AT&T, FCC, NTT

USAToday announces that AT&T is selling unbundled DSL:

Within a few months, AT&T is expected to start charging $19.95 a month for "naked" DSL, meaning you don't have to buy any other AT&T (T) service, including phone, to get that rate. It currently charges $45 for a stand-alone broadband subscription.

AT&T also is developing $10 DSL for new subscribers who also buy AT&T-branded phone service.

AT&T plans to offer both services for at least 30 months. The clock starts as soon as the media giant starts selling them in any of the 22 states where it is the incumbent local phone company, including California, Florida, Illinois and Texas.

AT&T to offer $20 'naked' DSL service By Leslie Cauley, USA TODAY, Updated 1/15/2007 3:49 AM ET

Sounds good, eh?

Well, yes, but remember that in Japan you could get 50Mbps aDSL for about $25/month or 100Mbps FTTH for about $30/month.

Why is AT&T doing this?

The FCC, which has broad regulatory control over the U.S. telecommunications industry, recently approved AT&T's acquisition of BellSouth. To get needed votes from the FCC's two Democratic members, AT&T agreed, reluctantly, to offer these DSL bargains.

Well, that's nice, but it's not what worked in Japan:

The realization of DSL in Japan is due to mandatory unbundling. Unbundling is a means to allow for connecting household telephone subscriber lines with DSL without passing through a switchboard. But this requires DSL operators to place their equipment in the premises of telephone stations owned by the Nippon Telephone and Telegraph Corp. (NTT), which is inherently a competitor of the DSL operators. Understandably, NTT refused unbundling at first. So in 1997 the Telecommunications Business Law was amended to make unbundling obligatory for NTT.

How the "Japanese Miracle" of Broadband Came About Nobuo Ikeda (Senior Fellow, Research Institute of Economy, Trade and Industry), GLOCOM Colloquium #43: December 24, 2003

This sounds like what was tried in the U.S., that didn't work because the ILECs dragged their feet and effectively subverted the CLECs.

It is interesting to note that similar legislative action was taken in the United States in 1996 and in Europe in 2000, but did not have the expected effect of enhancing competition. Over 90% of DSL in the US and in Europe is still operated by telephone companies. In Japan, however, the top DLS carrier is Softbank Corp. with over 30% of the market, while the share of the entire NTT group combined is under 40%.

The GLOCOM article goes on to say that two big factors were the "obedient attitude" by NTT, and "strong requests" by Masayoshi Son, president of Softbank for the government to get NTT to open its network. Plus Son then went far out on a limb with the resources of Softbank to push aDSL, including handing out DSL modems in train stations. After some years, Softbank is profitable.

NTT is having profitability problems, but is forging ahead with FTTH, which is what it apparently always viewed as the wave of the future. What may not survive is fixed line telephone service, which was already at risk due to widespread mobile phone usage.

Which is better risk management for the society as a whole? Fast broadband that can provide voice as one of many services? Or fixed line voice-only service?

-jsq