Is AT&T's VDSL pair bonding enough to compete with cable?

Sean Buckley, FierceTelecomAfter three years of delays and various unintentional setbacks, AT&T (NYSE: T) finally revealed last week that it would start rolling out pair bonded VDSL to extend the reach of its U-Verse service.

But if you're an existing U-Verse customer and think you'll be able to access higher speeds, well think again. By leveraging VDSL with bonding, AT&T will be able to reach more customers because they will be able to extend its U-Verse service an additional 1,000-2,000 feet from the Video Ready Access Device (VRAD). In other words, they want to find a way to bring U-Verse video to more people.

And while theoretically AT&T could use the VDSL bonding technique to get higher speeds, if the majority of the bandwidth is going to be allocated for video, it's more likely the VDSL speeds will continue to be offered at 24/3 Mbps range.
Even if it's just for video, there are a number of obvious obstacles here. For one, the technician installing the service will have to make sure if you are eligible for the service, and even if you are eligible, they'll have to make sure there are two available copper pairs at the premises.

What I find interesting is that Ma Bell's bonded copper drive comes little more than a month after a report emerged that it would deliver 80 Mbps over copper that was buried in a discussion focusing primarily on wireless services.

While I don't doubt that the AT&T Labs gurus and network planning executives don't have advanced copper boosting techniques such as Dynamic Spectrum Management and VDSL with vectoring in their future roadmaps--two technologies that can up bandwidth speeds to not only 80, but even into the 100 Mbps range--the near-term reality of what they are rolling seems to just be more of the same.

Some financial analysts may love the fact that AT&T took the safer hybrid fiber/copper router versus Verizon's (NYSE: VZ) more risky all fiber drive that it decided to dial down on by focusing on existing markets, but my question is bonded VDSL going to be enough to compete with cable as a long-term strategy?

Putting aside the fact that I am a cable subscriber, AT&T's VDSL bonding drive comes at a time when cable operators such as Comcast and Cablevision are already are delivering 50 and even 100 Mbps over their existing HFC infrastructure. Not only can cable offer higher speeds, but Comcast by comparison has 24 million video subscribers versus AT&T with 2.5 million U-Verse video customers.

In announcing its Q2 earnings this week, AT&T admitted that the decline in its wireline broadband connections is indeed the result of having to deal with strong cable competition. To help battle cable, AT&T said it will start sending counter promotions in non-U-Verse market.

To overcome these subscriber challenges, AT&T could go out and buy a satellite company--a proposition that AT&T's CEO Randall Stephenson recently admitted would not be supported by U.S. regulators--or figure out that maybe they'll need to bite the fiber bullet.

I can't completely fault AT&T or say they haven't grown their video and overall U-Verse base with their existing FTTN architecture. In Q2, the service provider saw its video base grow to 2.5 million subscribers, a 60 percent increase of where it was just a year ago.
And while AT&T's VDSL bonding came long after it starting to tout the technique over three years ago, I agree with Stacy Higginbotham in a recent GigaOM post: Maybe "this upgrade is better late than never."--Sean