US Telcos Are Giving Up On Residential Broadband And Nobody Seems To Have Noticed

from the ill-communication dept

We've noted for a while that US telcos have been making it very clear they no longer really want to be in the residential broadband business. While profitable, it's not profitable enough, quickly enough for Wall Street's liking. And since upgrading aging DSL lines in rural or less affluent urban markets is expensive, these companies have largely decided to freeze most major fiber upgrades. Not only that, many of these companies (Windstream, Frontier, CenturyLink, AT&T, and Verizon) have been refusing to even repair many of the lines already in service.

The problem is that as these companies exit and neglect these underserved markets, cable giants are being left with growing monopolies across huge swaths of the US. Limited competition means less incentive to compete on price, or fix the cable industry's often comical customer service. And while some believe 5G will magically come in and somehow fix this problem, that's not likely to happen for the same reason fiber isn't universally deployed: companies don't want to pay for to connect fiber to the nation's rural and less affluent urban communities.

.@khart accurately articulates the reality around 5G that I've found from research. The ISPs aren't sure they can justify the investment to Wall Street's demand for fast returns (ie not profitable fast enough). Could stagnate like fiber to the home.

https://t.co/WaSVKnShhG — Ernesto Falcon (@EFFFalcon) June 3, 2019

Aside from the reduction in competition, another problem with telcos just giving up on residential broadband is that many of these networks were heavily taxpayer subsidized. Regulations in many states (which telcom lobbyists have voraciously been assaulting for years) also protect the elderly and poor from having connectivity stripped away. That's not really stopping companies like CenturyLink, which recently quietly froze all network upgrades, and is now signaling that in may leave the residential broadband market almost entirely to focus on more immediately profitable enterprise offerings after acquiring Level 3.

AT&T and Verizon have shifted all of their focus toward wireless and trying to become (however ham-handedly) the next major players in the online video advertising space. Another major telco, Windstream Communications, recently declared bankruptcy after years of network neglect resulted in a flood of customers headed to the exists. There's a similar story playing out at Frontier Communications, which first gobbled up Verizon's unwanted assets in growth for growth's sake, but now is being forced to sell some territories off as it struggles with the massive debt load.

Again, wireless isn't going to fix this because the same rules apply: 5G needs fiber lines carriers don't want to invest in in rural or less affluent broadband markets if the ROI is low. And while many communities have turned toward building their own broadband networks instead, these very same telcos (with the help of the Pai FCC) have lobbied to pass state laws banning towns or cities from building the better broadband these telcos have long refused to.

It's a pretty massive problem with an exponential impact on numerous sectors that tends to get lost in mainstream tech conversations surrounding "big tech" giants. But it's a problem that's not going away and remains hugely important all the same.

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Filed Under: 5g, broadband, competition, municipal broadband, residential broadband, wireless

Companies: at&t, verizon