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AT&T Changes Course - Might Upgrade Rural Broadband Infrastructure After All

Upgraded Network Equipment Could Double Rural DSL Speeds to More Than 10 Mbps


Earlier this year AT&T signaled a desire to sell its Yellow Page Directory Service and 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. 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.

Not All Broadband is Created Equal: Various Options in Broadband Technology

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 to sell a variety 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 is 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 less costly for the company.

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If AT&T opts to use the new equipment, the company would 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. This would serve two purposes for AT&T - offer new DSL service to previously unserved customers, and increase bandwidth for existing DSL customers.

AT&T: FCC to Blame for Slow Industry Growth

While AT&T has been trying to convince FCC regulators that its 4G/LTE wireless broadband service is the most expeditious way to deploy rural broadband, data usage caps prevent this technology from being an effective panacea to rural unserved areas.

During its bid to acquire T-Mobile, AT&T sent a clear message to the Obama administration regarding an increasingly larger demand for wireless spectrum to help expand both cellular and broadband access. One of the primary benefits touted in the AT&T/T-Mobile application was increasing broadband access in rural areas of the country. In AT&T's statement regarding its withdrawal of the merger application, the company said it would continue to invest in expanding its network.

“The mobile Internet is a dynamic industry that can be a critical driver in restoring American economic growth and job creation, but only if companies are allowed to react quickly to customer needs and market forces,” AT&T Chairman Randall L. Stephenson said at the time.

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Regarding the company's options now, Stephenson said the company is weighing both rural broadband options. “We are giving this a hard look,” Stephenson recently said on an investor conference call. He said existing IP DSLAM technology “brings broadband capability in a more cost-effective manner, with a better revenue profile than perhaps we would have thought two years ago.”

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