Are Phone Companies Becoming The Dinosaurs Of The Broadband World?

Back in the dark days when we were all wandering lost and disconsolate on the the Earth, you know, right before the dawn of the Internet, it made perfect sense to link up computers through the phone lines, and hence, pay the phone companies for service (followed by what felt like hours listening to the phone dialing up a connection). But times have changed, as they always do, and it seems phone companies as high-speed Internet providers are on the way out.

Subscribers are fleeing phone companies, causing the first loss of broadband subscribers for the landline phone industry for the very first time this year. Cable companies appear to be the better choice for residential and small business customers, because of the simple fact that they’re faster.

Experts say this trend could continue on into a veritable monopoly on broadband service for cable providers in some places in the country, notes the Associated Press. The AP looked at reports from the eight largest phone companies in the country, and found that they lost 70,000 total broadband subscribers from April to June of this year, while the top four cable companies padded out their customer lists with 290,000 subscribers.

While some things are changing — like the needs of customers hankering after faster and faster Internet connection speeds — some things stay the same, like our country’s often very old phone lines. They were designed for people to talk across great distances, and not really suited for carrying Internet signals.

Cable companies win with their newer cables that are better at zipping signals along at great speeds, allowing them to offer cheaper and often speedier Internet in many areas. How much faster? Cable providers have been touting download speeds of 100 megabits per second, which is 20 times faster then DSL. Yikes.

AT&T is the largest phone company offering Internet, with Verizon coming in second. Phone companies are hanging on to a 43% share of U.S. home Internet customers with broadband, a share that will likely continue to dwindle as our need for speed grows (and grows, and grows).

Some experts warn of the looming cable company monopoly, and say cable companies should share those speedy lines they use with other service-providers to even out the playing field and give customers more options when it comes to how they’re able to watch every episode of Dawson’s Creek all over again. Or whatever it is you choose to do, of course.

Phone companies lose broadband subscribers for first time [Associated Press]

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  1. deathbecomesme says:

    DSL blows. If I couldn’t have my cable broadband I would go nuts.

  2. dicobalt says:

    Phone companies are moving from DSL to VDSL. AT&T’s marketing name for it is Uverse. It’s a pipe partially dedicated to providing TV services and partially dedicated to internet services. It’s up to the phone company to decide how much of what goes where.

    • Starfury says:

      U-Verse is available here but:

      ATT internet service is complete crap on my street. I had DSL and also got constant slow connection speeds (it’s UP TO 6mb not guaranteed speed; I’d get 2-3 on average with some rare days hitting 5-6) and constant drops of service. Because of this I won’t get their u-verse service and I’ll stick with my non-bundled TV/Internet/Phone setup.

  3. dolemite says:

    Yaaaay. We are going from a duopoly to a monopoly. Phone companies are looking to maximize profits through reaming people for cell service while letting their landlines languish. In high-pop. metro areas they are actually trying to compete with FIOS, but that’s it.

  4. nandhp says:

    Verizon’s ahead, though. They have FiOS, which runs a brand-new fiber-optic line into your house. (Although AT&T markets U-verse as a similar product, in most areas AT&T uses existing copper for the last mile, rather than running fiber to your home.)

    • scoosdad says:

      FiOS is installed or being installed in as many homes as it will ever reach. Verizon has no plans for expansion beyond what’s there now:

      Verizon Again Confirms FiOS Expansion is Over- 3/23/2012

      So I’d say Verizon is not ahead, at least as far as FiOS is concerned.

      • dorianh49 says:

        I guess I’m lucky. My city was the first in the nation to receive FiOS, and they just upgraded to FiOS Quantum (oh boy). I’m getting 85/35 speeds and landline telephone service for around $90.

      • lovemypets00 - You'll need to forgive me, my social filter has cracked. says:

        Heck, in my area Verizon won’t even properly maintain the copper for landlines, let alone run fiber. My coworker has been fighting with them for weeks because her phone (along with her neighbors) has been working on and off, depending on how much rain we get. She puts in one service call per week. When I used Verizon for landline, it took them years to fix the problem on my road.

        This makes me glad I have Comcast Triple Play (isn’t that sad).

        • MBZ321 says:

          My folks had the same issue. Only at our house, whenever it started to rain. None of the neighbors seemed to have problems, but something in the outside connections was messed up. No matter how many times they promised/tried to fix it, the next big storm would knock it out. Dumped Verizon and hooked them up with a MagicJack and ported the number over. No issues since :)

        • Paul in SF says:

          Verizon wants to get out of the landline business altogether and focus solely on wireless. That is why they have quit building out the FIOS and why they are more than happy to see their broadband customers move over the cable company.

    • JEDIDIAH says:

      Copper for the last mile is the same sort of dinosaur this article is talking about. The phone network beyond the last mile has been fiber for a long time now already. AT&T isn’t selling you anything but a pack of lies when it talks about “fiber” in relationship to their services.

  5. scoosdad says:

    I knew the end of my relationship with Verizon DSL was near when they accidentally disconnected my service due to non-payment by someone unrelated to me or to my account, then when they finally restored it, I found I had been ‘optimized’.

    That’s a Verizon euphemism that means they had artificially lowered my maximum line speed to a point where statistically, they found it generated the least amount of customer service calls due to line sync issues, while still being legally within the bounds of their agreement with a customer. Even though technically my copper wire could have (and did) support speeds far higher than I was ‘optimized’ for. At 1500 cable feet, I can just about see the terminal box from my house where the fiber from the CO comes up and transitions to copper wire to my house, I’m that close. They also gave me some gibberish about the terminal being ‘at capacity’ so they couldn’t give me a higher speed tier even if I was willing to pay more for it.

    So now I have a cable modem now with a speed about 20 times faster, and at the same price, with the option anytime to go higher. As much as I also hate the cable companies, in this case the phone companies get what they deserve.

  6. Guppy06 says:

    Phone or CATV, there’s only so much copper in the loop. Both rely on a glass fiber backbone, and connection performance is almost entirely dictated by how close to the premises the fiber loop gets before transitioning to copper (be it coaxial or twisted pair).

    CATV is currently winning because, more often than not, they get fiber to the neighborhood (which they originally rolled out for digital cable television) while the “last mile” really is a mile for too many telephone exchanges. However, as the phone companies expand their fiber-to-the-home offerings, the see-saw will tip the other way.

    Provided they manage their resources properly, there’s no reason why phone companies can’t be competitive again in the very near future.

  7. Jeremie_NX says:

    For what it’s worth, my DSL with centurylink has been the best service I’ve had. I actually get the advertised speed most the time (can’t say that with Comcast here). I pay a lower price and there was no “promotional pricing” games. Also, no monthly caps!

    Disclosures: I live in downtown Portland, OR and I pay for the 7 meg plan. I still stream Netflix in HD with no problems and I torrent often.

  8. SeattleSeven says:

    The LECs still own all the big loops. They make lots and lots of money doing backhaul for everyone. Every cell tower, every business, every data center, every mobile switch, every connection point.

    Every time you make a cell phone call, watch a streaming movie, download game of thrones, etc. the local land carrier makes a penny or two. But they never need to talk to you on the phone, send anyone to your house, print you a bill, process your payment, etc. etc. etc.

    The business has changed, serving the last mile is expensive and it is a game they aren’t forced to play… Cable companies however, they must do it, they don’t have those big backhaul connection fees rolling in.

  9. PunditGuy says:

    Try competing, dumbasses. Oh what, you expected us to just hand over money to you no matter what you charged for such significantly slower speeds?

    I hate Comcast. Hate them. I will switch in a heartbeat if you just get CLOSE to the price/performance ratio of cable internet.

    Did I mention you’re dumbasses?

  10. tz says:

    Phone companies still think they are monopolies, and are pricing their somewhat slower DSL as if it was cable broadband. Copper would give me the same speeds as Comcast (Business Class – which differs by actual support), but having to choose between two finalists for worst company that provide EQUAL service, DSL not upgradable, I’ll go with cable. Their intro cost would be 1/3 what I’m paying now and I would switch tomorrow for such a discount. Instead AT&T ran fiber in the area so they could offer more – well, actually about what Comcast offers (Coke v.s. Pepsi) at the same prices. Worse, I’m with Verizon (seems to be the least bad telco and I have a grandfathered unlimited), and Verizon and Comcast are getting together for deals.

    I suspect the problem is that the actual service is bad (intermittent), the customer service is worse, and you get “new customer discounts”. Maybe in 6 months people will switch back when DSL has the new customer offer.

  11. Sorta Kinda Lucky Soul says:

    Where I live it’s either phone broadband via a mifi (or similar device) or satellite internet. Currently have Verizon service via a Samsung 4G LTE Mobile Hotspot and, while spotty and resets itself multiple times a day, is better than HughesNet/DirecWay ever was.

    • Sorta Kinda Lucky Soul says:

      Crap, hit reply too soon. My point was, for people like me, phone internet service is probably the only real answer.

    • Cerealmom says:

      I have had Hughesnet for a year now and it really is not as suck-y as some people might think.We live in the country where DSL and cable end miles away and mobile broadband would not work because our coverage varies from one bar to three in this remote area and is only suitable for texting/talk.And I got a break on installation and fees due to residing in an “un-wired” area.
      The downside is that Voip is not compatible with Hughesnet, and streaming content is iffy depending on time of day.There are also download allowances but there are ways to work with that.
      Upsides?The price is about the same or less than I would pay for DSL or Charter Cable’s internet service.I have a home Wireless Network that allows us to play games,pay bills,or shop online and watch the occasional video,and that works for me,considering I had Dial-Up until 2011 :-O
      The best thing is that if you do not use your free monthly “token” that allows you to restore your download allowance, you can “bank” it and save it for Wow marathons or extensive downloads.It is not perfect by any means but with the Baby Bells and Kabletown Krooks neglecting the untapped rural market,it is the best thing going.

  12. Machine Gun Tommy says:

    The “looming” monopoly he says! As if it hasn’t happened already. I can’t even get Fios in my area. I’m stuck with Time Warner no matter what. And I have nothing but venom for them.

  13. Fred says:

    Don’t forget there are still millions of us you don’t have a cable wire coming to the house. My dialup was turned off about a year ago and my only choice was satelite (which is very restrictive) or 3G hotspot which I now have.

  14. 2nd party post dated counter check says:

    I wish I could post a picture of Lily Tomlin’s operator here. I have no land line to my home, and because I am rural, I couldn’t get DSL if I wanted too. I understand why the phone companies don’t want to upgrade rural infrastructure for an ever dwindling market, but it makes it tough for people like me who live in rural areas. (And no, cable is not an option. I use satellite, and it sucks more than DSL ever will.)

  15. balderdashed says:

    I hate Comcast as much as anyone, and swore I’d never be a Comcast customer again — unless my only choice was somebody even worse. That honor goes to CenturyLink. I had speeds in the neighborhood of 12 to 16 megabits from Qwest, but after CenturyLink gobbled them up, speeds dropped dramatically, and service was inconsistent: OK during the day (when most people are at work and not using the service); at night, so slow as to be nearly useless for streaming Netflix, Vudu, Amazon Prime, etc.

  16. EricS says:

    The Telecommunications Act of 1996 mandated universal broadband access and upgrades to broadband capabilities. The phone companies successfully fought to have the upgrade requirements overturned so that they could continue using as much old infrastructure as they could. The cable companies, meanwhile, upgraded their capacity on their own to outcompete the phone companies. Comcast has upgraded the lines past my house three times in 30 years, while SBC –> AT&T has done it zero times.VDSL-type tech improvements help the phone companies a little, but for the most part they’ve screwed themselves.

  17. NorthAlabama says:

    what this article fails to address are business practices and pricing.

    for a long time, the phone company forced you to buy a home phone in order to have dsl. this turned many of us off dsl. they just couldn’t imagine people not wanting a home phone. i will never forget being forced to pay for something i never wanted.

    next, they decided to price their slow service with a phone at a higher price than the faster cable services. they only lowered pricing once cable built out their service and became more competitive. the old adage of “charging what the market will bear”, not based on what is costs to provide the service plus a modest profit. they lowered the cost too little too late.

    the phone companies could have increased their speeds sooner, but felt it wasn’t necessary, because only a few “target customers” needed the faster speeds, and they could just go to cable. they went to cable. in droves.

    i believe this failed business model, along with the slower speeds, have contributed to the phone companies woes. they caused a lot of it themselves.

  18. drowse says:

    I love this website, and I love the photos that accompany articles. But this is a picture of a three phase electric transformer bank with a secondary to a building.

    Not a telephone pole. It doesn’t even look like there is telephone service on that pole.

  19. Warren - the Original Chocolate Cake with Eyes! says:

    I’ll be dropping my land line soon and using my cell as my only phone. I had a T-Mobile smart phone with data at $45 a month. Data would cut out for no reason so I dropped it. Now I use TruConnect since I don’t spend much time online.

    I won’t miss my land line and all the suspicious little charges added to my account every month.

  20. trencherman says:

    I just recently switched from Time Warner Cable to ATT for internet. It’s faster and cheaper. Maybe that’s because no one has a land line for their phone in my neighborhood anymore, so it’s the line is all freed up for internet. Or maybe it’s because so many of my neighbors are using the same cable line, at the same time. Whatever the reason, I’m happy with ATT.

    Please note, I am NOT happy with ATT for my mobile phone, but that is unrelated.

  21. Paul in SF says:

    Not to be too picky, but what does that photo at the top of the page have to do with the story? Why pick out a photo of a pole containing absolutely nothing telephone related to go with a story about the telephone industry?

  22. esc27 says:

    The local cable company is notorious for outages and other related problems. So I’m sticking with DSL until something better comes along. 99.5% uptime and enough bandwidth for Netflix. My only complaint is that the pricing should better reflect the lower (vs. cable) bandwidth.

  23. do-it-myself says:

    So Fios is no longer expanding? Damn, what a mistake. But this also explains Verizon’s Comcast (xfinity) partnership in Florida. Now it’s makes sense. Verizon is too lazy to bring Fios, but they still want $$$ from the market, so they are piggy backing comcast for a wireless/cable combo deal.