects its 4G LTE network will cover 99 percent of all customer locations;
• Spectrum: AT&T continues its acquisition binge with more than 40 spectrum deals so far this year. AT&T’s biggest win of the year was approval for new WCS spectrum it will occupy alongside satellite radio. AT&T will have accumulated 118MHz of spectrum nationwide.
• Small Cell Networks: AT&T has already aggressively deployed a large number of Wi-Fi hotspots to encourage customers to shift traffic off its traditional wireless network. The next priority will be deployment of small cell technology, macro cells, and distributed antenna systems that can offer neighborhood-sized cell sites to serve urban and suburban customers and high density traffic areas like shopping malls and entertainment venues.

AT&T’s wireless 4G LTE upgrades will cover 99% of the service areas where the company provides landline service. It has to offer blanket coverage if it hopes to win approval for decommissioning its current legacy landline network in rural America.

Using New Infrastructure to Drive New Business and Even Higher Revenue

AT&T would have had a hard time selling its planned investments to Wall Street without the promise of new revenue opportunities. AT&T’s new network enhancements will support a range of new services the company hopes to introduce to win greater revenue in the future:

• AT&T Digital Life: A nationwide all IP-based home security and automation service set to launch in 2013 that will let consumers manage their home from virtually any device — smartphone, tablet or PC.
• Mobile Premise Solutions: This new nationwide service, available today, is an alternative for wireline voice service and in the future will include high-speed IP Internet data services.
• Mobile Wallet: AT&T is participating in the ISIS mobile wallet joint venture. Market trials are underway in Austin, Tex. and Salt Lake City today.
• Connected Car: More than half of new vehicles are expected to be wirelessly connected by 2016. AT&T is positioned to expand from vehicle diagnostics and real time traffic updates to consumer applications that tie into retail wireless subscriber data plans. AT&T already has deals with leading manufacturers such as Ford, Nissan and BMW.

AT&T’s 2012 Investor Conference introduced major transformative changes for AT&T’s wired and wireless broadband networks.  (2 hours, 9 minutes)

Will be available to 8.5 million additional customers by the end of 2015

AT&T will spend $6 billion over the next three years to upgrade broadband speeds across its 22 state operating service area and further expand its U-verse broadband platform to reach suburban and exurban customers stuck in the DSL broadband slow lane.

AT&T today announced existing U-verse customers will be able to buy upgraded speeds as high as 75Mbps by the end of 2013, with speeds increasing to around 100Mbps further out. AT&T’s current U-verse platform is currently constrained with maximum speeds of around 24Mbps.

Customers currently bypassed by AT&T U-verse may still have a chance to get the service in their community. AT&T announced plans to expand the fiber to the neighborhood service by more than one-third, with an additional 8.5 million customers able to sign up by the end of 2015.

AT&T also announced an eventual replacement for its existing ADSL platform, which currently offers speeds ranging from 768kbps to around 12-15Mbps in certain areas. The company’s lighter version of U-verse, dubbed U-verse IPDSLAM, will be introduced to 24 million AT&T customers in smaller communities by the end of 2013. Customers will be offered phone and Internet service over the network — but not television — with broadband speeds up to 45Mbps.

About 25% of AT&T’s rural customers will not see any upgrade to their current landline service. Instead, AT&T announced it will seek to gradually decommission rural landline networks and transfer those customers to its 4G LTE wireless service for both broadband and voice service, pending regulator approval.

Short on specifics, AT&T did not say whether rural customers will face the same broadband usage caps that are familiar to other AT&T wireless customers.

AT&T plans to upgrade its broadband speeds using a combination of technologies:

• Pair bonding existing copper wiring to get additional bandwidth;
• 17MHz: Devoting six frequency bands to broadband, up from the current four;
• Vectoring: Using technology to reduce or eliminate speed-robbing crosstalk noise on existing lines;
• Additional Copper Wire Reductions: Bringing fiber further into neighborhoods to reduce the distance of copper wiring between your home and AT&T’s network;
• Using “rate-adaptive” technology to let equipment select the fastest possible speeds with a tolerable error rate.

Halloween scare stories are back!

It is amazing the length some incumbent broadband providers will go to stop publicly-owned networks from getting off the ground and competing with the “good enough for you” service on offer from the local phone or cable company.

This morning, Stop the Cap! received word from a Minnesota reader who reports their dinner hour was interrupted by an unsolicited phone call from a group called “Americans for Sensible Broadband,” which as far as we can tell does not exist as a formal group. The caller used ridiculous scare tactics worthy of a bad Halloween movie:

• Did you know that fiber broadband networks are expensive to run and will increase your electric bill to pay for the high powered lasers needed to send the signal to your home?

Fiber broadband projects now expanding in Minnesota have no relation to your electric bill because most are run by independent community-owned co-ops, not electric utilities. Even if they were run by an electric provider, the cost to power a fiber network is far smaller than the network of signal amplifiers and other transmission equipment needed by traditional cable and phone companies. The only electrical expense to the homeowner is powering any set top boxes or other related equipment to make use of the service. These costs are comparable to what one would pay with cable or phone services.

• Most fiber networks are not actually fiber at all. The largest companies in America actually let you keep your current wiring, but that is not fiber, so why spend tax money on a risky fiber network?

While AT&T U-verse has chosen the route of “fiber to the neighborhood,” which still relies on existing copper wiring from nearby poles to your home, many fiber to the home projects take fiber… straight to the home. Some community networks do make use of very short lengths of pre-existing copper wiring inside your home, but this has more to do with your convenience. You don’t need a fiber connection to your landline phone, for instance. Compare the broadband speeds and services on offer from the community provider vs. incumbent cable and phone companies. Choose the one that delivers the best services for the price.

• America’s cable and phone companies are working hard for pro-growth, pro-expansion policies in Washington that will allow your community to get the benefit of billions of private investment, at no risk to you.

An in-home threat to your children or incumbent provider profits?

Incumbent phone and cable companies already enjoy a higher level of deregulation than ever before. If they have not spent money to improve broadband in your area before, there is nothing that will open their wallets to provide the service now, unless someone else subsidizes part of the cost. Guess who “someone” is? That’s right. You the taxpayer or ratepayer. Whether in the form of broadband subsidies paid for by taxpayer dollars or ratepayer subsidies from the Universal Service Fund, only subsidies or competition prod incumbents to deliver better broadband to rural Minnesota (or anywhere else). If you fail a “Return On Investment” test, you will not get broadband no matter how much deregulation gets approved in Washington.

The question for rural consumers is whether AT&T, Frontier, CenturyLink, Comcast, or Charter Cable has your best interests at heart or whether a community co-op you partly own will.

• In socialistic countries, the government runs the broadband service and can monitor your web browsing. Do you want your local community checking up on your online activities?

“Socialistic” is in the eye of the beholder. Most broadband networks are run by private telecommunications companies, some with state subsidies, others entirely on their own. The federal government’s security agencies already have access to monitor Internet traffic under warrantless wiretapping laws, and that extends to every provider in the country, private or public. That said, there is no evidence local government officials would monitor your web browsing habits, much less have the budget or technical expertise to do so.

• Fiber cables create more hazards on utility poles designed for phone, cable and electric service. Is it worth risking those services for an unnecessary and expensive fiber network?

Electric and phone companies used the same scare stories to try and keep cable television lines off utility poles more than 30 years ago. Cable operators fought for and won the right to use utility poles to no ill effect, and at fair prices. It is ironic some cable companies want to use the same argument against municipal fiber that phone and electric companies used against them.

• In these difficult economic times, do you realize your local taxes could triple to pay for unnecessary fiber Internet?

Most public broadband projects are financed by municipal bonds obtained in the private free market. Investors can decide for themselves if they represent a safe investment, and many do. If the networks fail, private investors typically take the hit.

But the most ridiculous claim of all was that “recent news reports warn that lasers could blind your children if they happen to play with the fiber cables in your home.”

The only “news report” we could find on this subject was an Engadget news story from 2011 about an S3 Krypton laser that could blind astronauts without proper safety equipment. But those lasers are not powering broadband networks.

In reality, fiber to the home networks are safer than traditional copper phone wiring, which can send a significant electric shock to anyone playing with the wiring when a telephone rings. Many fiber networks rely on Class 1, low power lasers — the lowest risk level. Even if a customer stared at the lit end of an optical fiber connector, the visible light would be diffused into a cone pattern that would be completely harmless by the time it reached the retina. Many networks also include a secondary safety mechanism that quickly shuts down the laser light once the connection has been broken. Certain higher-powered laser communications networks can have some safety risks, but almost entirely for workers working on primary cables that deliver service to dozens of homes. Those workers are well-trained to avoid those risks.

Minnesota seems to be one of the latest hotbeds of incumbent wrath over expanding community-owned broadband networks. Despite efforts to label them insidious creeping socialism, they are actually no more threatening than a traditional co-op, except perhaps to incumbent cable and phone companies that have been running to the bank cashing checks from customers enduring low broadband speeds at high prices.

Cable companies are starting to lay the groundwork to support the next generation of HD video — first with 4K, an improvement over today’s HD standard, and eventually 8K Ultra High Definition TV — delivering pictures 16 times better than the current 1080p HD standard and coming close to the level of detail supported by IMAX.

The 8K evolving standard, proposed by Japan’s public broadcaster NHK and dubbed Super Hi-Vision, remains years away, but cable operators are preparing their systems to support 4K UHDTV (3840 x 2160 – 8.3 megapixels)  much sooner.

By the time 8K comes into use, most cable operators will rely entirely on a single broadband pipe to deliver video, Internet access and telephone service. To handle that traffic, and the bandwidth UHDTV demands, providers will have to upgrade their systems to support much faster speeds. A single video channel transmitted in 8K UHDTV requires around 360Mbps.

That makes Google’s decision to construct a gigabit broadband network in Kansas City seem less revolutionary and almost evolutionary, considering how quickly bandwidth demand will increase in the next eight years.

The cable industry is now moving fast to finalize the next version of the DOCSIS standard which supports cable broadband. DOCSIS 3.1 is expected to be introduced Thursday at the Cable-Tec Expo. An initial preview seems to suggest the standard will be backwards-compatible with prior DOCSIS versions — good news for those buying their own cable modems — and will support multi-gigabit speeds, if the cable operator decides to dedicate more of its available bandwidth to broadband.

An essential goal of the cable industry is to match or beat 1Gbps, currently on offer from several fiber to the home service providers and Google. Some operators want even more — up to 10/2Gbps capacity, as they consider future speed needs.

But engineering advancements and innovation fly in the face of bean counters attempting to monetize broadband usage with usage caps and usage-based billing. The industry’s justification for usage caps becomes even more tenuous as it moves to a single pipeline for all of its services and treats its cable TV package differently from Internet traffic. AT&T and Bell are already doing that today with their U-verse and Fibe platforms. Both claim their TV channels move over a different network than traditional Internet, but as costs for both continue to decline, that is becoming a distinction with little difference.

Google and a handful of independent or community-owned broadband networks are largely the only ones calling out the cable industry’s bogus claims that consumers don’t need super fast broadband, usage caps are necessary, and broadband speed upgrades are difficult and too expensive. These new competitors have correctly predicted the exponential growth in bandwidth demand and are prepared for it, even as the industry continues to dismiss their competitors’ networks as unnecessary overkill.

But cable’s hurry to DOCSIS 3.1 tells a different story.

Jeff Baumgartner from Light Reading Cable observed cable executives at Tuesday’s annual Cable & Telecommunications Association for Marketing (CTAM) conference, where those attending beat the drum for faster and better networks:

[DOCSIS 3.1] will also focus on the quality of cable’s pipe, reduced latency and other smarts designed to help enable a new set of broadband-based services. Cable’s interest in offering 4K HD services, which offer four times the resolution of today’s HD, was an example that was brought up several times during the session.

The cable industry also hopes to shorten the process of creating the specs and having them turn into deployable products. An average generation of DOCSIS has typically taken three to four years.

“We can no longer do that,” said Phil McKinney, the new president and CEO of CableLabs, but didn’t offer a guess on the anticipated cycle for 3.1. “We have to deliver higher and higher performance.”

[…] And 3.1 is also about the almighty dollar as broadband usage continues to climb. Getting costs down “is a key part of Docsis 3.1,” said Cox Communications Inc. EVP and CTO Kevin Hart.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Light Reading NBCU Ultra-HD Demo 10-12.flv[/flv]

Jeff Baumgartner from Light Reading Cable was invited to a demonstration of 8K UHDTV, which will require much faster broadband networks to handle the super high quality video. (3 minutes)

Property values in the historic neighborhood of Hanover Heights (Kansas) are ticking up as tech businesses relocate to follow Google’s roll-out of gigabit fiber service, coming in a matter of weeks.

Only one problem: Google is not officially selling fiber service to businesses just yet. Answer? Buy residential property in the area and move workers who could deliver increased productivity with faster Internet speeds.

That was the answer for Local Ruckus LLC, which is opening its new headquarters in a 2,500-square foot home in the first neighborhood scheduled to receive Google Fiber service.

“It just makes life easier,” CEO Adam Arredondo told the Kansas City Star.

The company says it needs the faster speeds to facilitate transferring files back and forth more quickly.

RareWire, a local developer of apps for mobile devices has decided it can best leverage 1,000Mbps broadband speeds launching a new startup – App Creation Studio, which will assist developers with testing and marketing apps.

Tech start-ups are exactly what Google hoped to see from its experimental fiber network, which is still barely operational. City officials see fiber broadband infrastructure and Business Hosted Voice Solutions as the foundation for energizing the local digital economy.

KCMO mayor Sly James last month unveiled Launch KC — an effort to attract technology companies to Kansas City, particularly start-ups.

James announced five companies and Union Station were prepared to offer free or “very affordable” office space in the city’s Crossroads district, the West Bottoms, and downtown. Office space is even available at the Kansas City International Airport.

Other initiatives would stimulate businesses with attractive sale-and-leaseback offers and exemptions for sales and property taxes. Officials specifically targeted city neighborhoods they felt would be attractive to young entrepreneurs in their 20s and 30s looking for office space. Nearby renovated rental property in neighborhoods officials call “funky without being phony” and “organic” should prove attractive to those relocating to Kansas City, according to project representatives.

City officials are also working on developing free Wi-Fi service in the neighborhood and attracting a data center that would offer attractive cloud storage and other web hosting services.

Most of the incentives represent a fundamental shift away from traditional economic development initiatives, mostly targeted to traditional brick and mortar projects for large manufacturing, retail, or service companies that employ hundreds or thousands of workers. Instead, Kansas City officials are targeting small digital economy businesses that often employ fewer than 20 workers. Launch KC believes the sheer number of potential start-ups, and the modest cost of the program, could pay dividends.

With Google Fiber and the city’s cooperation, the Mayors’ Bistate Innovations Team Task Force believes it has a winning combination.

“We’re in a great position right now,” Burke said, “and we need to take advantage of it.”