A Wall Street research firm is asking questions about the “mixed messages” AT&T is sending consumers over its broadband offerings.

Ovum Research senior analyst Kamalini Ganguly said AT&T’s fiber to the home (FTTH) network in Austin — set to upgrade customers to 1Gbps next year — is likely to confuse AT&T and its shareholders over the future direction of AT&T’s current fiber to the neighborhood (FTTN) upgrade effort, dubbed Project VIP.

Having spent eight years deploying the U-verse FTTN service, a year ago AT&T chose to expand household coverage and upgrade speeds. That effort, called Project VIP, is still ongoing and until now has reflected AT&T’s projection that 45Mbps downstream (and 6Mbps upstream) should be good enough for the majority of its customers.

AT&T says it intends to boost part of its Project VIP footprint to 75Mbps or 100Mbps with VDSL2 vectoring, but the extent of this is unknown. It has also deployed a small amount of GPON FTTH in greenfield markets, typically designed to support 80–100Mbps to each household. Also as part of Project VIP, it plans to reach 1 million businesses with symmetric 1Gbps FTTH.

However, the GigaPower offering in Austin will be AT&T’s first 300Mbps or 1Gbps mass-market FTTH offering targeting consumers, not just businesses, in a major market. It is also a symmetric offering, meaning upstream will be 1Gbps as well. Those speeds are far higher than what Project VIP will deliver to the majority of consumers. The jump from 45/6Mbps to 1/1Gbps for consumers raises questions around its strategy. The cost issue looms large. Deploying 1Gbps point-to-point FTTH will continue to cost much more than GPON FTTH, which in turn still costs a lot more than FTTN – even with vectoring. AT&T needs to explain better what has changed from last year in the business case for FTTH over FTTN.

Wall Street is asking questions because AT&T has repeatedly denied its fiber project in Austin has anything to do with Google’s intention to offer a similar fiber network in Austin next year and everything to to do with its general broadband strategy. There is increasing skepticism about AT&T’s veracity on that point, particularly after AT&T announced pricing that was suspiciously similar to what Google charges its fiber customers in Kansas City and is likely to charge in Austin. Ovum’s researchers also took special note of AT&T’s intention to “examine its customers’ browsing habits in order to generate incremental revenues with targeted ads and commercial offers.”

There is evidence Google is proving a growing market disruptor, turning cable and telco industry pricing models upside down where the search engine giant threatens to compete. Industry plans to charge premium prices for incrementally faster broadband speed tiers is at risk with Google’s gigabit offer, priced at just $70 a month. Comcast charges up to $300 a month for considerably less speed. Community owned fiber broadband providers are increasingly adopting Google’s pricing model themselves. EPB in Chattanooga reduced the price of its 1Gbps tier from $300 to $70 earlier this year.

“By accepting a ceiling of $70, AT&T may be making it harder to break even,” writes Ganguly. “We may see lower prices cascading down for all broadband services. AT&T runs the risk of de-valuing its own broadband business and ultimately that of others too. On a more positive note, demand for 1Gbps was seen as questionable when prices were unaffordable for consumers and when multiple HD streams can be supported by 40–50Mbps. With these price levels however, demand may spike and boost the business case for 1Gbps.”

Rural Norway is getting a broadband upgrade. Out goes last century’s DSL service and in comes gigabit fiber to the home service for villages and towns that American providers would consider unprofitable to serve.

Despite the harsh winter conditions, Altibox has already begun work installing the new fiber network in the fjord and mountain district of Hjelmeland on Norway’s west coast. The aim is to offer a fiber optic connection to each of the 2,800 residents and 1,000 seasonal vacation homeowners who want one by the end of 2016.

Hjelmeland
Photo by: Bjarte Sorensen

Installation has already begun in the fjord and mountain district. The first customers will be online by the first half of 2014. At launch, customers will be offered a package including 1,000/1,000Mbps Internet access, cable TV, and a phone line with calling and feature package for around $165 a month, considered steep for Europe but not unusual in high cost service areas.

With its widely spaced buildings and vacation homes, Hjelmeland is perhaps one of the most challenging districts in Norway to install a fiber-optic network, according to Toril Nag of Altibox.

“This project will set a new standard for what it is possible to achieve when local government, local residents and the service provider all work towards a common goal,” Nag said. “In our assessment, there are currently only a few households that are situated so far from the trunk cable that it would not make economic sense to invest in a fiber connection.”

Not every resident can get broadband service as the district relies heavily on DSL, which underperforms in rural areas. Fiber optics solves the problem distance creates for high-speed copper-based DSL service and is cheaper to maintain in a district known for its difficult terrain and rugged character.

Altibox is using Hjelmeland as a rural broadband laboratory to learn more about how the company can profitably offer fiber optic broadband in higher cost areas. Eventually every Altibox customer across Norway will get gigabit speeds from the provider.

Norway is rushing ahead of North America in broadband deployment and speed. The government has set a target for every resident to have access to a minimum of 100Mbps service by 2017. The European Union has been less demanding, seeking 100Mbps service for at least 50 percent of subscribers by 2020.”We can look forward to an incredibly exciting year,” said Hjelmeland’s mayor, Trine Danielsen. “We believe that the installation of the most advanced data-communications infrastructure in Norway will make us an even more attractive area to live in for people of all ages.

“In the long-term, for example, the fiber-optic network could enable our older residents to live at home for longer, with the help of smart-house technology and new self-help solutions,” she added. “In addition, the new fiber-optic network will boost business development throughout the district, and provide a strong platform on which to build for both existing business enterprises and brand new ones.”

Cincinnati Bell is an island in the middle of a sea of AT&T — offering over 258,000 southwestern Ohio residents and businesses access to a fiber to the home network that has kept customer disconnects down and broadband speeds up.

Now the phone company says it is ready for any speed increases on tap from competitor Time Warner Cable and has the capacity to bring gigabit speeds to Cincinnati as soon as enough customers ask. But first it has to expand its footprint.

The company has plans to bring Fioptics to 35 percent of Cincinnati by the end of this year, according to Leigh Fox, chief technology officer for Cincinnati Bell. The company has successfully upgraded its fiber network to offer 53,000 more homes a fiber alternative to Time Warner Cable during the first nine months of this year. At least 29 percent of Cincinnati residents have cut Time Warner Cable’s cord at least once, trying the fiber to the home service.

Cincinnati Bell wants a 50-70 percent penetration rate in the city, defined as the percentage of customers who have subscribed at least once.

“I am pretty confident on returns and we do have to hit a certain metric,” said Fox. “As an example, we just built out my neighborhood over the summer where in the first two weeks we had 23 percent penetration and after a month we had 43 percent penetration.”

Unlike AT&T which confines U-verse to larger population areas, Cincinnati Bell is continuing to invest in traditional ADSL/2+ service for the nearly half million customers throughout its service area that cannot get Fioptics service yet. The company claims the majority of these customers can now buy 10Mbps or faster DSL service, making Cincinnati Bell competitive with Time Warner Cable across the region. Higher, stable speeds are the phone company’s best defense against DSL disconnects. Most cable broadband growth comes at the expense of telephone company DSL customers leave behind.

Currently, the majority of Cincinnati Bell’s “non-techie” fiber customers are satisfied with 20Mbps service. Time Warner Cable is planning to offer up to 100Mbps in the near future, but Fox noted Fioptics has the capability to exceed those speeds ten times over, and said if enough customers want 1Gbps speed, Cincinnati Bell will offer it.

C Spire has announced the nine Mississippi cities that will be finalists for the nation’s first and only statewide 1Gbps broadband fiber to the home Internet service.

The nine communities participating in the first phase of the gigabit fiber broadband initiative include: Batesville, Clinton, Corinth, Hattiesburg, Horn Lake, McComb, Quitman, Ridgeland and Starkville. These cities and towns were among 33 municipalities that submitted formal applications late last month.

Competing cities developed aggressive campaigns featuring rallies and town hall meetings, local celebrations, door-to-door canvassing, mobilization of neighborhood groups and homeowner organizations, dedicated websites, social media campaigns and even stadium and freeway billboard advertisements to get C Spire’s attention.

C Spire also announced pricing for its Internet and related digital television and home phone services. Pricing for 1Gbps Internet access will be $80 a month, $100 a month for combined Internet and home phone, $140 a month for Internet and digital TV and $160 a month for the entire package. C Spire Wireless customers will receive an extra $10 monthly discount on all packages.

The finalist cities were selected by a C Spire review panel that considered factors like proximity to the company’s fiber optic infrastructure, community mobilization capabilities and incentives to speed up the construction process and reduce overall costs.

“We are truly impressed with the overwhelming show of support for C Spire’s Fiber to the Home deployment and the tremendous interest and demand for making this service a reality for the residents in these communities,” said Hu Meena, president and CEO of C Spire. “The positive response we’ve received only strengthens our determination to bring 100-times-faster Internet, and the limitless possibilities that come along with it, to as many people as we can because we know that this service has the power to transform our state into a hub for technology investment and economic growth.”

The nine finalists for C Spire’s gigabit broadband network.

Meena said C Spire plans to continue working with the cities that were not selected in the preliminary round and will share best practices and improvements that promise to make the process easier, faster and better for later challenges.

“We want to ensure that all of our communities remain actively engaged in the process and keep the demand and excitement alive for upcoming phases,” he said.

The finalist communities will next compete to see which can pre-register the most homeowners in designated fiber neighborhoods. Those that reach their targets will get fiber service first.

As soon as neighborhoods reach their percentage goals in an individual city, C Spire plans to begin construction in those areas – so there is a possibility that work could start in more than one community at the same time, said Gregg Logan, senior vice president of C Spire Fiber.

Residents will be asked to make a $10 refundable deposit and provide credit card information when they pre-register. The website also will feature detailed, interactive maps of neighborhoods in cities showing progress each one is making toward turning their fiberhood “green” and qualifying for build out of the service.

Logan said C Spire hopes to start turning up 1 Gig service in the first C Spire Fiber neighborhoods by the middle of next year.

[flv]http://www.phillipdampier.com/video/ABC Extended interview with Dr John Cioffi – Father of DSL 11-18-13.mp4[/flv]

Dr. John Cioffi, the “Father of DSL” doesn’t think much of fiber to the home service, suggesting it is a waste of money and delivers budget-busting losses to providers. He has the ear of the man in charge of overseeing Australia’s National Broadband Network, Communications Minister John Turnbull. Turnbull’s public statements imply he supports Cioffi’s approach – a hybrid fiber-copper network similar to AT&T U-verse.

By adopting cheaper VDSL technology, Cioffi claims providers can avoid the “$800 unrecoverable loss per customer Verizon FiOS has experienced” bringing fiber to the home. He also claims fiber to the home service isn’t as robust as fiber proponents claim, with flimsy, easy-to-break fiber cables and loads of service calls commonplace among some European providers.

Few media interviews, including this one with ABC Television, bother to fully disclose how Cioffi has a big dog in the broadband technology fight. Cioffi founded ASSIA, Inc., a firm that markets products and services to DSL providers. ASSIA is backed by investments from AT&T, its first customer, and a handful of overseas telephone companies. Cioffi estimates ASSIA software is used to manage 90 percent of existing DSL accounts in the United States and is a fundamental part of AT&T’s efforts to increase U-verse speeds. Dismantling DSL in favor of fiber could have a marked impact on ASSIA’s profits. (8:47)

[flv]http://www.phillipdampier.com/video/Malcolm Turnbull Discussion with Father of DSL John Cioffi Part 1 11-18-13.mp4[/flv]

Australia’s new Communications Minister Malcolm Turnbull talks with Dr. John Cioffi about the differences between VDSL and fiber technologies. Cioffi bashes one form of fiber to the home service dubbed “GPON” because it shares infrastructure. Cioffi claims fiber speeds drop to 20Mbps when a few dozen people share a GPON connection. When in Paris, Cioffi claims his shared fiber connection maxed out at 2.5Mbps while ADSL still ran at 6Mbps. (3:52)

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Unsurprisingly, Cioffi claims his company’s software is essential for a good vectored VDSL user experience. Cioffi also claims VDSL can easily beat GPON fiber broadband speeds, a very controversial claim. In Cioffi’s view, even Wi-Fi can perform better than fiber. Finally, Cioffi claims Google is spending $8,000 per customer to deploy its fiber to the home network, when VDSL can do the job for much less money. (2:58)