The RBOCs: Copper, Spectrum, Regulation and Sales

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

The RBOCs: Copper, Spectrum, Regulation and Sales

We have just 2 RBOCs - regional Bell companies left - AT&T and Verizon. You might consider CenturyLink an RBOC (because of US West), but since they don't have the same business model as the other 2, I just mean the two Bell-head companies with their Jekyll cellular side.

Both have been running from wireline for a while -- since maybe 2006. I think they wanted forbearance to get rid of unions and that copper plant. The wireless divisions are non-union for the most part. Unions and pensions are killing them financially (they say).

AT&T will record a $10 billion charge in fourth quarter. "The company expects a pretax loss due to changes in pension and post-employment plans and abandonment of certain copper assets." And "The Dallas-based company will also take a $2.1 billion non-cash charge after deciding to abandon certain copper assets deemed unnecessary for future network activity as customer demand for older voice and data products declines," writes CNET.

Verizon nears "the end" of FiOS builds, according to ARS. "Verizon lost $2.23 billion, but FiOS and wireless businesses remain profitable. Verizon posted a net loss of $2.23 billion in Q4 2014, despite making a profit of $9.63 billion for the full year. The loss included "significant non-operational items... primarily related to the annual actuarial valuation of benefit plans and mark-to-market pension adjustments," Verizon said."

VZ nears the end of landlines as it makes a deal to sell off as it makes a deal to sell Cali, Texas and Florida wireline and FiOS to Frontier for $10 Billion.

The RBOCs both spent big in the AWS-3 auction. AT&T spent $18B and VZW spent $10B. AT&T bought Nextel Mexico from NII Holdings and Iusacell. Verizon just sold Cali, Texas and Florida to Frontier for $10B plus, according to this SEC filing.

Cable won the broadband war when the FCC raised the definition of broadband to 25 Mbps. Now cable will again win market share as it did when Frontier took over Connecticut. Where does Frontier keep getting this money from? And why can't they ever have a smooth transition?

The RBOCs want out of copper (VZ more than ATT) - and want to focus on wireless which is profitable for them. BUT their churn is getting out of control. AT&T "said postpaid churn, or the rate of customer defections, rose to 1.22 percent and average revenue per phone user declined 10.7 percent from a year earlier." [reuters] The cellular market is flat in the US. AT&T has been looking to expand to Europe, but the EU says NO (probably due to Room 641A and Snowden revelations). So it is off to LATAM for AT&T. Verizon is kind of stuck because they have all that debt from divorcing Vodafone for sole ownership of VZW.

Now the FCC is making their DSL obsolete and about to add Title II regulation. The RBOCs are likely ready to leave that headache to Frontier, Windstream (70% of revenues are broadband), and the cable coalition.

Oh, if the Title II goes through for mobile broadband, VZW's super cookies will be burnt.

I was going to talk about this: "Chairman Wheeler Proposes to Classify Internet Access as Telecom Service" but everyone has made so much work of it in the last few months that I decided to give my readers a break. Please note, however, that ACA, et al. Oppose Title II Regulation on Small ISPs; WISPA opposes the plan; and CTIA Urges Different Open Internet Rules for Mobile Broadband Providers. No one likes change. Lawsuits already filed - even before the order has been voted on and finalized. You can blame just 2 companies: VZ and Comcast -- and then spread some blame over to the FTC for not jumping in the fray.

Related Articles to 'The RBOCs: Copper, Spectrum, Regulation and Sales'
Featured Events