Is CenturyLink About to Ditch Copper?

It’s no small secret that Verizon has been working really, really hard to ditch copper access lines. In areas where they haven’t rolled out FIOS, they’re letting older copper plants rot on the vine, ceding the wired space in those communities to the local cable companies. In areas of New York where Hurricane Sandy wiped out the copper plant, they’re flat-out refusing to rebuild any landlines, instead offering a high-margin fixed wireless service.

AT&T hasn’t been too much better. Their anemic speeds on FTTN constantly lag behind their cable counterparts. Like Verizon, most of their money comes from wireless operations, so that’s where their efforts have been focused. In fact, when was the last time you heard anything about U-Verse in the news?

It seems to me that CenturyLink is ready to follow suit. They recently announced that they would be building fiber to 19-20K cell towers in their service areas. I can’t say I blame them. This is a highly profitable business, one that I wish UTOPIA or its providers could crack. Given the slow and steady loss of both landlines and broadband customers (the latter due to a lack of network upgrades), I’m sure they’re looking at whatever boosts the bottom line.

You’ll note, however, that upgrading DSL users to ADSL2+, their FTTN solution, is a footnote. Their CFO and SVP more-or-less states it outright:

“We try to design the routes to bring fiber to the towers to where they can serve other needs that we have to in terms of providing fiber closer to business customers and closer to residential customers to provide some of the higher bandwidth services,” Ewing said.

That’s right: CenturyLink is stating rather plainly that their main concern is to get fiber to those cell towers, then, if it’s “feasible” (read: dirt cheap), you can have the leftover table scraps. Cable companies (and most other phone companies) have posted subscriber gains in broadband, yet CenturyLink, who hasn’t upgraded speeds past 40Mbps since 2009, is losing thousands of customers per quarter. Odds are good that any areas getting this fiber will just now be moving off of vanilla DSL to the same 40Mbps speed (or lower) that they’ve been pushing for the last four years. When Comcast is pushing 105Mbps and UTOPIA and Google Fiber are doing gigabit, how is it anything but a giant middle finger to current and potential customers?

CenturyLink is choosing to let copper customers loose for the same reasons that Verizon and AT&T are: it’s expensive to provide service, and they can make the same or more money from wireless (albeit on different ends) with lower costs and a lot less competition. The copper network has paid for itself many times over, so writing it off as it continues to degrade is no big deal. The money they invest in cell towers has a much better ROI than investing in wireline services, so what limited funds they have will be going there.

This isn’t just a problem for CenturyLink customers. As they slowly back away from consumers and shift their core business to wholesale transport for other businesses, most users in Utah will be left with just the cable company, Comcast, to fill the void. With only a single wireline provider in most of the state, speeds will stagnate, prices will rise, and service will worsen. When there’s no incentive to compete, why would you?