Analyst calls AT&T U-verse a "bust"

Future of U-Verse Questioned [Suddenlink FYI]

Based on the report last week from Light Reading that AT&T's U-verse product growth is stalling, Suddenlink FYI points to the report of an analyst that believes that U-Verse will continue to loose steam because the product's engineering cannot make the jump to the next level of broadband speeds that customers want.

Samuel Greenholtz, a retired Verizon employee and founder of a consulting firm named Telecom Pragmatics, writes:

We expect dramatic cutbacks in U-verse CAPEX [capital expenditures] over the next two years. The service has pretty much been a bust. For AT&T, 3Q09 will probably “be identified as the quarter in which the U-verse star started to fade.”

AT&T’s U-verse will not be “getting in stride” or “picking up steam.” There are indications that point to significant pullback on CAPEX for the service in 2010 and 2011. The reason why these are not “hyper growth” times for U-verse is that the main technology used was doomed from the start.

U-verse technology uses the same twisted pair copper that Ma Bell has utilized for phone service for decades. At some point, its ability to transmit broadband speeds comparable to cable just can't keep up. And the analysis that U-verse technology is a "bust" are words coming from a former phone company employee. Not exactly a ringing endorsement.

Comments

[steve]

RE:Michael was quick to point out that Insight is proud of it's second place rating in J.D. Power for the south region for its internet service.

How did they rank for TV? (Cable's bread and butter)
1.) AT&T U-Verse
2.) Verizon Fios
3.) DirecTV
4.) Bright House Networks
5.) Dish Network
6.) Insight

The JD Power Survey's are fixed. As a Uverse Installer if a survey is bad managers call the customer verify information given and have the survey removed from the system..I am sure all company's do this.. its just a matter of who is better at doing it i suppose

[Jim]

Let's keep in mind that Insight still uses coax cable (and not really data quality in most areas), which like twisted pair, has a maximum speed of 10Mbps... and that's in a perfect environment. (Let's be honest: the expense and logistics of sending out the 100Mbps coax to every subscriber would be more than the company could handle.)

So keeping this in mind, what type of compression is Insight using to offer the higher Internet speeds?

Think about it:
1 Mbps for normal telephone traffic
4.5-6 Mbps Video (1.5-2 Mbps for DVD quality video over three streams for three TVs)

That leaves 3-4.5Mbps for data. Again, what level of compression would one use to get such a high speed (especially the 30Mbps that's "coming soon")? To get that speed, there will need to be fiber switches on every block!

Now! Let's think about this: the max speed for FIBER is 1000Mbps (they can't afford the new 10Gbps fiber). So at max, they are claiming 30Mbps for data, about 5 for video and about 1 for voice... 36Mbps. That's per one fiber connection, 27 customers, but you need to remember about $25,000-$50k for the equipment, fiber and labor. That's about $1,000-$2,000 per customer (and that doesn't count the base cost of the services)!

Wow!

[Rob Mattheu]

I would love to hear someone talk about U-verse quality in Louisville. I personally would love to have an alternative to Insight, which seems to be on a downhill slide. If nothing else, I'd simply like a larger DVR that is accessible on multiple TVs. The limited capacity for HD shows makes the DVR worthless if you can't get to the shows right away.

U-verse offers an intriguing product, but I cringe when I hear AT&T's name. Even on Insight's worst day I've not had the service issues I've experienced with AT&T wireless.

[zehnmonkey]

Allow me to caveat- I'm an unbiased consumer that does IT architectural solutions.

Here's why Uverse is a bust.

AT&T knew that bandwidth limitations on a single UTP would stifle available services as they attempt to grow with competition. Their solution was to get 2 UTP bonded in an aggregate fashion. Small problem, trying to bond pairs on a PBX trunk without having to upgrade every trunk wouldn't work. They did make huge strides in running fiber to each trunk (FTP). As it works right now the circuit is a multiplexed UTP and fairly close to max.

I have Uverse @ 2600ft from the trunk, barely within the signal tolerance for 2HD service. We were promised that pair bonding was going to be available by 1 Jan 09 We lose sync roughly 10-20 times a week.

The only reason I've kept it is that we had dish for TV and AT&T for DSL & POTS and it cost us about $200/mo. Right now Uverse is 3 for 30ea. We've gone through two DVRs and had a tech out here about 6 times over the three months we've had it. You get what you pay for. . .

If AT&T can't get pair bonding to work, they can't reach distribution like cable can. To this point, AT&T has not had success with pair bonding. Ergo- no expansion of availability or services-bust.

FiOS (FTN) is better technology, however the only available locations are new residential developments that Verizon buries the cable in during construction. No idea if they plan to expand services, but because of municipality contracts, consumers have limited choice.

I hope AT&T gets it figured out, since my options are AT&T, Charter, or Satellite. Alternately I've thought about just ditch the TV service for netflix set-top box and DVR software for network TV. It'd be more reliable. . .

[Jeff]

Michael was quick to point out that Insight is proud of it's second place rating in J.D. Power for the south region for its internet service.

How did they rank for TV? (Cable's bread and butter)
1.) AT&T U-Verse
2.) Verizon Fios
3.) DirecTV
4.) Bright House Networks
5.) Dish Network
6.) Insight

If U-Verse is busted, then how can they do such a better job in providing a service then Insight? Why is it that customers (when they have the choice) choose Fiber or Sat over cable almost everytime?

Now if you would like to see old out of date technology thats busted, just press the guide button on your insight remote. The insight digital user interface is about as out dated as New Kids On The Block. And I know they just released a new album trying to make a come back, but just like Insight 5.0 it was a flop.

[DM]

sineswiper,

I think you missed the point of my post. I was arguing that AT&T is moving away from traditional phone lines to fiber optics, but they are doing it in a different manor than Verizon. It is a strategy that involves incremental network infrastructure improvements. Updating in stages over time can be advantageous for a cost-benefit ratio in the short-term.

In regards to the cable vs. DSL argument, both technologies have improved over the years to provide more efficient services in the bandwidth they have available. Who’s to say that the same trend won’t continue? Cable can upgrade to DOCSIS 3, but DSL could also evolve to some newer technology to keep up with cable services. I hate it when cable reps (Jason Keller) say things like (paraphrased) “copper phone lines are old and outdated technology”, like coaxial cable is some new and innovative product that just came into existence in the 21st century. The cable industry has bashed DSL in their marketing programs for a while; I just think it would be ignorant to not think that some day cable might be in DSL’s position against the fiber market.

And I like how you referenced a “friend” in your post. On the internet, that is called anecdotal evidence. Anecdotal evidence is often opinion-oriented and thus, provides a different response from each person. I also have a friend in Indianapolis who uses U-verse for TV and Internet (he has an iPhone, which I have read can sync up with the service as well). He raves about it and says that he is happier after switching to U-verse from Comcast. I might also add that he is a dedicated gamer and didn’t experience any internet gaming problems when he switched. I do agree that U-verse needs to improve the quality of their TV channels (I am assuming that is what you meant by reception), but I think that when a comparison is made between U-verse and cable picture quality, U-verse still comes out on top.

[Bill]

Uverse is a bust? Just like 5.0, Micheal. Your company is a joke.

[sineswiper]

RE: DM

Except he's right. Granted, all parties involved are biased, but facts are facts.

While coaxial cables have been around for ages, just like twisted pair, those cables have been delivering many different channels. With QAM compression, there's even more channels to offer. So, if some of those channels could be used for downstream channel bonding (ie: DOCSIS 3.0), then it can transmit quite a bit of speed.

Twisted pair is twisted pair. Unshielded, and not a lot of bandwidth to play with. They can't even do TV over twisted pair right. (Friend of mine had it and said that the over-the-air channels had better reception.) What makes you think they can do HSI any better?

[DM]

I agree with you Richard – “BREAKING NEWS: FORMER VERIZON EMPLOYEE DOESN”T LIKE AT&T!!!”

I think that, strategically speaking, both AT&T and Verizon made choices that they thought were best for themselves in regards to fiber deployment. I can understand why AT&T went with their “Fiber to the Node” strategy rather than the “Fiber to the Home” strategy that Verizon is utilizing. AT&T wanted to upgrade their network infrastructure but also wanted to control costs. AT&T is gambling that the upgrades will be sufficient for now and that, over time, they will have to upgrade again to “Fiber to the Home” to compete. However, they are hoping that the future upgrades will be cheaper to roll out than enact now.

Verizon is positioning themselves to incur a higher initial investment cost but with a network infrastructure that will not have to be updated again in the long-term. This could be a future competitive advantage because they could potentially respond quicker to market pressure than cable could.

There was also a report out about Fios deployment declining and how Verizon was going to shift strategies in the marketing of their products, so this decline isn't exclusive to just AT&T.

“U-verse technology uses the same twisted pair copper that Ma Bell has utilized for phone service for decades. At some point, its ability to transmit broadband speeds comparable to cable just can't keep up.”

Michael, let me re-write this statement for use in the future:

DOCSIS technology uses the same copper coaxial cable that the cable industry has utilized for television service for decades. At some point, its ability to transmit broadband speeds comparable to "Fiber to the Home" just can’t keep up.

[MRN]

It is interesting that Mr. Willner has put this blog out today. Insight Cable is now having to deal with competition in at least two of their markets, Columbus, OH and the Louisville , Ky area, where AT&T U-verse technology is beeing deployed. I read this article last week and find it funny that Mr. Willner has pick up on it and has reported on it in his blog. The writer was a Verizon employee who worked with Verizon TV product called FIOS. Verizon and AT&T are direct competitors of each other. I just find it funny that once Insight faces some competition that Mr. Willner publishes a blog that bad mouths its competition, even though the writer of the article is a Verizon employee. Mr. Willner, you should be writing about things that Insight is doing, not about what your competition is doing

[Richard]

"U-verse technology uses the same twisted pair copper that Ma Bell has utilized for phone service for decades. At some point, its ability to transmit broadband speeds comparable to cable just can't keep up. And the analysis that U-verse technology is a "bust" are words coming from a former phone company employee. Not exactly a ringing endorsement"

Because a remark from a VERIZON employee is relevant when talking about AT&T. Verizon saw the writting on the wall and is deploying fiber, so of course a ex-VZ employee will bash a competing ILEC, if this had come from one of the retired AT&T people that worked on these lines, then it would hold water.