An Explanation For Why Verizon Is Driving DSL Users To Competitors' Cable Lines
from the dumping-dsl dept
Karl Bode has an interesting story explaining how Verizon is willfully pushing its DSL customers over to cable broadband "competitors." It's worth reading the whole thing, but the short version is that Verizon wants desperately out of the DSL business. Now, some of that is to drive people to its popular FiOS fiber service. However, the company has basically stopped expanding FiOS entirely. The fact that most of the competition is gone couldn't possibly have anything to do with that, right? But the bigger vision appears to be to push people over to the company's wireless solution, LTE. Bode suggests a few reasons for this, with a big one being that LTE is much more expensive, and has relatively low caps and high overage rates. In other words, it makes a lot more money for Verizon, but is much more limiting for users (there's also the bit about how it switches from a "unionized" business to a non-unionized one).In other words, Verizon will cut off copper in FiOS markets first (which makes sense given the lower maintenance costs of fiber). They'll then leave users in DSL-only markets un-upgraded, forcing them to buy a costly landline so that remaining on Verizon DSL becomes less attractive. Those customers will flee to the same cable companies Verizon just signed a massive new partnership with, with Verizon planning to sell those users more expensive LTE connection later. Verizon will continue to "compete" in FiOS areas for now, if you call winking and nodding when it's time to raise prices competition.Now, there is something reasonable about a company actually being willing to cannibalize its own older offerings with something more modern. But a key warning sign that something is wrong is that they're not moving customers to something that's better and cheaper -- which is what you normally see in a truly competitive, innovative market. Instead, they're moving them to a more limited, more expensive offering. That's what you tend to see when there's not nearly enough competition in the market, and a few established players whose customers have little choice.
Rural areas could see the biggest impact from the shift, as Verizon pulls DSL and instead sells those users LTE services with at a high price point ($15 per gigabyte overages). Verizon then hopes to sell those users cap-gobbling video services via their upcoming Redbox streaming video joint venture. Expect there to be plenty of gaps where rural users suddenly lose landline and DSL connectivity but can't get LTE. With Verizon and AT&T having killed off regulatory oversight in most states -- you can expect nothing to be done about it, despite both companies having been given billions in subsidies over the years to get those users online.
The entire amazing transition becomes clearer still when looking at Verizon's quarterly earnings posted yesterday. The company added a whopping 3.2 million LTE users during the second quarter, a record for the telco. In contrast, thanks to a frozen FiOS expansion (with the exception of franchise obligations in urban markets) and their disdain for DSL, Verizon managed to add just a net 2,000 broadband users in the quarter, despite adding 134,000 FiOS users. Verizon CFO Fran Shammo gave several excuses during yesterday's conference call ranging from the economy to aardvarks -- but the reality is that DSL users are fleeing in droves, and Verizon wants them to.
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Filed Under: broadband, cable, dsl, fiber, wireless
Companies: verizon
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LTE right now is a bit spendy, mostly because it's the new technology and they are paying to get it set up. However, just like everything else, it should come down in price over time, especially if they have some competition in those areas.
On the landline side, while the equipment is "paid for", the maintenance is high. As consumers are moving away from landline service to wireless for their phones, it becomes less and less desirable to keep all this copper infrastructure in place and to maintain it.
My guess (I don't have studies, sorry) is that they are aiming for a lower cost per installation in the long run. Wireless can be maintained with less people, and the costs of adding more subscribers (especially in rural areas with long distances to run cables) should be lower.
Perhaps thinking like a business major might help, what do you think?
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Re: Prices coming down?
Just like prices for internet service, cellular service, and data plans have!
Oh, wait...
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Re: Re: Prices coming down?
It's a little more complicated with Internet and data service, because the average throughput has increased so much. That makes it difficult to compare like to like. NetZero still offers a free plan for under 10 hours of use, and a $9.95/month plan for modem access. But I suspect that you want to compare to modern fastest speeds.
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If they have anything to do with it, there won't be any effective competition in the future, just like there isn't much effective competition right now.
In any case, please let me know when prices have ever come down in these markets? We're always given this "prices will come down when the startup costs are covered" line, but I've yet to see it happen except in markets where there is a large number of competitors, of which this isn't one.
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Especially when many of the start-up costs were covered by the government through tax money and shadow taxes. E-911, which we all paid multiple times for, seems to have disappeared without being fulfilled. And the access taxes which have disappeared without providing the services that they supposedly paid for, as well as the other stuff pulled by the telecoms have basically been pocketed by them, with no oversight and no enforcement to provide the services that they promised to deliver. And don't get me started on the taxpayer money given to the telecoms to build the "Information Superhighway."
Truth is, they've been screwing us forever, and nobody in authority has been able to stop it (likely because of kickbacks and bribes,) and there is nothing to show that they won't continue to screw us forever more.
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They are almost certainly laying out fiber to the towers. If they get somewhat overloaded, they can always add another tower.
Going with the tower solution also allows them to upgrade their network without having to work at both ends of the last mile. They can add new services (5G, when it comes along, example) much more easily.
It also shifts a certain amount of responsibility to the end consumer for the equipment they will use.
I am not seeing the less investment in doing the last rural mile in fiber.
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They were turning a profit after only 2 years.
Most of the cost isn't the fiber, it's the equipment installed at the customer's home.
In the "average" gpon installation, the end points are almost 70% of the cost, with the rest being laying the fiber and the datacenter gear.
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Whereas with wired communications like copper and fiber optics, as long as you can properly shield parallel cables from each other, you can add additional bandwidth quite easily by laying another one right next to the existing bundle. With wireless broadcasting you would need to add a parallel spacetime to achieve that effect. In the case of fiber optics, we're still very capable of upgrading bandwidth on existing cables simply by swapping equipment at the endpoints for models capable of signalling at higher frequencies.
Of course, if one installed wireless access points with very short ranges, say within a single house, there is no such issue with wireless. This is why it's probably possible for Americans to use petabytes per second of bandwidth just using existing wifi networks.
If non-directional wifi-like networks were expected to cover much larger ranges, that wouldn't be possible, since there simply isn't enough bandwidth in the air.
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Re: Huh? Prices will go down...
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You're not the idiot who still thinks that censorship means it can still be seen with the click of a button are you? Based on your moronic comment, you are. So no real need to answer that. Hint: Censorship means unviewable. Period.
You trolls used to try. [shakes head in disappointment] Have we put your in your place that much that now you can't even try anymore? Tsk tsk.
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Maybe they've developed a conscience...
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As a former Verizon DSL customer ...
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Simple economics
It's not much of a long term plan since the cable companies are always looking to skim telco subscribers and I can't imagine what Verizon will do when MVNOs eat into their market share.
Sounds like some greedy bastard at Verizon asked himself how to make the most money possible in the shortest time at the expense of their user base.
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With this I started looking around and doing some tests. The results kind of shocked me honestly. When I got the phone I did not realize how fast 4G can go and was amazed doing a speed test on the phone I got a download speed of 37Mbs.
I then sat there a bit shocked and started to do a bit of math. Verizon with their current plans top out at 10GB a month at a cost of $100 extra a month. 10GB at 30Mbs takes little over 50 minutes to burn.
So they are selling you broadband that if you actually use it for 1 good hour out of the month you have used all your data and went WAY over. What kind of plan is that?
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A lucrative one.
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It sounds bad, until you think a little bit. Most people don't download at a constant "top speed". Most web surfing is high transfer for a short period of time, followed by an extended time of no transfer as the user reads the web page.
Mail, messaging, and the like are all light on bandwidth.
10 gig of mobile is actually quite a bit of bandwidth - unless you are into doing some stuff that really hogs bandwidth. Then you might consider not doing that stuff on mobile.
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However I would be extremely impressed if Verizon managed to achieve the same thing anywhere near a large city. Back of the napkin calculations say that they would need to space low-power transmitters about as far apart as typical wifi access points or amend the laws of physics.
Basically, it would either be a miserable failure or people would be stuck having to chose which one Youtube video to watch this week and do so when there's low network demand.
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And none of them are better because they're happening over faster pipes. So, I think Machin's implied point is still a reasonable one: if you do things which are really better over faster pipes, the usage caps will still bite you.
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What is the point of 4G if all you are doing is mail, messaging and the like? Yes they don't use much bandwidth and will keep you under your limit but if that is all your doing WTF are you paying for high speed for? Can do all those things very well on 3g.
They are offering a service that has great potential (a potential I am greatly enjoying) and then limiting it so people cant use it. You know, like how I can watch netflixs in full HD on my phone...
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10Gig would last me about 30 mins.
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Deregulation
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Re: Deregulation
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So Verizon is essentially pushing people away from a less competitive but regulated market into a more competitive market. That's pretty difficult to square with the idea that Verizon and AT&T have "killed off regulatory oversight." It would be more consistent with an idea that regulatory oversight is so strong (and holding down profits) that Verizon would prefer to exit that market.
And yes, there have been tons and tons of subsidies of rural phones over the year. That doesn't change the fact that rural service is really expensive to provide-- and that most of that rural subsidy actually goes not to Verizon and AT&T, but to smaller local phone monopolies. (Verizon and AT&T actually pay those companies the subsidies through FCC set interchange tariffs that subsidize smaller carriers.) Perhaps as a country we should stop spending lots of money subsidizing people who choose to live out in the middle of nowhere. It's a silly subsidy (and not good for the environment either.) But eliminating the subsidies seems as unlikely as eliminating the rural subsidy that is Essential Air Service, which McCain and other Republicans tried to eliminate and failed. (This was a vote to table the Amendment, so a NO vote was to eliminate the subsidy.)
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I think that your comment only reinforces the idea that Verizon is trying to get out of the DSL business because it's inefficient and unprofitable. They're willing to get out of the business even when they're not going to move anyone to LTE.
It's the same reason that they got out of the local phone business in rural areas. They sold that business to other companies. It's not about specifically pushing people to another product; it's about getting out of an unprofitable business.
In those same rural areas, LTE is pretty expensive for them to deploy as well, though less expensive than wireline.
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Firstly, it is proven that everyone having access to internet is very beneficial for the economy.
Secondly, wireless is not only extremely expensive ($15 per GB overages) but it is also an area where competition is equally non-existent. In most areas you have one maybe two companies with decent data networks. In several you have zero.
Thirdly, living out in the middle of nowhere is not optional for everyone. Although I can see how people living in major cities cannot possibly comprehend this, the fact is people who have farms, land, etd. need to be able to access their property as quickly and easily as possible. There are countless reasons for this, but it is safe to say that living in the country is not optional for everyone. And if a person had to drive 20 or more miles out from a city to get to their farm several times a day, something tells me the pollution problem would be worse.
And finally, Verizon does not plan to cut off just rural areas. They plan to cut all copper lines over time, including entire towns and cities. Many of these towns and cities and even the rural areas are within states and areas where Verizon was given special treatment in exchange for a full an upgraded copper or fiber roll-out that never happened. Verizon has broken the law by charging for extra fees and avoiding taxes per agreements that they backed out of.
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Do you mean the people who grow all the food?
"and not good for the environment either"
Like a 2 hour commute everyday to and from a suburban strip-mall wasteland?
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Actually, only about 5% or less of all farms are corporate, producing about 15-20% of the food. If you get way out in the sticks, you'll find most everybody growing something, even if it's just tomatoes and peppers for the local market.
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I don't think that's true, at least not in my neck of the woods. If you want wired broadband, you have two options: cable or DSL. That's two competitors. If you want wireless, you have two options: AT&T or Verizon.
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net neutrality?
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Those telcos will be trashed by the likes of NTT, Samsung, Hawei, Free and others.
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Municipal Broadband
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You are obviously not thinking of the children.
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The end of a long relationship
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tnx
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Alternative
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We realize you have choices when it comes to your broadband services. That�s why we would like to take this opportunity to say thank you for being a loyal customer and for choosing Verizon as your broadband provider.
We hope you understand that to maintain our broadband networks, from time to time we need to increase our rates. Your monthly rate will increase from $37.95 to $36.99 (not including additional services or, taxes and surcharges) and will be reflected on your bill within the next two months. The new rate will remain in effect for one year.
If you would like to review your account to see if you may qualify for savings by taking advantage of our bundles or if you have any questions, please log on to myverizon.com or give us a call at 1.888.214.3354.
To keep your current service as is, no action is required, and any credits or discounts remain in effect until their original expiration date. If you have recently upgraded to a new plan, please disregard this letter.
Thank you again for your business and we hope to serve you for many years to come.
Sincerely,
Your Verizon Team
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Mobile Connection
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dirty pool
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dirty pool
I just want to be able to use my email and go about my business
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