DSL Prime, DOCSIS Report, Fiber News, A Wireless Cloud

Speculation, not fact. AT&T isn't going away, but they clearly are willing to accept the rapid decline of the good old phone network. “We are a wireless company,” Randall declared when he took over. Saul Hansell of the NY Times calls it “harvest mode.” They cut investment half in 2002-2003 to 30% less than depreciation. Now, they've delayed U-Verse for another year, although cable is clobbering them outside o f U-Verse territory. AT&T is losing 10% of landlines each year, and is already down something like 30%. Over 5-15 years that will turn the wireline network into a shell.

T will maintain the copper indefinitely, because they intend to create a second wireless cloud across the nation by giving their customers femtocells. They are ready to order 10M femtocells as soon as they get the kinks out. They all need a wire to backhaul. The old PSTN at AT&T continues to be one of the most profitable businesses in the world, aided by a slew of rate increases in the states. So almost no one believes he's willing to let it go, but a rapid decline is implicit in Randall's actions and statements.

He was probably the first head of a major telco to accept that wireline copper decline was inexorable – although of course he'd never say that directly. He decided the $20B Verizon is putting into FIOS wouldn't have an adequate return. The general presumption is that they were sacrificing their future by not investing, but so far AT&T profits have held up. Randall, who is proving an extremely able manager, is “a numbers guy.” Ed Whitacre wanted the power of owning half the lines in the U.S., with the expectation of an ultimate payoff. Randall is looking at a much shorter term goal, and profits before power.

While cutbacks may or may not be best for AT&T shareholders, they are not a good thing for T's half of the United States. They will have an inferior Internet. Chicago and San Francisco will have a system 50-90% slower than New York, Boston, Paris, Amsterdam, Geneva, Madrid, and Tokyo. It's a clear case of what's best for the company not being best for the nation, which is best met by strong policy. 30,000-40,000 more job cuts over five years are implicit in this strategy.

Coming heresies: OFCOM talk of “super-fast broadband” is an attempt to fool the British people. BT's 1 up, ? down is 50-90% slower than what's building in New York, Boston, Paris, Geneva, and Amsterdam. That looks to be the only choice for half the country unless Ed demands more from BT. Red queen language that's beneath Ed Richards.

Time Warner Cable's spinoff and $9B dividend is dependent on FCC approval and a $B tax break. That gives the administration enormous leverage. TWC is far behind Comcast and Cablevision deploying DOCSIS 3.0 and other technology, so the FCC will need to look at the effect of de-capitalizing the company. In addition, Glenn Britt says the deal requires a $B tax break that needs a special ruling that the Bush administration wouldn't sign off on. Why should Obama? Blocking TWC hasn't been discussed much in D.C., but Landel Hobbs asked for trouble when he announced “we will increase the number of cities where we implement consumption based billing this year.” I'm one of the few who said Comcast's 250G cap was reasonable in 2008, because there is a cost of bandwidth. But every policymaker in D.C. knows that the 20, 40, and 80 gig caps are a blatant attempt to discourage “access to content of your choice.” If Jules and Michael aren't thinking that way already, they will be by next week as the buzz increases.

Japan's high speed wired homes show minimal increase despite a great fiber network at a low price. Are they leading a wireless migration of 20-40% of broadband users, or will only a handful cut the cord? It's too early to tell, but anyone ignoring the possibility should not be planning the future of any company.

Jules and Barack will probably double the effective spectrum for U.S. communications, which will be their most important policy initiative. It's crucial to Jules and Michael's goal of bringing down wireless rates through more competition. Other government agencies have been sitting on spectrum they don't really need for years, so it's completely practical. Transition team member Kevin Werbach has been writing about this since for years. Jules might follow the Canadian and French model of insisting some of the spectrum goes to new entrants. That should be one of the first things they move on, although it might not be enough to counter the enormous economies of scale of AT&T and Verizon.

Verizon and AT&T conceded the blocking issues around Net Neutrality over a year ago (except maybe wireless) because the battle wasn't worth fighting. There are lots of details to get right, as the battle shifts to price, caps, and speed. Comcast is still in court on this one, a very dumb move given that the incoming FCC chief – and the President – put net neutrality in the party platform.