U.S. Telecom Antitrust Investigation

The Wall Street Journal has published an article stating that the U.S. Department of Justice (DOJ) has begun reviewing if large U.S. telcos such as ATT and Verizon are abusing their market power. This review is not targeted at a specific company today. The review is expected to cover all areas from land-line voice and broadband service to wireless.

The article points to exclusive contracts with handset vendors such as ATT's iPhone contract with Apple as an example. It also points to traffic management such as ATT's suppression of peer to peer traffic on its mobile data network as another example.

It sounds like this review is much more wide ranging than these two examples. The DOJ forced the breakup of ATT in 1984. This has largely been undone through the mergers and acquisitions that Verizon and the current ATT have made. Maybe it is time to take them apart again. The level of competition in the U.S. is certainly much less than in France, and we Americans pay for it.

Wireleine Woes

The New York Times published and article discussing if the U.S. wireline telcos will need a bailout to rescue its copper based access business. It pointed out that AT&T lost 12 percent of its access lines in 2008 and Verizon lost 10 percent. The article paints a pictures that the wireline business in the U.S. is headed toward bankruptcy.

I have been tracking U.S. switched access lines at my website from 1991 through 2007. The FCC has stopped tracking switched access lines, so that one of its most interesting pieces of data will no longer be updated.

It is clear that copper is being replaced by the cable companies coax, by wireless technologies, and by the telco's own fiber services. The more aggressively that they deploy fiber, the better off they will be in the long run.

ATT's 2020 Strategies

AT&T gave a presentation this week where it made some interesting comments about how it plans to address important issues for getting ready for 2020.

The company talked about how network usage will change. It expects that 70 percent of its voice minutes will come from mobile services by 2013 and that data usage will grow by 50 percent per year between now and 2013. Its charts indicate that at least half of its voice traffic came from mobile services in 2007. It expects that voice will account for less than 5 percent of the traffic on its networks by 2013. Its charts indicate that it expects video to account for significantly more traffic than data. Over all its expects its backbone traffic to grow 50 percent annually and access traffic to grow 30 percent annually.

The company also discussed its consolidation into what it calls "one company". It expects to end up with one business services organization, one consumer services organization, and one network and services organization. It is doing this to increase its efficiency and to deliver new integrated/converged services. It stated that its U-verse IPTV service is the template for what it plans to achieve.

ATT plans to focus several areas for new services - femto cells, VoIP, VPNs, along with hosting and CDN services.

ATT is moving along the directions that we forecast in our report Telecom 2020: Transformation Strategies. Mobile is becoming the primary delivery vehicle for many services. This presentation confirms our predictions of the major effects that will occur in the organization of carriers.

ATT's Cuts

Light Reading published and article with various opinions on ATT's announcement that it would cut 12,000 people and reduce its CapEx budget. The gist of it is that ATT will not make cuts in wireless or broadband but will cut its wireline operation. The article ends with a quote from one analyst who believes that cutting spending on its POTS network will be a major mistake for ATT.

What ATT is reportedly doing is consistent with how networks will evolve during the next decade. Wireless and broadband will become more important and POTS services will fade away. Personally, I think ATT is making the correct choices.

Microtune Introduces 120 Mbps DOCSIS 3.0 Upstream Amplifer

Microtune has introduced an RF gateway that permits DOCSIS 3.0 upstream speeds of 120 Mbps and downstream speeds of 160 to 320 Mbps. Its chips are available for less than $5.00 in volume quantities.

DOCSIS 3.0 is shaping up to be a formidable competitor to Telco fiber technologies. It will compete directly with Verizon's FiOS BPON and GPON services. It leaves ATT's VDSL service in the dust.

DOCSIS 3.0 to Provide Fiber Push

An article on Light Reading cited a statement by Charter Communications that it will cost about $8 to $10 per subscriber to bring DOCSIS 3.0 services to a home, including the new cable modem termination system (CMTS) equipment and the routing systems. It does not include the cost of the new DOCSIS 3.0 cable modem or the cost of provisioning the service.

Verizon has said that it costs them $800 to $1,000 per home to make its FiOS fiber service available with a maximum 50 Mbps data service today. The cable companies can accomplish the same thing for one percent the cost.

DOCSIS 3.0 will provide the cable companies a strong defense against FiOS and be a very strong offensive weapon against ATT's VDSL U-verse service. Verizon will need to improve the performance and lower the price of its FiOS high speed data services. ATT will need to move from VDSL to GPON to be competitive.