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How AT&T and Verizon Rip Off DSL Customers (arstechnica.com) 217

Posted by BeauHD from the tier-flattening dept.
A new white paper written by the National Digital Inclusion Alliance finds that AT&T and Verizon are selling slow DSL internet to tens of millions of customers for the same price as fiber customers. These customers have no choice but to pay the rate AT&T and Verizon give them because no other service is offered in their area. Ars Technica reports: AT&T has been charging $60 a month to DSL customers for service between 6 and 10Mbps downstream and 0.6Mbps to 1Mbps upstream, the white paper notes, citing AT&T's advertised prices from July 2018. AT&T also charges $60 a month for 50Mbps and 75Mbps download tiers and even for fiber service with symmetrical upload and download speeds of 100Mbps. These are the regular rates after first-year discounts end, before any extra fees and taxes. Verizon similarly charges $65 a month for 100Mbps fiber service (including a $10 router charge), and $63 or $64 a month for DSL service that provides download speeds between 1.5Mbps and 15Mbps, the white paper says. The price is this high partly "because Verizon ADSL service at any speed requires paying separately for a landline telephone account." [...] The NDIA calls the practice of charging identical prices for wildly different speeds "tier flattening." It affects both urban and rural customers who live in areas where AT&T and Verizon haven't upgraded networks because they face no competition, because the upgrades wouldn't result in higher profits, or both. These customers end up using "the oldest, slowest legacy infrastructure," while paying much higher per-megabit prices than other Internet users.
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How AT&T and Verizon Rip Off DSL Customers More

How AT&T and Verizon Rip Off DSL Customers

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  • Meanwhile in Finland... (Score:5, Interesting)

    by Anonymous Coward on Friday August 03, 2018 @02:47AM (#57061738)

    ...a country with less people than an average US city spread over quite large land area, three different providers are competing who gets to offer gigabit fiber for your street / condo - because whoever gets to build the fiber "last mile" for your area gets money from all those customers going forward as it is unlikely multiple providers build it for same building and "wholesale" prices - using one provider's physical fiber to use another provider's ISP services is not really price competitive at the moment, tho there are regulatory talk about making this happen, so say Telia builds fiber to a condo, Elisa or DNA could still offer ISP services to everyone in that condo while paying "wholesale" cost of operating the underying fiber to Telia.

    DSL is something you use only if you live in a sad place where fiber hasn't quite gotten to yet (getting rarer every year). Copper wiring is actively being dismantled and replaced by fiber in most places and by LTE in really remote places (think individual houses or small groups of houses built miles from anything else and any summer cottages in the forest)

    Actual "trunk" fiber networks are effectively triple-built - Elisa, Telia and DNA all have their own fiber networks across the country and they are busy covering even suburb houses, street by street. Sure, the initial build-out to an individual house costs a bit (gotta have that backhoe to set the fiber from the street to the building) but it is an one-time fee and probably improves the value of the property at least as much as it costs.

    I'm paying 39e/ month for 1000Mbit down, 100Mbit up.

    Competition is good.

    So, lul DSL for $60.

    • Re:Meanwhile in Finland... (Score:5, Informative)

      by Joce640k ( 829181 ) on Friday August 03, 2018 @03:06AM (#57061786) Homepage

      Even in second-world Spain I have 300Mbit up/down for 30 Euros/month.

    • Re: (Score:3, Interesting)

      by Anonymous Coward

      DSL can be great. I've got 50Mb down/7Mb up DSL, they offer 150Mb here as well.

      As much as I hate US telecoms, the article completely fails to mention how DSL is cheaper to deploy and maintain than fiber. At the amount consumers use, data is free, a couple of cents a GB. All of their costs are maintenance and customer support. I somehow doubt that support is cheaper to provide for DSL vs. fiber.

      • Re: (Score:2)

        by Anonymous Coward
        Um, that's the point of the whole article? That Verizon's profit margins on DSL are huge and they make no investment into those service-locked customers...

      • Copper is cheaper than fiber? Since most all DSL is digital from the CO to the SLIC, it's the literal last mile/hundreds of feet, but that copper is the most expensive connection by foot. Sure, it was installed by Bell himself, but it's either on a pole or most likely down to the ground-level SLIC, up to a pole, down to a cross connect which is rotting off at the base, thence to the house where it's painted over, bumped into, and insulted regularly. Copper is the worst. FTTH is expensive to install, but us

        • It would not be cheaper to install and not worth installing new, but it exists. It's a sunk cost, not figuring into the accounting. That network investment has been paid off long, long ago.

    • Yeah, and what will happen, when that one company *does* own your last mile? Guess what...
      Yeah... have fun with your very individualized monopolies!

      There are only two groups that should own the last mile:
      You...
      Or your city.

      In Germany, we had the problem, that the last mile was owned by the ex-state Telekom, which got "privatized" (which is another word for what Mussolini originally coined as "fascism"). So to avoid a monopoly, they forced the Telekom to pass competitors' data through at the net cost price.

      • In the US this requirement to carry at wholesale cost gave birth to the CLECs. Go look that up, and then look up ILECS, which is what Telekom was in Germany.

        And in the US this was caused not by data, but by competitive long distance services, more than a decade earlier in some cases.

    • Re: (Score:3)

      by GuB-42 ( 2483988 )

      Is it true outside of Helsinki? Just being curious.

      Because what you describe is what happened in France during early fiber deployment. Companies competed to install fiber in the most profitable areas, sometimes with several carriers putting their own fiber on the same building. In contrast, other areas got nothing. In order to put a stop to that madness, the government forced carriers to rent their lines for a reasonable price to other carriers after 6 months.

      For consumers, there is almost no difference in

    • Re: (Score:2)

      by ZiakII ( 829432 )
      Finland is about the size of California....

    • Look at the Finnish guy who thinks his country is big and sparse. New Mexico has about the same area of Finland, but has 2 million people as opposed to 5.5 million people. The population of South Finland where Helsinki is located is about 2 million in an area of about 1/10 the size of the country.

      I'm not saying that the population or density is the reason for the bad prices, it's still no excuse, especially since the US experiences bad internet speeds even in cities, but your example of Finland doesn't ex

  • Longest book ever written.
  • Why wouldn't they rip you off when they have zero competition and no incentive to make the service better. They're even trying to ramp it up with getting rid of net neutrality but don't worry the free market will solve it, right?

  • This is why monopolism is a crime. (Score:1)

    by Anonymous Coward

    And so-called "governments" ... which are actually corporate oligarchy traitors in "for the people" skin ... are criminals too, if they allow it.

    That's the one thing every libertarian needs to remember: When corporations talk about "freedom", they talk about their freedom to take away the freedom of the market, turn it into a monopoly, and take away your freedom with it. And if they don't, they'll be driven off the market by the corporation that does.
    We all love freedom; yes, communist socialists too ... we

  • The issue is bandwidth is dirt cheap. Go sign up for any VPN provider where you end up paying $3-5 a month for unlimited transfers. That tells you EXACTLY how much the bandwidth actually costs. Everything else in the cost of a service like cable/dsl. is the cost of doing business and the cost of maintaining the last mile(s) infrastructure.

    I currently have an account with private internet access and tunnel all of my home connection though it. I paid for two years up front and my 100% unlimited transfers thou

    • Re: (Score:2)

      by gweihir ( 88907 )

      Number from a large European peering point from a few years back: 1Gbps peering $200/month, unlimited traffic.

    • Well, the VPN services are probably also subsidizing your monthly fees by selling your activity data to interested parties.

  • ... I pay $70 for 1Gbps symmetrical. It is really staggering how countries like the US or Germany are unable to get reasonably fast Internet to everybody at a reasonable price. Apparently, everybody there is so convinced they are firmly in the leadership position, that they will not wake up until it is far too late to salvage anything of their former position.

    • Here in the United States, I also pay $70/month for 1Gbps symmetrical.

      The issue is that not every place in the U.S. is the same, nor has the same geography, nor the same population density, nor the same local laws, nor the same local telecom and cable TV history. So what you can get varies by the realities of the specific situation. I have multiple providers for DSL, cable, fixed wireless and fiber. Some other locations, it just isn't worth to pay the money it would take (i.e. the resources it would take) t

  • Costs (Score:5, Insightful)

    by Bert64 ( 520050 ) <.moc.eeznerif.todhsals. .ta. .treb.> on Friday August 03, 2018 @04:24AM (#57061978) Homepage

    The backhaul bandwidth is only a tiny fraction of the cost to provide service, most of the cost is providing and maintaining the physical line so it doesn't cost significantly less for an ISP to provide a 2mb DSL service than it does to provide fibre assuming the infrastructure is already in place.
    If anything, providing DSL might cost more because the infrastructure is older and more likely to suffer problems.

    • Re:Costs (Score:5, Insightful)

      by Zebai ( 979227 ) on Friday August 03, 2018 @04:38AM (#57062014)

      I was about to same the same thing, I hate advocating for ATT/Verizon but the actual speed is meaningless as far as cost. This is why most internet speed packages are close to each other in price ($50,60,70,80 etc..). The real cost is maintenance, which in parts and labor are not any less than fiber(probably more). Customer service, these people do not call in any less than fiber customers(again probably more). Yet these areas are probably rural or have some barrier that makes it more expensive to maintain/upgrade than they can pull in with reasonable monthly rates.

      In fact I would propose a counter argument, they should be charging their "upgraded" customers LESS as as it is usually very cheap per person to service heavy pop areas and most of that "cost" is paid for by their other products such as TV/phone that use the same lines.

      • Yet these areas are probably rural or have some barrier that makes it more expensive to maintain/upgrade than they can pull in with reasonable monthly rates.

        The kicker here is that while this is happening, a not-insignificant number of customers are cutting the cord and moving entirely to cellular LTE. It's not everyone or even a majority, but enough that it significantly erodes the profitability of a landline operation.

        Sure, it makes sense to invest in laying new cables and upgrading when you can count on

        • Re: (Score:3)

          by bondsbw ( 888959 )

          A not-insignificant number of people would blow through today's LTE plans in a day or two.

          I would definitely prefer LTE, it would be 5x my home service (FTTN) download speed and 16x upload. But I work from home and use about 20x the standard "unlimited" data allowance for LTE, so there's no way it would be an effective replacement.

          • Re: (Score:2)

            by Bert64 ( 520050 )

            Also once a lot of people move to LTE, it will slow down significantly...
            If everyone has their own last mile, it's relatively easy to upgrade the backhaul from the exchange but with LTE the last mile is shared between all users in an area and cannot be easily upgraded.

          • Oh no doubt. LTE isn't good enough to replace a landline for more than a small segment of the population. However it's just good enough to undermine the kind of critical mass required for major infrastructure projects. Which is exactly why Google has given up on fiber and is focusing on wireless instead. Everyone has a cell phone, even if they already have a landline.

      • We paid the telcos billions to build out the last mile and deliver 10+Mbps to every subscriber. They didn't do that. They are all thieves and liars. That goes double and triple for ATT and Vz.

        • Technically, someone to whom they don't offer service isn't a subscriber. As long as 10Mbps is available to everyone to whom they offer service, they're "complying". Disgusting, but technically compliant.

          Of course, I've lived places where AT&T didn't offer anything over 6Mbps as recently as 2015, so they're not even technically complying.

        • No, "we" didn't pay the telcos billions to build out the last mile.

          Some politicians and government bureaucrats chose to take some people's money and mostly waste it on overhead while benefiting their "friends", the same thing which usually happens when government decides to "fix" something like that. You have to start with the people and the heavily regulated telecom system which make the whole thing possible.

          Instead, lots of people will turn around and decide the solution is to give those same people more

    • Re: (Score:2)

      by jwdb ( 526327 )

      The backhaul bandwidth is only a tiny fraction of the cost to provide service, most of the cost is providing and maintaining the physical line so it doesn't cost significantly less for an ISP to provide a 2mb DSL service than it does to provide fibre assuming the infrastructure is already in place.

      Fair enough, but it doesn't cost $60 a customer, at least not for urban customers. You can get DSL for a third of that in suburbia or cities where there is competition, and these other companies aren't going broke

  • Doesn't really matter what company is in your area. We are offered 10Mbps DSL in our neighborhood, but when you contact them about it you are informed that you will only get 4Mbps at max due to proximity to a substation, oh and by the way it will still be $50/month but we are so gracious to you that your prices won't change for 24 months. That is their selling point. "We won't raise prices on you."

  • They (Score:2)

    by Revek ( 133289 )

    don't tell the truth. Even worse they don't tell the sales personal that they are doing the lying.

  • I have DSL and yes, it's about $60 once you add in regular phone service, all the fees and taxes and caller ID. I've looked into switching to fiber many times and always, it's difficult to get it for under $100 a month once the teaser rate expires. Currently, Verizon offers fiber internet with no phone for $40 a month plus $10 for a modem, plus unspecified fees and taxes, so let's say $60, but that's only for 1 year, after which they won't tell you what it costs even in the fine print!

    • For what it's worth, I pay about $105/month for gigabit fiber from Verizon It technically has $20/month in credits I believe that expire after 2 years, but apparently they will re-issue those credits to get you to sign another 2 year contract. I'm pretty sure 150/150 service is about $75/month with no credits (or that might be the 50/50 tier).

    • Re: (Score:2)

      by SeaFox ( 739806 )

      Currently, Verizon offers fiber internet with no phone for $40 a month plus $10 for a modem, plus unspecified fees and taxes, so let's say $60, but that's only for 1 year, after which they won't tell you what it costs even in the fine print!

      I think my first question would be what a "modem" is in fiber optic service. Terminate to Ethernet and get out of my way.

  • Verizon similarly charges $65 a month for 100Mbps fiber service (including a $10 router charge), and $63 or $64 a month for DSL service that provides download speeds between 1.5Mbps and 15Mbps, the white paper says

    So? Why do you assume that Internet access prices should be somehow related to rate? There are plenty of good reasons why Internet access through DSL might actually be more expensive than fiber access.

  • I have AT&T DSL, but no phone service. It took some work, but it's called "standalone" or "naked DSL". However, I also have a "business class" line, and five static IPs, that I pay $95 a month for. It's a rip-off; but at my apartment "someone" long ago went into the coax junction boxes and cut the cables off at the top of the pipe. It's rumored this happened at the same time AT&T was given an exclusive contract to this complex many years ago. They no longer have that here, but the apartment compl
    • Dude, by definition, DSL comes in over your phone line. You don't need to have phone *service*; this is called 'dry loop' or 'naked' DSL, but there still needs to be copper coming in to your location to carry the signal.

  • I pay $40/month for 25/2 from AT&T (DSL), cancel at the end of the 1-year agreement, then $30/month (after fees) for 25/5 from Comcast (Cable) for a year and cycle back and forth between the two each year. They both suck but there are zero competitors in Northern Illinois. The only actual hope for a competitor will be 5G from a cellular data provider, assuming they charge a reasonable fee (LOL.)

  • There is a cable provider and there is a dsl provider. No fiber is available. There are 5G wireless providers starting to penetrate the area, but where I am there is as yet no line of sight. LTE wireless is spotty right where I am. I've been paying as much for a slow DSL line as backup to the cable for my business needs and I need it so rarely that I'm ready to finally pull it. My need for backup for those rare times is finally lower, and LTE coverage is at least sufficient to meet that occasional need. HOW

  • The reason they are comparable is because the value of the line is fixed. The bulk of the cost is in the sales/support/line maintenance and generally speaking it's a lot cheaper to maintain a brand new fiber network than an aging copper one. It's a rip off in that it's too much for internet overall but not if you're comparing them to each other.

  • Paying $60/month for AT&T's 5mbps dsl. It's total garbage but I don't have any other options.

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