AT&T quietly rolls out reasonably-priced unbundled DSL

Over the past month, AT&T has quietly started to offer reasonably priced unbundled "naked" DSL Internet service to customers around the country. The company's website makes no mention of the service, nor do its Internet phone sales representatives offer or even discuss the service. Customers wishing to sign up will need to call a specific department at AT&T to request the secret plan. Two tiers are offered, a 3Mbit down/1.5 Mbit up plan for $28.99 per month, and a 1.5Mbit down/768k up for $23.99. Those who opt for the stand-alone DSL service will be able to avoid paying the myriad of mandatory fees associated with a phone line.

The service is available to customers in at least the following states: AL, AR, CA, FL, GA, IN, IL, KY, LA, MI, MO, OH, NC NV, SC, TN, TX

Customers wishing to sign up for the service should do the following:

• Call the AT&T Dry Loop department directly at 888-800-4095.
• Ask to switch to "DSL direct".
• If they give you a hassle, say it's a retention offer.

The Federal Communications Commission ordered AT&T to begin offering stand-alone DSL service as one of a handful of conditions that allowed for the merger of SBC Communications and AT&T in October 2005. While it technically met the conditions it agreed to, the services were offered at such an obscenely high price that few actually opted to drop their telephone service.

The company has been widely criticized in the past for its unbundled service pricing structures. Back in 2006, the company began offering stand-alone DSL for $44.99 a month. At the same time, the company offered bundled DSL service for $29.99 a month, but subscribers were also required to purchase telephone service in a package that totaled about $46 a month. Customers could essentially save $1 per month by choosing to go with the unbundled Internet service.

In December of 2006, the company agreed to offer a low priced bundled DSL service, as part of several conditions negotiated with the FCC in order to complete a merger with BellSouth. While technically meeting the promises it made to the FCC, the company did its best to make it almost impossible for customers to locate information on the much hyped $10 per month DSL plan. Furthermore, at 768Kbps down and 128Kbps up (compared to the 3-6Mbit down speeds that the company advertisers on its website), the service barely qualified as broadband.

As part of the same BellSouth merger deal, AT&T also agreed to offer reasonably priced unbundled DSL service to customers in the 22 states that it serves. The company is required to offer the service for 30 months. After that, it can force everyone to go back to bundled DSL.

According to a number of postings by users on the Fatwallet and DSL reports web forums, AT&T has been quietly offering the previously announced unbundled DSL for at least one month. Two services are offered, a 3Mbit down/1.5 Mbit up plan for $28.99 per month, and a 1.5Mbit down/768k up for $23.99. These prices are roughly $3-5 more expensive than the bundled plans. However, customers will not need to pay $12+ per month for the required phone service as well as the myriad of mandatory phone related taxes and fees. That is, for the first time, DSL subscribers can actually save real money by ditching their phone line.

Regular readers of this blog will know that I am no fan of AT&T. The company's willing (and highly profitable) participation in the illegal NSA wiretapping program is disgraceful, and should the US Congress actually let the lawsuits proceed, AT&T could be looking at $21,000 in damages for every customer they let the NSA listen to (i.e. all of its 100+ million customers). A successful class-action would probably result in a lovely situation where customers could choose between having the Electronic Frontier Foundation or the ACLU as their long distance carriers...

AT&T has dragged their feet in offering unbundled DSL service. Even under this new, cheaper service offering, it is still impossible to get the company's highest tier of service, "up to" 6Mb downstream, without getting a phone line. Only 3Mb and 1.5Mb services are offered to those who refuse a dial-tone. The blame for this, however, does not lie with AT&T, but with the FCC.

As the first few paragraphs of this blog post should have made clear, AT&T has only ever offered lower priced, pro consumer services when it was absolutely forced to. This was usually done as part of terms negotiated with the FCC. AT&T wanted to merge with another of it's Ma-Bell siblings, and in order to do so, the company had to agree to a few token offerings requested by the FCC. The only reason AT&T is offering snail-speed DSL for $10 per month, or unbundled DSL service at all, is because it was forced to.

To expect the company to do anything else would be insane. AT&T is a corporation, which by its very definition is a for-profit entity. Furthermore, AT&T enjoys a near monopoly in many markets. If it did anything other than try to milk every last cent out of its customers, its shareholders would file suit and demand the heads of the CEO and the other members of the board. Simply put, corporations exist to make a profit. If we as consumers want reasonably priced pro-consumer products and services, we cannot rely upon monopolist corporations to provide them.

The solution to this problem, of course, is government regulation which encourages competition. If AT&T's customers could choose from 10 other companies, prices would fall, and consumer demands for unbundled services would have been met long ago. Unfortunately, instead of passing pro-consumer regulations, the FCC bends over backwards to help the telecom companies. With AT&T spending over $19 million on lobbying in 2006 (1/3 of the total contributed by the telecom industry that year), is it any surprise that the FCC looks out for the telcos?

According to the nonpartisan Center for Responsive Politics, more than 100 former FCC employees have also worked in the private sector. At least 50 percent of them have lobbied on issues related to telecom, communications and broadcast at some point in their careers. The Center's Revolving Door Database lists the FCC as the agency with the third-highest number of employees who have shuffled between the public and private interests focused on the federal government, behind only the White House and the House of Representatives.

What is the end result of this? US consumers lack access to real high speed access, pay through the nose, and are stuck with one or two companies who have little incentive to compete. According to the Information Technology and Innovation Foundation, French broadband connections are, on average, more than three times as fast as ours. Japanese connections are a dozen times faster. Oh, and access is much cheaper in both countries than it is here. As an example, 52% of French homes subscribe to VOIP based telephone service. Furthermore, over 1.1 million French subscribers pay as low as $40 monthly for a "triple play" package that includes 81 TV channels, unlimited phone calls within France and to 14 countries, and blazing fast 28Mbit Internet connection. For that same price, AT&T customers can get a 3Mbit connection and a local phone line.

The reason for this is pro-competition government regulation. In 2000, France's national telecom regulator forced former state-owned monopoly France Telecom to open up its network to rival operators. That encouraged telecom upstarts and carriers from other countries to rent access to France Telecom's wires and start offering competing broadband services. And that, in turn, spurred France Telecom to improve its own prices and services.

The US has sadly fallen far behind other western nations when it comes to broadband adoption and availability. The telcos offer us crappy, overpriced slow service, while consumers in Japan can stream HDTV live to their computers. The blame for this of course, falls squarely on the FCC. Now... how do I go about moving to France?