The Kansas House of Representatives voted 118-1 to pass a bill they admit was written and pushed by the largest telecom companies in the state. The chief supporters all received campaign contributions from AT&T and other telecom interests.

Kansas’ House of Representatives voted 118-1 Monday to support a bill largely crafted by AT&T that will let the state’s largest phone company discontinue service at-will in rural areas of the state.

H.B. 2201 had near-universal support from legislators that openly admitted the legislation was conceived and written by the state’s largest telecommunications companies, chiefly AT&T, and grants the phone companies a third round of deregulation.

The legislation is expected to sail through the Kansas Senate with bipartisan support and Republican Gov. Sam Brownback, who generally favors telecom deregulation, is likely to sign it.

The legislation was originally pushed as a money-saver for Kansas ratepayers. The bill calls for a major reduction in funding requirements for the Kansas Universal Service Fund (KUSF), which subsidizes rural telecommunications services in the state. The KUSF is principally funded through a surcharge found on customer bills. Under the terms of the bill, funding requirements will be drastically reduced, cutting the surcharge in the process.

The Kansas Citizens’ Utility Ratepayer Board testified if H.B. 2201 only contained KUSF reform, the group would have supported the measure. But the bill also has a myriad of deregulation measures that received little apparent attention by legislators:

1. H.B. 2201 eliminates quality of service requirements. AT&T and other phone companies can deliver any level of phone service they choose with no oversight and nobody to answer to;
2. Allows price discrimination based on geographic location, which could mean substantially higher phone rates in rural areas, especially for nearby toll calls;
3. Allows telecom companies to exit the Lifeline program for inexpensive service for the poorest Kansans after 90 days written notice;
4. Removes AT&T and other phone companies as “carriers of last resort,” which means they are no longer required to provide phone service upon request.

The elimination of the “carrier of last resort” provision is essential to AT&T’s plans to abandon rural landline service, forcing customers to buy substantially more expensive cellular phone and data service. With the passage of H.B. 2201, AT&T can notify rural Kansas customers it will drop their landline service and/or broadband at-will.

Siewert

The single “no” vote came from freshman Rep. Larry Hibbard, (R-Toronto), who noted landline service was essential in many rural areas. Hibbard worried AT&T would use the legislation as an excuse to raise rates or force elderly Kansans to use a wireless cell phone, which could prove too confusing for them.

“This bill may come back to haunt rural Kansas,” Hibbard warned.

“We have this mentality, ‘if I don’t have a wire, I can’t make a phone call.’ That’s not true,” countered Rep. Scott Schwab, an Olathe Republican who supports the bill. “That copper line is being replaced with an antenna, and it’s more reliable.

“We are not killing Lifeline,” Schwab added. “We are just not mandating it.”

Other supporters were far more sanguine, even disclosing the substantial role telecom companies had getting the legislation written and shepherded through the House.

“This was an industry bill that they all worked very hard” to put together, admitted Rep. Joe Seiwert (R-Pretty Prairie) during a House Republican caucus meeting. “[This bill] puts legislators in an easier position of not having to ‘choose between friends.'”

Kuether

Seiwert, for example, did not have to disappoint his largest campaign contributor — AT&T — or others who donated to his campaign, including the Koch Brothers, Cox Communications, CenturyLink, Verizon, and the Kansas cable lobby.

Rep. Annie Kuether of Topeka, who is the ranking Democrat on the Utilities and Telecommunications Committee, also supported the bill. Kuether is the recipient of campaign contributions from AT&T, Cox Cable, Time Warner Cable, Kansas cable and telephone company PAC groups, and more than a dozen independent telecommunications providers doing business in Kansas.

For ordinary Kansans, the bill does not assure savings, and could lead to dramatic price increases, especially in rural areas forced to pay for cell service. The measure also eliminates the Kansas Corporation Commission as a last resort for customers with service problems that go unresolved. Those customers would be on their own after the bill becomes law.

Legislators did not see any incompatibility between the proposed bill and Kansas state policy, set forth in Statute 66-2001:

It is hereby declared to be the public policy of the state to:

(a) Ensure that every Kansan will have access to a first class telecommunications infrastructure that provides excellent services at an affordable price;
(b) ensure that consumers throughout the state realize the benefits of competition through increased services and improved telecommunications facilities and infrastructure at reduced rates;
(c) promote consumer access to a full range of telecommunications services, including advanced telecommunications services that are comparable in urban and rural areas throughout the state;
(d) advance the development of a statewide telecommunications infrastructure that is capable of supporting applications, such as public safety, telemedicine, services for persons with special needs, distance learning, public library services, access to internet providers and others; and
(e) protect consumers of telecommunications services from fraudulent business practices and practices that are inconsistent with the public interest, convenience and necessity.

The Associated Press notes this is AT&T’s third trip through the state legislature to win deregulation. A 2006 state law deregulated prices for bundles of services that included wireless, Internet access, cable TV or other video and moved toward deregulating rates for local service in exchanges where competition existed. A 2011 law went further, allowing companies to avoid most state price caps. This year’s bill would allow those companies to avoid even the Kansas Corporation Commission’s consumer protection regulations and minimum quality-of-service standards.

[flv width=”640″ height=”380″]http://www.phillipdampier.com/video/Bill Moyers How Big Telecom Increases Our Digital Divide 2-5-13.mp4[/flv]

Susan Crawford appears this weekend on Moyers & Company (check to see if it airs on a local public television station) to explain the real reason America has a digital divide with broadband have’s and have-not’s. The heart of the problem is America’s largest telecom companies, who are only interested in picking off the low hanging fruit — urban customers they can wire cheaply for service and demand monopoly or duopoly-style high prices. Rural America is being left behind, putting profit ahead of the public interest.

America has seen this before during the era of electrification, when power was denied to small towns and family farms. Then the country decided electric service was a utility and must be provided to all Americans. So it should be with broadband. Only the same ideology that argued rural Americans should pick up and move if they want electric service is back in force with broadband, where some argue companies should not have to spend money to provide universal service when they can sit back and reap enormous profits from the areas they choose to serve.

Check out this preview. (2 minutes)

FCC Chairman Julius Genachowski’s cowardly lion act. The rhetoric rarely matched the results.

Washington insiders are predicting Federal Communications Commission chairman Julius Genachowski will leave his position early in President Obama’s second term.

It cannot come soon enough, as far as we’re concerned.

One of the biggest disappointments of the Obama Administration has been the poor performance of a chairman that originally promised a departure from the rubber stamp-mentality that allowed Big Telecom providers to win near-instant approval of just about anything asked from the Republican-dominated FCC of the Bush Administration. If only to underline that point, former FCC Chairman Michael Powell joined Republican ex-commissioner Meredith Atwell-Baker on a trip through the D.C. revolving door, taking lucrative jobs with the same cable industry both used to oversee.

We had high hopes for Mr. Genachowski when he took the helm at the FCC — particularly over Net Neutrality, media consolidation, and predatory abuse of consumers at the hands of the comfortable cable-telco duopoly. Genachowski promised strong Net Neutrality protections, better broadband — especially in rural areas, an end to rubber stamping competition killing mergers and acquisitions, and more aggressive oversight of the broadband industry generally.

What we got was the reincarnation of the Cowardly Lion.

The Washington Post reviews Genachowski’s tenure during the first term of the Obama Administration and reports he has few unabashed supporters left. Telecom companies loathe Genachowski’s more cautious approach and consumer groups hate his penchant for caving in when lobbyists come calling. In short, another Democrat that talks tough and caves in at the first sign of trouble.

“His tenure has been nothing but a huge disappointment because he’s squandered an opportunity to give consumers the competitive communications market they deserve,” Derek Turner, head of policy analysis at public interest group Free Press told the Post. “If someone like him upholds compromise, it quickly leads to capitulation, which is what he’s done. He folds…to the pressure of big companies.”

Genachowski’s Record:

• Heavily promoted rural broadband and oversaw a review program measuring actual broadband speeds against those claimed by providers. But much of the money available for improving rural broadband has been separately awarded to “middle mile” and “institutional networks” that are not accessible to most consumers or businesses. Genachowki has heaped automatic praise on many of the phone companies winning broadband funding, despite the fact many of them are satisfied giving consumers no better than 4Mbps service;
• Reformed the outdated Universal Service Fund, which long outlived much of its usefulness, into a broadband expansion fund. But some unintended consequences have led to some rural providers suspending network upgrades because of funding uncertainties still unresolved;
• Approved a blockbuster merger deal between Comcast and NBC-Universal that included temporary “hard-won” concessions Comcast later admitted they were going to offer anyway – merger or not. The result is a new high bar for tolerating super-sized media consolidation with no serious consideration of the impact on consumers. The latest evidence: support for Rupert “Phone Hacker” Murdoch’s latest efforts to buy more newspapers in the United States;
• Rejected an AT&T/T-Mobile merger deal, but only after the Justice Dept. took the lead dismissing it as an anti-consumer, anti-competition nightmare. Within hours, Genachowski’s office issued a “me, too” press release condemning the deal he said little about earlier;
• Demanded a strong Net Neutrality framework to protect the open Internet, but utterly caved under pressure from politicians receiving hefty corporate contributions from AT&T and others. The resulting loophole-ridden “protections” do not apply to wireless, and the industry-approved compromise is now the subject of a lawsuit filed by some of the same companies that earlier applauded Genachowski’s flexibility;
• Genachowski handed out his direct phone numbers to the CEO’s of the top Big Telecom companies, and has been directly lobbied by those “super-citizens,” while ordinary consumers are stuck filing comments with the FCC’s arcane Electronic Comment Filing System. Genachowski also directed closed-door meetings be held on the subject of Net Neutrality with large telecom companies. These meetings were closed to the public with no consumer representatives on hand;
• Genachowski refused to reclassify broadband as a “telecommunications service,” which would give the agency clear-cut authority to oversee the service. Instead, he has stuck with former FCC Chairman Michael Powell’s odd interpretation of broadband as “an information service,” not subject to much review by the agency;
• Appropriately nixed Philip Falcone’s LightSquared venture, the biggest threat to GPS navigation around. But Genachowski’s controversial early boosting of the venture, including support for expedited special permission to launch the network without the usual scrutiny, resulted in an embarrassing about-face after long-standing critics’ fears of navigation interference were vindicated;
• In 2012, Genachowski’s cozy relationship with the industry reached whole new levels with unabashed support for Internet Overcharging schemes like usage caps and consumption billing, despite no evidence justifying them. The FCC has continued to ignore repeated requests for a review of these pricing schemes.

AT&T’s Supreme Court: senior executives sitting together in judgment of landlines at Wednesday’s analyst conference.

Yesterday, at least a half-dozen AT&T senior executives sat lined up in a perfect row to present Wall Street with the company’s vision for the future.

There were no consumers in attendance, just a group of Wall Street investors and analysts that braved the latest nor’easter to attend.

At issue: what to do about AT&T’s landline network, particularly in rural areas. Earlier this year, AT&T CEO Randall Stephenson, still smarting from a regulatory slap-down of his plan to acquire T-Mobile USA, ranted his disapproval of federal regulators for nixing the deal and then reflected on AT&T’s rural customers who still cannot buy broadband service from AT&T.

One of Stephenson’s strongest arguments in favor of merging with T-Mobile was it would facilitate a rural broadband solution. With that off the table, Stephenson seemed at a loss:

“We have been apprehensive on moving, doing anything on rural access lines because the issue here is, do you have a broadband product for rural America?,” Stephenson said. “And we’ve all been trying to find a broadband solution that was economically viable to get out to rural America and we’re not finding one to be quite candid. That having been set aside, now we’re looking at rural America and asking, what’s the broadband solution? We don’t have one right now.”

Now AT&T claims they do, and miracle of miracles, it turns out they never needed the buyout deal with T-Mobile after all.

AT&T’s solution is good news for urban, suburban, and exurban customers who will benefit from billions in additional investments to beef up the company’s U-verse platform. Those with access to U-verse TV, broadband, and phone service will soon find maximum speeds available up to 75Mbps — important at a time when cable companies are moving to 50-100Mbps premium service tiers. Those without access to U-verse, bypassed by its recently completed initial buildout, now will have a chance to see the service in their communities.

For more exurban and near-rural areas, AT&T has a positive plan to rid customers of the scourge of painfully slow ADSL service, better known simply as “DSL,” which AT&T pitches at speeds typically 10Mbps or less. In more rural areas, it is often much less.

By using additional fiber and using D-SLAM technology to reduce the amount of copper wiring between the phone company and you, AT&T’s IPDSLAM service will dramatically improve speeds for customers languishing with 3Mbps service to upwards of 45Mbps. But for now, AT&T won’t roll this out as a full-scale U-verse service. Because maximum speeds are lower and network variability is expected to be greater, AT&T will instead pitch this as a broadband and landline phone service package. Customers will be marketed satellite dishes if they want television service bundled in.

Although not as robust of a platform as U-verse will soon be, it still represents a major improvement over DSL, which is now barely tolerable for today’s online multimedia experience.

But AT&T’s “good news” may not be so great for its most rural customers, who either have the slowest DSL service or more likely no broadband at all. Those customers have waited years for AT&T to invest in upgrades to finally connect them to the Internet, but AT&T’s plans have gone in a very different direction.

AT&T’s rural solution is to take down the existing landline network and move everyone to its wireless cell phone service. To implement this proposed solution, AT&T will aggressively invest in rural cell sites within the 22 states where it supplies landline service. The company claims 99% of its customers will be able to access a 4G LTE signal within a few years.

Phillip “Are you following this shell game” Dampier

But here is where things begin to get dicey.  AT&T told investors it has no current plans to differentiate rural wireless customers from their urban counterparts. In larger cities, a smartphone and data plan is not necessarily a necessity — customers can still access a landline to place urgent calls or find a home broadband plan that does not carry the kinds of restrictive data caps wireless plans deliver.

Rural landline customers often pay low rates for their home phones, primarily because their local calling areas are generally far more restricted than in larger communities. The base rate for rural phone customers can be around $10 (before taxes and fees) in some areas. The base rate for AT&T’s wireless service starts at around $40 for 450 talk minutes or $19.99 for anchored, wireless unlimited calling home phone service (with a $36 activation fee and a two-year contract) that works with your existing home phones. Both represent rate increases.

Wireless data plans are notoriously expensive and limited. Verizon’s plan for home broadband users is priced at $60 a month with a 10GB limit. Less expensive plans with limits 25 times greater (or unlimited) are available from wired broadband providers. If the customer wants a smartphone for their data and home voice calling, bundled plans start at $85 a month with a 1GB usage limit.

With these prices, it is no surprise AT&T is promoting this as great news for the company. But we’re not so sure the average rural American is going to be pleased treated like a second class citizen with high priced, usage-capped Internet access.

As victims of Hurricane Sandy also found out last week, the venerable landline also enjoys a reputation of working after disasters strike. Unlike a fallen tree knocking down a phone line in the backyard, should AT&T’s wireless network fail in a storm, it would potentially leave hundreds, if not thousands of customers without service. Repair crews could take days to reach damaged facilities. That actually happened to Frontier Communications in some parts of West Virginia where heavy snows and tree damage made travel nearly impossible.

But there are important clues to what AT&T is really up to in regulatory filings that accompanied the showy presentation AT&T put on in New York Wednesday.

AT&T Has a Plan — Move Customers Away from Low Profit, Low Growth Landlines to High Profit Wireless/Deregulated Broadband

After the two hour presentation ended, AT&T posted a copy of its proposal sent to the Federal Communications Commission.

Reviewing the 24-page document is a classic case of  déjà vu. Once again, after the rhetoric is set aside, AT&T is back, peddling the same case to retire landline service and the regulatory obligations that accompany it. Only now, it has a carrot to dangle in front of regulators — significant investments in broadband expansion.

Although the private sector has invested well over $1 trillion in broadband networks, much remains to be done. As of 2010, roughly 14 million Americans, residing in rural and other high cost areas where the broadband business case is tenuous at best, still lacked access….

[…] Carriers such as AT&T are stepping up to do their part. In fact, just today, AT&T announced a $6 billion investment plan to expand and upgrade its wireline network to bring robust IP broadband services to millions of additional locations in its legacy footprint.

[…] AT&T makes this announcement with full confidence that the Commission will continue to implement the National Broadband Plan’s vision of removing regulatory impediments to efficient, all-IP networks, including obligations that could require carriers to maintain legacy facilities and services even after they have deployed new, IP-based alternatives.

I guess they didn’t need T-Mobile after all.

Translation: We used to bypass 14 million Americans, leaving them behind because it was unprofitable to serve them. But now we’re going to invest some additional money. But before you get that investment, we need you to agree the landline is a relic and (largely unregulated) IP-based networks are the future. We are not going to run both, so if you want all of this investment, you have to let us abandon our regulatory responsibilities and commitments to rural customers.

AT&T even tried to calm investor fears about capital spending increases, arguing the potential payoff of discarding landline service opens up a new era of earnings, both from shifting customers to AT&T’s highly profitable wireless service at a cost of double, triple, or more what customers used to pay the phone company, and a platform to sell them even more services later.

A number of Wall Street analysts disagreed, panning AT&T’s wireline investments as unproven.

The Broadband Coalition, a group of competing telecom providers, called the entire affair a smokescreen:

AT&T’s announcement today that it needs regulatory intervention from the FCC in order to invest in IP technology is a re-run of a tired ploy to leverage the company’s dominance. AT&T only invests in order to respond to competition, and competition is made possible by the very pro-competitive policies that AT&T seeks to eliminate.  The Broadband Coalition members have invested billions of dollars to bring the benefits of IP to American consumers from coast to coast.  But if AT&T gets its way, competition will largely disappear, investments will dry up and consumers will suffer.

Former Congressman Chip Pickering, coalition spokesman, stated,  “AT&T is simply trying to use its belated roll out of IP technology as an excuse to rewrite the telecom rules to its advantage.  We already know that AT&T’s claim that IP will somehow alter the laws of economics and lessen its dominance is patently false.  Clearly, AT&T’s proposed changes are not necessary to achieve widespread IP deployment, but the retention of competition policy is.”

Consumer groups accused AT&T of lying to federal regulators when the company argued the T-Mobile acquisition was essential to accomplish their plan to expand wireless service to 96% of the U.S. population. A year later, the company now claims it can deliver 4G wireless service to 300 million Americans and 99% of its landline service area without breaking much of a sweat.

CNN:

AT&T insists that it wasn’t being disingenuous with the regulators. Things changed, the company says, pointing to the 40 new spectrum deals it signed over the past year. The FCC recently made available some spectrum that wasn’t on the table when AT&T was negotiating its T-Mobile takeover.

“We chartered a new path,” AT&T spokeswoman Roberta Thomson told CNNMoney on Wednesday.

That’s precisely what the FCC — and industry analysts — believed would happen.

Now What

For now, rural customers need not worry AT&T will put their entire rural landline operation up for sale, potentially selling off a large number of  customers to companies like CenturyLink, Frontier, Windstream or FairPoint.

Rural America’s new home phone?

But AT&T’s lobbying machine will soon descend on state legislatures to win regulatory approval of their “abandon landlines” agenda. AT&T has a carrot for those legislators as well — a promise that states that hurry to rubber stamp AT&T’s wish list will be first in line for “investments.”

“We are going to have to see 21st-century regulation for 21st-century investments like this,” said AT&T CEO Randall Stephenson. “I think what you’re going to see is that these investments will go first to those states where you have good line of sight to good regulatory authority to do some of the things we’re talking about here.”

The implications for rural customers are profound if AT&T wins permission to scrap the landline network. Despite assurances from AT&T this is a technology argument, in fact it is more of a campaign to rid themselves of regulatory and consumer protection rules that have been around for decades. The type of technology used makes all the difference. Landline providers are usually compelled to provide reasonable, affordable, universal service for all Americans. Broadband, IP-based, and wireless networks now exist largely in a deregulation free-for-all where AT&T can do as it pleases, serve who it likes, and charge whatever it wants.

Considering AT&T’s current business plans, that sets the stage to worsen the newest digital divide — one pitting urban areas with faster, advanced, and more competitively priced networks against rural America, consigned to expensive, usage capped wireless service that may or may not work when a natural disaster strikes.

The only way this plan works for consumers is if common-sense service obligations, consumer protection, open access for competitors, and mandated equivalence of service is part of the package. Without it, AT&T will get exactly what it wants: a regulation free lifestyle, an expensive wireless network that rural residents will be forced to use for basic telecommunications, and cost savings and revenue opportunities AT&T will use to bolster its own profits, while cementing its monopoly position in the rural communities of 22 states where it operates.

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)