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AT&T Announces Significant Investment in Broadband

Project VIP Investments Include Wireless and Wireline Networks

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At&T announced an ambitious plan to provide broadband connectivity to over 300 million people by the end of 2014. By investing $14 billion in both wireline and wireless technology, AT&T hopes to reach over 96% of all U.S. residents. AT&T, the largest telephone company in the United States, plans to use a combination of financial and business strategies to diversify its portfolio, increase revenues, and expand broadband access in rural America.

While the company is planning for future growth, the move also signals AT&T's desire to decommission older copper-line phone networks which provide DSL and landline phone service to 76 million homes and businesses in 22 U.S. states. While making the announcement about Project VIP, AT&T's CEO and Chairman Randall Stephenson signaled that AT&T would attempt to repeal state landline regulations in the process of expanding its network.

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Four states (Florida, North Carolina, Texas, and Wisconsin) have already passed laws that release telephone companies from a requirement to provide affordable telephone service to every resident. These states claim that the regulations are outdated in a new era of broadband, smartphones and other Internet devices. The telecommunication industry is lobbying many other states to do the same thing.

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Earlier this year AT&T signaled a desire to sell both its Yellow Page Directory Service and older copper based rural telecom lines, because they were "underperforming assets." AT&T agreed to sell majority ownership of the Yellow Page Division to Cerberus Capital Management. The company's rural telecommunication network was slated to be sold next, raising the ire of many rural Americans. According to Bloomberg.com, Chief Executive Officer Randall Stephenson is quoted as being "cautiously optimistic" about using new broadband technology to boost the speed of broadband networks in rural areas, and boost company revenues.

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According to the Bloomberg article, AT&T will decide on whether to upgrade or sell the rural telecom assets by the end of 2012. Fueling the company's desire to upgrade its rural broadband network assets, is the potential revenue resulting from offering a slate of profitable services including Internet access, voice and video services. Almost 15 million customers fall outside the range of the company's U-Verse fiber optic service, and use older copper-based DSL service - which offers access to the Internet - but at much lower speeds than fiber-optic technology offers.

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IP DSLAM Could Speed Up DSL Connections

A network device called an Internet Protocol Digital Subscriber Line Access Multiplexer serves as a network gateway for DSL customers. With the cost of this equipment less than originally expected, AT&T had been rethinking its rural broadband strategy.

The business decision AT&T is dealing with involves upgrading older copper telephone wiring which exists between the company's switching office and its customers. For customers living more than 10,000 feet from the company's office - DSL service can be very slow. While replacing copper lines with fiber optic connections would dramatically increase speeds, the IP DSLAM is a less costly alternative for the company.

Depending on the degree to which AT&T opts to use the new equipment, the company could extend fiber to a limited number of IP DSLAM's, which are located at the most distant points from the central exchange. Copper phone wiring could still be used to transmit the signal to customer's homes, serving two primary purposes - offering new DSL service to unserved customers, and increasing bandwidth for existing DSL customers.

At the time AT&T outlined the options the company was considering for broadband in rural America, AT&T CEO Randall Stephenson said “We are giving this a hard look. bring broadband capability in a more cost effective manner, with a better revenue profile than perhaps we would have thought two years ago.”

The company's announcement of its new $14 billion investment plan, dubbed "Project Velocity IP," or "VIP" provides some insight into AT&T's strategy for using IP DSLAMs to expand service and raise speeds for its DSL customers. Project Velocity IP is divided into three primary investment categories for its wireless strategy, and four categories for its wireline strategy. Part of its wireline strategy includes using U-Verse IPDSLAM's to expand U-Verse coverage to 24 million customers, offering speeds of up to 45 Mbps.

AT&T Project VIP Includes $14 Billion Investment to Increase Broadband Access: AT&T: 4G LTE Will Reach 300 Million People, 95% of Wireline Customers

The strategic move announced by AT&T comes at the same time the company is also touting its extensive repair effort in the States of New York and New Jersey - two of the hardest hit states in the wake of Hurricane Sandy earlier in November 2012.

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