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AT&T goes nuclear in the 2nd broadband war – the battle for the MDU

AT&T has finally articulated a huge broadband plan for the whole of America – taking a combination of copper G.fast broadband and fiber to MDUs, some in territories which are traditionally within the Verizon footprint. It is also offering the full DirecTV main TV service over broadband, with no satellite dish to MDUs. This is the broadband/TV equivalent of thermonuclear war as US telcos move out of the dark ages of broadband in to the gigabit era.

It sure does take a long time for major tier 1 US telcos to embrace a new technology, and October 2012 was our first mention of G.fast, but AT&T has turned US broadband on its head today embracing G.fast, jumping from fastest copper speeds of 50 Mbps to new copper speeds all the way up to 500 Mbps, and leapfrogging all US cable services in a heartbeat. Only Comcast has 500 Mbps DOCSIS3.1 service on offer, in a handful of territories.

For so long in the US, cable has had the lead in headline fixed broadband speeds but no longer. Comcast actually offers 1 Gbps services, but with the exception of a few markets where it has DOCSIS 3.1, these are all enterprise services, expensive and based on fiber to the door, using the same technology that AT&T is now embracing.

Back in 2007 Verizon grasped the nettle and invested heavily in passing 18 million homes with fiber, while AT&T stuck with copper, That decision by AT&T has now paid off as fiber install prices have plummeted, and once again the MDU opportunity – taken entirely by cable in the past – is now within technical reach at least for copper delivery. Verizon and AT&T have more or less left their ADSL installed based to atrophy until now.

US MDUs have stubbornly resisted the shift to fiber, as all copper connections were laid when the buildings were put up, often both coax and twisted pair, and pulling fiber through existing ducts is seen as impractical and expensive, although it is happening on some greenfield sites.

About 19% of US homes are considered MDUs, but as many as 35% (National Multi-Family Housing Council) could be counted as such because the basement and external facilities are a shared resource, supporting more than one family. Outside of the US, major Asian cities house as many as 50% of residents in apartment buildings, with slightly less (42%) in Western Europe. Getting ten times faster broadband to these millions of homes has been the subject of a silent technology war upon which telcos and especially US telcos, have pinned their broadband renaissance.

In the US, cable broadband landed almost every MDU deal in long-term, multi-decade deals, mostly in the mid-1990s. At that time telcos had little to offer across twisted pair wiring. But cable will now have to fight to defend those relationships as they come up for grabs once again, just as telcos begin to seriously address them.

And equipment suppliers who win in the battle to supply AT&T will have the potential to drive down pricing and establish themselves as global entities with proven track records in MultiDwelling Unit (MDU) broadband.

AT&T has laid out a plan that means genuine MDUs get 500 Mbps coax delivered G.fast connections, while in 22 particular major metro areas, AT&T will go the extra mile and install fiber for ultra-fast internet (read 1 Gbps) for apartment and condominiums but only in those areas. These are obviously those with high yielding broadband services.

AT&T said that it recently completed a trial of G.fast in Minneapolis, the first of the 8 initial launch cities to have live G.fast properties.

The G.fast solution will be rolled out in Boston, Denver, Minneapolis, New York City, Philadelphia, Phoenix, Seattle and Tampa and in the very near future AT&T will add MDUs 14 other metros including Albany, Baltimore

Buffalo, Cincinnati, Colorado Springs, Hartford, Omaha, Pittsburgh, Portland, Providence, Richmond, Rochester, Washington DC and Salt Lake City.

Each of these last 14 metros are outside of AT&T’s traditional 21-state home internet service-area – places where you would expect to find Verizon fixed line services or services from Cincinnati Bell and CenturyLink. Whether or not Verizon or other telcos will help by providing backhaul is not mentioned but offering 500 Mbps service in the backyard of Comcast, in Philadelphia, is a slap in the face to the largest cableco in the US.

We wrote about G.fast providing internet access to apartment and condo units over existing coaxial cables earlier this year and noted Sckipio trials and AT&T discussions of G.fast over coax, in the press at the same time. We are fairly sure AT&T will use both Sckipio and Broadcom chips in providing different flavors of G.fast within their network. Also in another story today we have talked about Adtran offering a product that uses bonded VDSL2 35b lines to backhaul G.fast for MDUs, which we suspect is also being used as part of the rapid roll-out for AT&T, which doesn’t even have to extend fiber trenches in order to reach the MDU basement and can do it on lines which either it owns, or Verizon owns. Of course that Adtran announcement may be entirely unrelated, or related to other US telcos or its strongholds in Europe, such asd Deutsche Telekom.

Verizon has been entirely silent on its plans to offer better broadband to arrest its decline in fixed broadband, but its best move may be to abdicate service in favor of an outsider, like AT&T, using some of its copper for backhaul – stranger things have happened. Investors have been on at Verizon to sell off its fixed line business for years.

Using G.fast will minimize disruption inside an MDU and there’s no need to place new wiring in each residence. It looks to us like AT&T is using G.fast first generation chips using up to 106 MHz of baseband, and will later move to the 212 MHz variant and speeds closer to 1 Gbps.

But the huge news is the way this can now be sold as an entire cable package – offering like for like. From the get go residents can take broadband and DirecTV, without installing a dish at their individual units. We assume that a channel stacking switch on the roof of the MDU can deliver the TV programs over the same coax, but it could also mean that these are delivered over broadband. However given that AT&T does not have head end assets throughout some of these regions, we suspect the CCSS is the way to go. Later fixed telephony over the broadband line could be offered as well.

AT&T alluded to its AirGig experiments carrying millimeter-wave wireless on the poles of power lines, as a means of broadband access into MDUs and can now attack from all sides using fiber, G.fast and fixed wireless, whichever is the most appropriate technology for access.

“We’re tapping into the existing internet infrastructure in some multifamily properties to bring ultra-fast internet in less time and with less disruption than replacing the network with fiber,” said Ed Balcerzak, senior vice president, AT&T Connected Communities. “While fiber to the unit remains the best broadband solution for most properties where possible, G.fast and fixed millimeter-wave provide connectivity to properties that aren’t able to support fiber. ”

Interestingly the MDUs in the US tend to have their coaxial cables in star configurations, which are point-to-point rather than point to multipoint. Otherwise G.fast would not be an inappropriate protocol to use. It has no QoS levels, as a single agency service, and cannot drop to multiple points in a looped configuration as MoCA, DOCSIS and G.hn can.

AT&T also says that it now markets the 100% fiber network to 5.5 million locations across 57 metros and that so far 2 million subscribers have taken the service. It has added 1.5 million locations this year alone and says it will add another 1.5 million during the remainder of the year. These connections however are all within its own 21-state home internet footprint and these additions will take it to 7 million locations. Fiber service is currently offered up to 1 Gbps, but is sure to be high priced compared to cable, as similar speeds are always cheaper on cable to date. It will offer 50 Mbps,100 Mbps and 1 Gbps and fiber has now been added in; Atlanta, Augusta, Birmingham, Chicago, Dallas, Detroit, Fresno, Indianapolis, Jacksonville, Los Angeles, Louisville, Memphis, Miami, Milwaukee, Nashville, Oklahoma, Sacramento, San Antonio, San Francisco and St. Louis.

Companies like Comcast, which is installing DOCSIS 3.1 in early territories will continue to claim the high ground in marketing, and refer to total throughput speeds of 10 Gbps, but the truth is that it has an architecture and roadmap which CAN go to 10 Gbps, but has only just offered 1 Gbps over DOCSIS for the first time, and mostly uses fiber for such services. The fastest DOCSIS speeds from other players are around 300 Mbps, usually delivered on DOCSIS 3.0 and limited only by the cost of the Customer Premises Equipment, which tend to only support a lower number of 6 MHz channels than the 32 which central servers can support, and often this throughput is shared across multiple homes. So regardless of what they say, cable has been overtaken or at least caught up.

In the years from 2007 to 2017 AT&T remained at around 16.3 million broadband lines and Verizon on something over 8 million. These were all under 50 Mbps, and only flexible pricing and the telco brands, managed to keep those numbers steady. During that same time Comcast added over 10 million new broadband homes and cable collectively more than double that. We’re not saying that we are entering an era where broadband will reverse and be owned by telcos, but AT&T at least, from this moment on, is no longer at the disadvantage it was in the past and all things being equal it should see a surge in broadband customers, revenue and profit.

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