AT&T supports 'alternative' broadband

Ma Bell is "testing and supporting" broadband Internet access through electrical power grids and fiber-to-the-home (FTTH) networks as a way to circumvent the Baby Bell phone companies' networks, AT&T announced at an event for Wall Street analysts. It also said it would lease DSL lines from "alternative" phone providers to avoid doing business with the Bells.

The plan is part of AT&T's attempt to revitalize its consumer business. The phone company is focusing on packaging broadband into its local and long-distance phone service as a way to compete with the Bells and with cable companies such as Comcast.

Broadband over power lines (BPL) and FTTH are technologies in the early stages of introduction. Only this month, the FCC began outlining rules to help energy companies sell broadband on their electricity networks, and BPL services are still in the preliminary testing phase.

Speedy fiber networks have begun making their way into rural communities, which typically lie outside the reach of DSL and cable. As part of its exploration of alternative technologies, AT&T said it will be a retail partner for Utopia, an FTTH project in Utah that covers 18 communities.

AT&T's statements demonstrate the growing importance of broadband in telecommunications companies' strategy to survive in a rapidly changing industry.

The Bells and cable companies are battling to win over the growing number of U.S. households that want broadband. Cable companies continue to lead the market with a 64 percent share, according to research firm Leichtman Research Group. The remaining 36 percent is made up of DSL services, provided largely by the Bells. Broadband is attractive because it can be added to existing bundles that combine phone service and--in the case of cable companies--TV programming.

AT&T jumped into the broadband business in July 2003, when it began reselling DSL service provided by Covad Communications. With its DSL push, AT&T aims to prevent its phone customers from dropping their lines and turning to the Bells or, worse, to cable providers that also offer phone service.

AT&T requires DSL customers to also subscribe to its local and long-distance phone plans.

As part of its DSL plans, AT&T said on Wednesday that it added Pennsylvania, Kansas and Missouri to the states where people can subscribe to its DSL service, bringing the total to 14. The company plans to add 14 more by the end of March.