With low-end broadband packages hitting price points that make them commodities, ISPs are starting to rely on high-bandwidth premium services to draw in high profits from their subscribers. Because the US broadband market effectively functions as a competition between regional cable providers and telcos, that competition has largely pitted DSL against cable. But the deployment of newer technology is shifting the fight to one between fiber to the home and the new, high-bandwidth DOCSIS 3.0 cable hardware. AT&T is in danger of being left behind in that fight, but it's managed to squeeze some extra bandwidth out of its DSL lines, and is now able to offer an 18Mbps DSL service.

By John Timmer | Published: November 06, 2008 - 06:20PM CT AT&T has been left in an awkward position since a few years back when it made a technological bet on how it was going to provide higher-bandwidth services, including Internet, voice, and television signals. One of its rivals, the cable companies, had a high-bandwidth infrastructure in place. To get more out of the system, cable companies simply had to change the hardware on either end. The benefits of that arrangement are becoming obvious as providers like Comcast are rapidly upgrading their networks with DOCSIS 3.0 hardware, enabling speeds (and thus subscriber payments) higher than anything possible over DSL.

Telcos faced a dilemma; they already had a huge infrastructure in their copper wiring, but issues of line quality and capacity keep that from offering speeds that can keep up with DOCSIS 3.0. Companies like Verizon looked at the future and decided it was time to give up on the existing infrastructure. It and others started the painful and expensive process of ripping out the copper and replacing it with optical fibers, leaving them with an infrastructure that's going to be more than capable of keeping up with their cable competitors.

AT&T chose a less-painful hybrid solution. It ran fiber to the local network facilities, giving each neighborhood plenty of bandwidth. That bandwidth, however, was then sent to the home over copper wires using DSL. So far, that's allowed the company to keep up and, in fact, thrive; it proudly proclaims that it's "the nation's largest provider of broadband service." But, eventually, it's likely that the limits in the company's infrastructure will eventually catch up with it.

In an effort to forestall that, the company announced back in January that it would roll out what's called "pair-bonded DSL" before the year was out. The technology relies on the fact that pretty much every household that's ever been occupied by teenagers is serviced by more than one telephone line. The pair bonding sends traffic down both simultaneously, and basically treats two pipes as one fatter one. Reports suggest that it's rarely capable of doubling the bandwidth, but it can provide a significant boost—in this case, it's apparently enough to carry TV and leave enough left over for 18Mbps service.

The end of the year is almost upon us, and AT&T is living up to its earlier promises, pitching the new service as being just the thing for holiday shopping. People opting for the new service can get nearly double the bandwidth of its U-verse Max for only $10 more (uploads max out at 1.5Mbps). The $65 monthly fee will only apply to those who are already subscribed to a U-verse bundle.

Those $65, 18Mbps speeds may actually come less frequently than customers would like. In September, the telecom warned customers that it would dial back bandwidth when needed to preserve the integrity of its HD video. The problem AT&T is facing now is that there's no obvious way to stuff more bandwidth through copper piping.

Unfortunately, unless something of the sort is developed, AT&T is going to wind up being left behind by its competition. Inertia will help them maintain some customers if cable providers leave them behind, but the market will probably punish a company that views inertia as its primary business mode.

Printed courtesy of author John Timmer and Ars Technica