How AT&T and Verizon Rip Off DSL Customers (arstechnica.com)

A new white paper written by the National Digital Inclusion Alliance finds that AT&T and Verizon are selling slow DSL internet to tens of millions of customers for the same price as fiber customers. These customers have no choice but to pay the rate AT&T and Verizon give them because no other service is offered in their area. Ars Technica reports: AT&T has been charging $60 a month to DSL customers for service between 6 and 10Mbps downstream and 0.6Mbps to 1Mbps upstream, the white paper notes, citing AT&T's advertised prices from July 2018. AT&T also charges $60 a month for 50Mbps and 75Mbps download tiers and even for fiber service with symmetrical upload and download speeds of 100Mbps. These are the regular rates after first-year discounts end, before any extra fees and taxes. Verizon similarly charges $65 a month for 100Mbps fiber service (including a $10 router charge), and $63 or $64 a month for DSL service that provides download speeds between 1.5Mbps and 15Mbps, the white paper says. The price is this high partly "because Verizon ADSL service at any speed requires paying separately for a landline telephone account." [...] The NDIA calls the practice of charging identical prices for wildly different speeds "tier flattening." It affects both urban and rural customers who live in areas where AT&T and Verizon haven't upgraded networks because they face no competition, because the upgrades wouldn't result in higher profits, or both. These customers end up using "the oldest, slowest legacy infrastructure," while paying much higher per-megabit prices than other Internet users.

Comments

Costs

[Bert64]

The backhaul bandwidth is only a tiny fraction of the cost to provide service, most of the cost is providing and maintaining the physical line so it doesn't cost significantly less for an ISP to provide a 2mb DSL service than it does to provide fibre assuming the infrastructure is already in place.
If anything, providing DSL might cost more because the infrastructure is older and more likely to suffer problems.

Re:Costs

[Zebai]

I was about to same the same thing, I hate advocating for ATT/Verizon but the actual speed is meaningless as far as cost. This is why most internet speed packages are close to each other in price ($50,60,70,80 etc..). The real cost is maintenance, which in parts and labor are not any less than fiber(probably more). Customer service, these people do not call in any less than fiber customers(again probably more). Yet these areas are probably rural or have some barrier that makes it more expensive to maintain/upgrade than they can pull in with reasonable monthly rates.

In fact I would propose a counter argument, they should be charging their "upgraded" customers LESS as as it is usually very cheap per person to service heavy pop areas and most of that "cost" is paid for by their other products such as TV/phone that use the same lines.

Re:This article doesnâ(TM)t make sense

[thegarbz]

If these providers were really treating me so incredibly unfairly, why wouldnâ(TM)t another option naturally emerge?

In a perfect market yes. Internet service providers are not a perfect market. In fact they are usually a text book example of an imperfect market created through a process of public spending and government granted oligopolies. That's if you're lucky. Quite often you're faced with an outright monopoly.

Hasnt that always been the cycle of technology? Someone does something poorly and then someone else can do it better and make lots of money.

Someone tried. Look how much Google fibre spent only to achieve nothing. This isn't some startup creating an app.

Re:This article doesnâ(TM)t make sense

[squiggleslash]

This isn't true.

Almost all areas have at least two ISPs, the telephone company and the cable company.

People keep arguing the latter has "exclusive monopoly rights" granted by the local governments, but that's not true either. That might have been true for a decade or two when the company started up, but since then those agreements have been invalidated.

But even if they did have monopoly rights, it wouldn't matter, because the monopoly was on cable TV, not on ISP services. Not even the old, obsolete, exclusive franchise agreements would have prevented new ISPs from setting up in any area.

The reality is that there usually just two ISPs in any area for a simple reason: they both already have infrastructure, whereas any new ISP is going to have to lay cable. And laying cable is phenomenally expensive.

There are things that can help such as local governments helping new ISPs have access to existing poles to hang wires from, rather than forcing them to bury it, but poles aren't everywhere, and those poles often belong to companies that have no desire to allow third parties access.

The other problem is it's easier for telecoms and cable operators to market their services. There used to be WISPs in my area, offering point to point WiMAX service. They disappeared. Why? Presumably because everyone had heard of AT&T and Comcast, they were already customers of both, whereas the WISPs would have had to do a major advertising campaign just to get noticed. Meanwhile AT&T and Comcast can simply ask you whether you want internet service whenever you move in to a new home and call them to get your TV or telephone hooked up. The WISPs you'd have to contact separately.

There are plenty of people who think the solution is "more competition" as if someone can just wave their wand and bring forth millions of miles of fiber optic cable. It's not that easy.

Even Google can't do it. Google. Think about that.