AT&T trusts IP DSLAMs could solve its rural broadband problem

AT&T (NYSE: T) is considering breathing new life into its rural wireline networks to deliver broadband services, a move that goes against its recent drive to divest what it believes are underperforming assets.

As reported by Bloomberg, CEO Randall Stephenson said during a JPMorgan Chase & Co. call with investors that AT&T would leverage IP DSLAMS to offer a higher speed DSL service. A sale of its rural lines would not be all that far-fetched, as fellow RBOC Verizon (NYSE: VZ) sold its rural lines in 14 states to Frontier Communications (Nasdaq: FTR) in 2010.

In addition to its Yellow Pages business, AT&T previously said it viewed its rural networks as "underperforming assets" that could hold back future company growth. The service provider sold a large stake in its Yellow Pages business to Cerberus Capital Management for $950 million in April.

When it could not complete its acquisition of T-Mobile USA in January, one that the service provider thought could be used to offer wireless-based broadband to rural customers, Stephenson said it did not have any solution for its rural broadband issues.

While AT&T has yet to make an official announcement on its actual strategy, Stephenson said that the advent of IP DSLAMs could be an option to solve the rural wireline broadband problem.

"We are giving this a hard look," he said. IP DSLAMs "bring broadband capability in a more cost-effective manner, with a better revenue profile than perhaps we would have thought two years ago."

But even with the advent of IP DSLAMs, the challenge in rural areas is that most homes are too far from existing RTs and COs in addition to the varying conditions of copper lines.

June 3, 2012

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