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Don't hang up on wireline yet
When I look at this week's earnings from AT&T and Verizon, it's hard not to notice the fact that wireless is again the rock star while wireline services slowed a bit. At the same time, I can't help but try to make the case that wireline still does matter.
Let's look at this quarter's numbers first. AT&T's and Verizon's Q4 09 earnings report made it clear where the momentum is: wireline service revenue continues to decline while wireless thrives. During the quarter, Verizon signed on over 2 million wireless customers, but in the wireline division it saw its landline residential subscriptions decline. Similarly, AT&T signed on 2.7 million new wireless subscribers, but saw continued growth in IP-based consumer and business services.
Out of the two here, Verizon obviously fared worse with a $653 million loss in the quarter. In response to its losses in Q4 09, Verizon said it would get the scissors out this year to cut yet another 13,000 wireline jobs. Okay, so I get it, consumers and business users like the convenience of not being tethered so it's not hard to understand why they would ditch their bedrock landline voice connection for wireless. On the broadband side, who would not pass up the faster speeds of a cable modem or FiOS where available? Of course, the drive to fiber-based broadband comes at the loss of DSL subscribers.
Another factor contributing to landline loss, as told to me yesterday by Keith Galitz, President of Oregon-based rural telco Canby Telcom is the economy. "What's happened is the economic disaster that this country has faced has exacerbated the wireless-only movement," he said. "People have said they had to cut, when they held a wireless phone in their hand they decided to cut the hardline phone, so we have seen an acceleration of the loss of access lines."
However, Canby is clearly not sitting pat. The service provider has built out a Fiber to the Home network that currently reaches 1,000 homes in its territory and has been migrating to softswitch voice technology to offer competitive wireline business voice services such as IP Centrex.
But before you all start ringing the wireline-network-is-dead-and-wireless-is-going-to-take-over-everything bell, consider the recent news from Windstream Communications' proposed plan to spend $20 million on a multi-purpose fiber network that is designed to bring fiber to cell sites and coincidentally expand the reach of its Ethernet offerings to business customers.
But what really drove the point about the role of wireline home for me were comments a reader pointed out in response to the ongoing talks between wireline union members and AT&T Southwest. The point is that AT&T and Verizon are finding great technology will continue to depend on, wait for it, a wire.
"It is copper and fiber optic lines that connect the equipment to the cell towers that allow wireless technology," the reader said. "So, wireless only customers are still using non-wireless technology."
Obviously, what this reader is referring to is wireless backhaul, a market that's got every wholesale operator salivating as, yes, AT&T Mobility and Verizon Wireless make their migrations to LTE--a migration that will require lots and lots of wireline fiber-based bandwidth.
So before you hang up on wireline, remember that when you're making that call from your car or tweeting about Mel Gibson's comeback there's a wireline connection that's probably supporting that session. --Sean
Comments
"So before you hang up on wireline, remember that when you're making that call from your car or tweeting about Mel Gibson's comeback there's a wireline connection that's probably supporting that session"
Begging the question- so what?
I know you are trying to make a game effort at putting out a counter popular wisdom article but do you really think that we wont see billions less PSTN revenue next quarter? That is not going to be made up for by an extra 100K Uverse subs.
Yes we do know how it will be accomplished. This goes back to the greed thing with Stephenson. I'm pretty sure the company makes multibillions of dollars just because that jackass shows up everyday. Its because the people he is currently throwing under the bus go out and do the work that is requested while at the same time being subjected to some of the most draconian rules ive ever seen. And before one person comments about if i dont like it i can leave, thanks but i do happen to want to provide for my family without having to feel like im treated like a kindergartner by people who have no clue what we outside actually do. For example a high ranking official in the company was just lauded by some organization for making the company more "green" by implementing a plan for us technicians to load our trucks more efficiently. Are you freakin kidding me? That is the kind of junk that AT&T is good at their skin is to thin to actually address things that might amount to perceived bad p.r. For instance we just recently had a surplus announced meaning we will be going down technicians either by retirement or by actually laying off. The very next day after it was announced we had the boom lowered on us about not meeting PUC commits as far as restoring service to customers. My head hurts trying to figure that one out. If your not meeting the commitments set for by the PUC with your current allotment of people then why on earth would you cut people? And im sure by asking this ill get some generic white businessman answer about how some metric showed it was the right thing to do. But lets all remember AT&T's answer is "well we have customer rules" and of course all of use plebes are supposed to be satisfied with that. The sooner Stephenson leaves this company the better!
Just in case the previous poster had it confused, Stephenson was NOT part of the AT&T that was on the chopping block and subsequently bought by SBC. Stephenson has been with SBC all of his career prior to the acquisition. And as far as labor costs are concerned....well we in the industry know how that is going to be handled!
theres no maybe about it! The current offering of ip based services runs over the same copper or in some cases fiber that the pots went over so therefore in the case of copper it will be subject to some of the same issues that affect service as pots deals with. I dont disagree with the concept of trimming areas that are not producing revenue but as i have already said your not cutting much labor costs by using the same plant that is subject to the same pitfalls as pots service. Its funny you would mention greed, Randall Stephenson is one of the most greedy individuals ive ever seen. Being a part of organized labor and being greedy are not necessarily partners. I believe if a company takes care of its people the company will thrive. And as Stephenson has already shown he can run AT&T into bankruptcy. Why do you think Whitacre was able to buy it. As a current employee I hope he refrains before he runs the new AT&T into the ground.
Maybe this is true...but capitalism says make money where u can and get rid of the areas of your company that u can't efficiently run anymore...greedy labor employees refusing to get off the free ride wagon are causing their own demise...just like the auto industry. So u will be outsourced to a company that does not have ur labor costs and they will keep plastering their name everywhere to attract new customers...either way the wireline business is dead in the long run from the traditional phone company standpoint
This article is so true. But unfortunately as long as that piece of Oklahoma trash runs AT&T they will never publicly admit it. Their vaunted ip based services such as uverse still run over the same old crappy copper lines that Stephenson seems to want to deny are important. In lay terms that means their precious ip based service will still be subject to inclement weather. Just like the good ole days, the only difference is since that moron running the place doesn't think its an important part of the business it will never be fixed properly or replaced. But what does it matter he got the bargained for employees to agree to bend over the proverbial barrel, so now we can do whats really important and put the company name on the Cowboys stadium and the Dallas Fine Arts Center, you know those solid pillars of the business we couldn't do without!



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