GigaOM » DSL

Deutsche Telekom’s ‘anti-net-neutrality’ plans alarm German government

David Meyer — Thu, 25 Apr 2013 09:39:01 +0000

Users of Deutsche Telekom’s mobile services are used to the concept of data caps, but its fixed-line customers? Not so much. This is part of the reason why the German government is reportedly upset about the telco’s plans to drop flat-rate pricing for its DSL services – the most alarming part, however, is that Telekom apparently wants to exempt its own services from the cap.

We’re into classic net neutrality territory here. As the company announced a few days ago, Telekom’s customers will be able to stream films from the carrier’s own T-Entertain service without any problem, but streaming a film from a rival would count towards the cap – effectively meaning Telekom’s caps will discriminate in favor of its own products. And all services, activists argue, should be treated equally on the open internet.

Concerned citizens have already set up a Change.org petition that has garnered around 30,000 signatures at the time of writing, but now the German government itself has weighed in. This isn’t just a regulatory thing – the government is Telekom’s biggest shareholder, too.

Der Spiegel claims to have seen a letter from Philip Rösler, the federal economics and technology minister, to Deutsche Telekom chief Rene Obermann, in which Rösler warns that the government and competition regulators will “very carefully follow ongoing developments with regard to a possible differential treatment of [Telekom's] own and rival services under the aspect of net neutrality.”

In a statement, Telekom claimed that “net neutrality is partly confused in the debate with a free internet culture” and that “T-Entertain is not a regular internet service, but a television service for which the customers pay separately.”

“Regular internet services are not subject to discrimination,” Telekom added, while noting that the alternative to introducing the caps would have been to raise the flat-rate tariffs for all customers.

Discriminatory caps

Telekom’s proposed changes work like this: customers on the slowest DSL lines (up to 16Mbps) will get capped at 75GB a month; those on up-to-50Mbps plans will face a 200GB cap; an up-to-100Mbps plan will max out at 300GB; and an up-to-200Mbps plan at 400GB. After that, speeds will be throttled to 384Kbps, although customers could also pay extra for more usage at normal speeds. The carrier claims its customers typically use 15-20GB a month.

On the face of it, these caps do appear reasonable, given the data volumes consumed by the average user, and they are supposedly aimed at stopping people from consuming extremely high data volumes at the standard rate — Telekom says only 3 percent of its customers will be affected. However, as those in the telecoms industry know all too well, data usage is only going one way: up, up, up.

Ultimately, it’s the principle of the thing that seems to be the problem here. Once you establish a precedent that certain services can be freely used while others cannot, you potentially raise the barriers to entry for new players. After all, with Telekom being Germany’s biggest ISP, would you set up a competitor to T-Entertain once the discriminatory caps are in place?

Yes, Germans are already used to data caps on mobile, and indeed Telekom itself has a cellular-centric agreement with Spotify that exempts traffic from that service from counting towards caps for customers on certain tariffs. The principle is already broken there. However, the way out of that for a Telekom mobile user who favors a rival to Spotify, is to offload as much traffic as they can onto their home Wi-Fi connection. If they’re also with Telekom for fixed-line services, as many are, now they’re going to face caps there too.

So, with traffic volumes set to keep on growing on all fronts, it’s not hard to see why many of Telekom’s critics are spoiling for a fight.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

German court says the internet is pretty much required for modern life

Stacey Higginbotham — Mon, 28 Jan 2013 18:14:32 +0000

The German high court has weighed in on the value of a web connection (as well as faxes and VoIP lines) and determined that the internet is pretty much essential to modern life (hat tip to TechDirt). This puts the German court closer to agencies such as the ITU and countries such as Finland where internet access is considered a right.

Apparently back in Dec. 2008, a German citizen found himself disconnected from his DSL line because of some error and was stuck without a connection for two months. He sought compensation for his expenses (he spent more time using his mobile phone instead of his wireline VoIP service) as well as €50 ($67) per day he had no connection. He didn’t get that much because the courts felt he was overeaching in seeking compensation from his ISP beyond actual costs for his fax line and VoIP line, but it did send the case back to a lower court telling it to set the fine accordingly.

The court’s rationale was that so much of modern life is conducted via the internet that going without was worthy of some compensation when it was cut off. A Google translation of the court’s press release notes:

The internet replaces, because of the easy availability of information, more and more other media, such as encyclopedias, magazines or television. It also allows the global exchange between its users, for example via e-mail, forums, blogs and social networks. In addition, it is increasingly for the initiation and conclusion of contracts, used for making transactions and to fulfill public service obligations. The majority of people in Germany uses the Internet daily.

The release goes on to say that because of these things it is not easily replaced and essential to modern life. Thus, it sent the case back so the man might get his compensation. In light of AT&T’s massive service failure last week that affected thousands of users, I’m curious how our own court system might view access to the web and what type of compensation — above and beyond a service credit — might be due those affected by multiday outages.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

US Broadband’s new reality: slowing growth

Om Malik — Wed, 14 Nov 2012 14:28:40 +0000

The go-go years of the US Broadband business might be behind it and the latest numbers from Leichtman Research Group (LRG), a Durham, NH-based research firm only confirm that. According to their data, broadband providers who represent about 93 percent of the total US market added 580,000 net new broadband customers in the three months ending September 30, 2012. The new additions are about 92 percent of net new additions during the third quarter of 2011.

By LRG’s estimate there are about 80.7 million broadband subscribers in the US. For the first nine months of 2012, US saw an addition of 2.1 million net new broadband subscribers, down from 2.3 million during the first nine months of 2011.

Here are some notable stats:

Cable companies continue to dominate the business and added about 575,000 subscribers. Comcast added 287,000 broadband subscribers in the quarter – nearly 50% of the total for the top providers
Telephone companies added about 5,000 subscribers.
AT&T and Verizon added 749,000 fiber subscribers (via U-verse and FiOS) in the quarter, while having a net loss of 799,000 DSL subscribers.

The market saturation and slowing growth means that companies like AT&T have to upgrade their broadband offerings to stay competitive and steal market share. At present, cable companies are offering a beefier broadband package compared to the phone companies and the results show. Most importantly, Verizon and AT&T’s customers are telling them: they don’t want slower classic DSL connections and instead want faster and better broadband connections.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Hey DSL, it is time for good-bye

Om Malik — Wed, 07 Nov 2012 19:52:17 +0000

As someone whose first home broadband experience was a 256 kbps broadband connection from Verizon’s grammy Bell Atlantic, I have always retained a soft spot for DSL technology. Sure, I was jealous of my friends who got @Home cable-based broadband and its 1 Mbps service, but in Manhattan of the nineties, DSL was the only game in town. If you saw the cables in my East Village apartment block, you too would feel incredulous – how do these creaking, aging old copper wires bring fast broadband. As time went by, the speeds increased.

Cable broadband suffered from too much popularity — too many people shared an infrastructure and as a result the speeds delivered to the home were actually a fraction of what was advertised. And when I moved to San Francisco, I decided to stick with DSL and used Pacific Bell’s (now AT&T) connections. However, somewhere in the mid-2000s, things start to change.

DSL speeds, though nearly 15 times faster than my first connection, started to fall behind the cable broadband speeds. DSL performance became spotty. And I switched to Comcast. Today, I live in the future — I have a 200 Mbps fiber connection, thanks to my local independent ISP, WebPass. It costs a lot less money than what the cable company wants from me. And it is a heck of a lot faster than what AT&T has to offer.

Like me, a whole bunch of people have switched from the creaking DSL offerings to faster connections. I have been writing about the slow migration away from the classic DSL offering for a long time. People have switched in big numbers to cable companies, particularly those who offer better quality, higher speeds such as Comcast and Cablevision.

DSL owners have switched to faster offerings from their own phone companies — Verizon’s FiOS for example — as the demand for consumer bandwidth has exploded thanks to growing popularity of web services such as Netflix, social networks like Facebook. The growing number of in-home devices has started to increase our need for bandwidth.

AT&T and Verizon, two of the largest DSL providers in the world didn’t really keep up with the times, and the speeds like their European peers did. The reasons were complex — our geography was a disadvantage compared to very compact cities in Europe, for starters. But most importantly, the Baby Bells wanted sops from the elected officials.

Whatever the reasons, we didn’t really see speed bumps on DSL like we saw from the likes of Free in France. AT&T built U-Verse, a hybrid fiber-copper network and Verizon built FiOS, but mostly for their richer constituents — the people who could afford to pay couple of hundred a month for a triple-play service. That focus on higher-end customers meant that the classic DSL was left to die on the vine.

The market too was speaking loudly — the people were switching away from AT&T and that did indeed threaten AT&T’s whole existence. As DSL sales swooned, AT&T customers went to Comcast and Cox and Time Warner. AT&T couldn’t sell switchers a phone service, a declining business to begin with. It couldn’t sell them a television connection. The lure of a wireless connection packaged neatly with everything wasn’t a reality anymore.

Today, AT&T essentially put the nail in the coffin for DSL technology when it announced that it was going all-in on IP-based networks and IP-technologies. As Stacey Higginbotham reported earlier this morning, Dallas-based AT&T is spending nearly $14 billion to completely switch from last century’s technologies and put old copper-based network out for pasture. Here is what the company said in a press release:

U-verse. AT&T plans to expand U-verse (TV, Internet, Voice over IP) by more than one-third or about 8.5 million additional customer locations, for a total potential U-verse market of 33 million customer locations¹. The expansion is expected to be essentially complete by year-end 2015.
U-verse IPDSLAM: The company plans to offer U-verse IP-DSLAM service (high-speed IP Internet access and VoIP) to 24 million customer locations in its wireline service area by year-end 2013.
Speed Upgrades: The Project VIP plan includes an upgrade for U-verse to speeds of up to 75Mbps and for U-verse IP-DSLAM to speeds of up to 45Mbps, with a path to deliver even higher speeds in the future.

These investments are a realization of a harsh reality AT&T and to some extent Verizon is living in — everything is going IP. Voice is an app. Video is an app. And even the thermostat is an app. The puny Internet speeds they continued to offer via the old DSL has no part of this bandwidth-hungry future. And even with these upgrades, AT&T is still lagging behind its fiber-based competitors. The need for bandwidth isn’t going away – and for Ma Bell, that is the reality. It needs to figure out how to live with it.

For me, it is a bittersweet moment — for I can only remember being blown away by the 256 Kbps speeds and dreaming of a future when I could have 100 times the speed.

Here’s AT&T’s $14B plan to kill its copper network and leave rural America behind

Stacey Higginbotham — Wed, 07 Nov 2012 14:57:32 +0000

AT&T is done with its copper telephone network and copper DSL business, according to its CEO and chairman Randall Stephenson, who spoke Wednesday at an analyst conference in New York City. The company believes that an all-IP network is the path to more profitable future. Given the millions of subscribers that are dependent on the copper telephone lines and copper DSL products, AT&T has offered a $14 billion fringe benefit for those customers and the regulators who will likely balk at the idea of AT&T stopping its investment in copper.

AT&T said it will invest $14 billion in its networks over the next three years, with those dollars going into wireless, business services and the fiber-to-the-node U-verse product. Those three product lines make up 81 percent of AT&T’s revenue and collectively are growing at 6 percent a year. AT&T expects to spend $8 billion for wireless initiatives and $6 billion for wireline initiatives. Total capital spending is expected to be approximately $22 billion for each of the next three years. (Several people are noting that U-verse is copper-based at the last mile, which is true, but I’m referring to the stand-alone DSL product as opposed to U-Verse, which AT&T is clearly investing in.)

For those worried about losing their access to communications, AT&T said with the new investment, its LTE network will reach 300 million people or 99 percent of the U.S. , while its wireline U-Verse network will expand to cover 75 percent of the current customer locations — or 57 million people.

The premise being that the remaining 25 percent of its customer territory will subscribe to LTE broadband, which comes at a much higher cost and has onerous caps that DSL access and AT&T phone lines do not have.

Essentially those living in rural areas are screwed when it comes to broadband, with Stephenson saying that he believes that in an IP age, wireline broadband will still be profitable in markets of “reasonable density.” He further went on to say that “The best service is delivered through an IP-only service with a streamlined product set,” which clearly doesn’t include copper telephone lines and DSL.

This news will have huge ramifications for Americans in rural areas as well as those who still rely on their wireline copper-based telephones for burglar alarms, emergencies and fire alarm systems. Competitive local exchange carriers in many regions will also woke up this morning wondering how they will continue to offer their products over AT&T’s copper pipes. Instead AT&T will use its fiber network and LTE to deploy broadband to smaller cities and towns. These decisions also mean the end of network upgrades to the copper network, although it’s not clear how exactly Ma Bell will back away from copper from its network, and it will have to do so with regulatory approvals.

But it’s clear that AT&T is running from copper like I’d run from a PR person waving a social media pitch, so now it’s up to the Federal Communications Commission to take a hard look at what the loss of copper means for consumers and for the marketplace.

From AT&T’s perspective this is a good move financially, because it will eliminate a high-cost product that delivers low revenues, while also allowing it to streamline its network and reduce the complexity of both the applications and networks it operates. I can’t blame the company for taking these steps, and it’s at least trying to engage the FCC on the regulatory front as opposed to selling off its DSL business as Verizon has done, but as it moves forward we need to look at who is left behind.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

90% of US households with computers have broadband

Om Malik — Tue, 04 Sep 2012 14:29:42 +0000

Broadband penetration in the U.S. is continuing to grow, and now stands at 90 percent of U.S. households that have a computer at home, according to Broadband Access & Services in the Home 2012, a study by Leichtman Research Group (LRG). Five years ago, 65 percent of households with a computer subscribed to broadband service, LRG notes. Its research shows that broadband subscriptions go up with household incomes.

Annual Household Income	Use a Computer at Home	Internet at Home	Broadband at Home
Under $30,000	59%	52%	47%
$30,000-$50,000	84%	78%	68%
Over $50,000	97%	97%	91%

“While higher-income households remain most likely to subscribe to a broadband service, computers in the home also increases with household income,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. “Disparities in computer ownership are the true roots of the broadband divides in the US.”

Here are some other findings from that study (via the LRG press release.)

While 76 percent with broadband don’t know the speed of their Internet connection, 63 percent of broadband subscribers rate the speed of their Internet connection as falling between an eight and 10 (higher is better), and 6 percent rate it poorly at between one and three.
Two percent of all online households say that broadband is not available in their area – compared to 6 percent in 2008
Overall, 1.3 percent of all households are interested in getting broadband, but say that it is not available in their area.
Overall, 0.6 percent of all households are interested in getting broadband, but cite cost as a reason for not currently subscribing to a broadband service.

The high broadband penetration in homes with computers explains why we are seeing slower growth in demand for new broadband connections. At the end of second quarter of 2012, there were a total of 80.33 million broadband subscribes in the U.S. according to LRG.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

US broadband growth slows to a trickle with only 260,000 new connections

Om Malik — Tue, 14 Aug 2012 15:11:45 +0000

US broadband is growing – albeit much more slowly according to data collected by Leichtman Research Group, a market research company. During the second quarter of 2012, US added 260,000 broadband subscribers, down sharply from 350,000 broadband subscribers added during the second quarter of 2011. According to Leichtman, “the net broadband additions in the quarter were the fewest of any quarter in the eleven years LRG has been tracking the industry.”

As we have previously reported – the decline of traditional DSL has created problems for phone companies, who are losing customers to cable broadband providers. Here are some other insights from the data they collected.

Top cable companies added about 330,000 subscribers. In the second quarter of 2011, they had added 271,000 new subscribers.
The top telephone companies lost about 70,000 subscribers versus a gain of about 80,000 in 2Q 2011. AT&T and Verizon had fewer net broadband adds in Q2 2012 than in any previous quarter in the past eleven years
AT&T and Verizon added 669,000 fiber subscribers in the quarter (via U-verse and FiOS) and had a net loss of 763,000 DSL subscribers.
Comcast now has 18.74 million broadband subscribers, making it the biggest broadband provider in the US.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Who and what to watch in the new era of the living room

Thu, 31 May 2012 06:55:44 +0000

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

The DSL death march continues….

Om Malik — Tue, 24 Apr 2012 12:57:44 +0000

The slow death march of DSL continues, especially at two of the largest phone companies in America. Last week, Verizon reported a loss of about 89,000 DSL connections and a boom in demand for its faster fiber optic service, FiOS, which added about 193,000 new subscribers. We are seeing similar trends at AT&T as well. Things are so bad at Ma Bell, that it buried the news at the bottom of the earnings release.

AT&T U-verse High Speed Internet delivered a first-quarter net gain of 718,000 subscribers to reach a total of 5.9 million, more than offsetting losses from DSL. Overall, AT&T added 103,000 wireline broadband connections. About 45 percent of consumers have a broadband plan delivering speeds up to 6 Mbps or higher versus 35 percent in the year-ago quarter.

The net addition of 103,000 broadband subscribers is an improvement from the fourth quarter of 2011 (ended December 31) when the company saw a net decline of 49,000 in total broadband subscribers. AT&T lost close to 615,000 classic DSL connections during the first quarter of 2012. In the fourth quarter of 2011, AT&T lost about 636,000 connections.

With more people using broadband to access all sorts of bandwidth-consuming services such as Spotify, Netflix and MLB games, it is pretty clear that the classic DSL isn’t enough. The change in demand patterns is reflective of that. For U-Verse, AT&T uses a combination of fiber-to-the-node technology to deliver video, voice and data service.

That said, I think that AT&T is not really interested in pushing standalone wireline broadband services. Instead it wants to focus on either the triple-play packages (voice, video and data) or the the more lucrative mobile business — much like Verizon. Why deal with net neutrality and fight for caps, when you can charge an arm and a leg for LTE?

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

Woman sues Verizon for lying about Internet speed

Jeff John Roberts — Tue, 10 Apr 2012 14:33:28 +0000

A California woman claims that Verizon talked her into buying a faster internet plan even though it didn’t have the technological capability to deliver what it promised.

In a complaint filed in Los Angeles state court, Patricia Allen of Santa Monica says that a Verizon sales rep talked her into switching from a $24.99 to a $34.99 DSL plan that was supposed to deliver internet at the speed of 1.5 Mb per second.

Allen claims, however, that her connection only ever reached half that speed and that when she complained to Verizon, a technician told her faster speeds were impossible because she lived two miles from a Verizon service center. She adds that a rep told her to downgrade because her line could only accept speeds of up to to 768k per second.

The way DSL service works, customers who live too far away from the central office of the telco face diminishing speeds as the noise on the copper lines that provide the service increases with distance. Thus, customers who live closer can get the top speeds advertised, while those a few streets away will find themselves surfing along at speeds reminiscent of the late 90s.

Allen also says the company refused to issue a refund.

Allen is suing Verizon on behalf of “all persons and entities in California who are located a certain distance” from a Verizon office.” The lawsuit is based on breach of contract and California consumer protection laws.

“We believe the lawsuit is baseless and without merit,” said Verizon spokesman Rich Young.

The fight over advertised speeds and actual speeds is an issue that’s gaining ground as users spend more time online, and are attempting to use services that require faster speeds. You can’t watch Netflix at 768k, or even conduct a good Skype video chat. The FCC is investigating the disparity as well, and has sent out routers to hundred of customers that report back on broadband speeds and conditions to the agency.

This is the second time this month that Verizon has found itself in hot water over its DSL service. Last week, the company caused a stir by saying that new subscribers will have to purchase an old-fashioned land line if they want access to Verizon’s DSL connection.

Here’s a copy of the lawsuit:

Verizon Class Action Copy

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.