AT&T's dual role
That means that the time it takes former TCI customers to upload a typical music file will go from a frustrating 4 minutes to a zippier 2.6 minutes, according to AT&T speed tests.
The situation isn't so rosy for AT&T customers acquired through the acquisition of MediaOne Group, a deal that was announced in April 1999 and completed in June 2000.
Former MediaOne customers have upstream speeds of 300kbps, which allows them to upload a typical music file in 2.2 minutes. Starting in September, they will migrate to the standard upstream speed of 256kbps, adding about 24 seconds to their music upload time.
Customers will continue to be able to retrieve data from the Internet to their computers (the downstream speed) at 1.5 megabits of data per second. Former TCI customers will be notified of the improvement by e-mail or letter in the next several days, and former MediaOne customers will receive details of their slower speeds when the changes go into effect in September, Eder said.
Eder would not disclose how many customers fell into the TCI or MediaOne camps, though the MediaOne acquisition was far larger than the TCI acquisition and is believed to have netted more customers.
The changes are meant to standardize the disjointed AT&T Broadband network, which had 1.6 million customers at the end of the first quarter of 2002. AT&T's customers come from a variety of other cable providers, mainly a result of AT&T's acquisition binge in the late 1990s and partnership deals with other companies, including Excite@Home. Excite@Home built the backbone for roughly 850,000 AT&T customers.
Customers from AT&T's acquisitions and partnerships rarely had the same upstream speeds or paid the same price, making it more difficult to come out with nationwide marketing promotions and pricing changes. AT&T's basic rates for new customers are standardized at $45.95 per month for service and lease on a modem, or $35.95 per month for customers who own their own modem.
"We think the standardized upstream speed is a competitive offering," Eder said. "We based it on users' activities, such as uploading music or videos. It seemed adequate and competitive."
Analysts said the standardization is likely the first step in moving to a tiered pricing system--what Eder called an eventual switch to "fast, faster and fastest" products. Bill Schleyer, chief executive of Englewood, Colo.-based AT&T Broadband, said at an industry conference last week that the company would migrate to tiered pricing as soon as this summer.
Tiered pricing has become thein the cash-strapped cable modem industry. In April, Rogers Communications of Canada moved to a tiered pricing plan, charging $24.99 for slower speeds and $44.95 for higher speeds. Before it went to tiered pricing, Rogers charged a flat fee of $39.95. AT&T's pricing may be similar.
Although demand for high-speed Internet connections is still growing, the economic slump has slowed growth somewhat and has resulted in a growing number of. And the industry is still reeling from the painful collapse of former front-runner Excite@Home.
The company's demise caused cable partners, particularly AT&T, to scramble to migrate consumers to independent networks, causing customer service nightmares for millions of people. Before its collapse last fall, Excite@Home had 4.1 million customers and controlled about 45 percent of the U.S. home-broadband market.
It is unclear how consumers will respond to the new upstream speeds and potential tiered pricing--particularly the MediaOne customers, whose upstream speeds will slow down.
A small but vocal group of heavy AT&T customers--known derisively as "bandwidth hogs"--erupted angrily when their services were reduced in December. That is when AT&T migrated about 850,000 customers from Excite@Home and standardized their downstream speeds to 1.5 megabits of data per second. Some customers said they could receive 4 megabits downstream from their old service--even though they didn't get a reduction in price.
Mark Kersey, a broadband industry analyst for La Jolla, Calif.-based ARS, said the heavy users will probably complain vociferously. But he said that most people--those who mainly use the Internet for research, e-commerce and e-mail, will barely notice the slower speeds.
"The majority of customers honestly aren't doing a tremendous amount of uploading," Kersey said Friday. "But there's going to definitely be some negative response, as there always is with this kind of thing. You have a group of people paying a certain price for a product that is now lessened, yet they're still paying the same price. They're not going to be happy, and I don't blame them."