Will AT&T follow Verizon in selling its California landline network?

AT&T has been busy in Sacramento trying to pass legislation that would make it easier to get rid of its copper landlines by 2020.

April 26, 2016 3 AM PT

Frontier Communications’ bumpy takeover of Verizon’s landlines in California raises a question about the fate of the state’s other big controller of copper wires. Is AT&T also looking to unload its landline network?

The answer is a resounding maybe.

At issue are the copper phone lines that for decades have connected people’s homes to AT&T’s network. They’re good for basic phone service and relatively slow DSL Internet access, as opposed to fiber-optic lines that carry super fast services such AT&T’s U-verse TV system.

I’ve spoken with a number of telecom industry players and analysts, and the general consensus is that AT&T sees no future in copper landlines — but the company isn’t in as big a hurry as Verizon to go digital-only.

“I don’t think it’s in AT&T’s interest to maintain all those copper wires,” said Paul Glenchur, senior telecom analyst at Potomac Research Group in Washington, D.C. “Gradually, they’ll want to replace them.”

AT&T’s chief executive, Randall Stephenson, repeatedly has indicated that the company aims to abandon outdated technology by the end of the decade.

In a 2013 letter to shareholders, he said that AT&T is “putting software rather than hardware at the heart of our network infrastructure,” and that “we’ve committed to upgrading all of our customers to new technology by 2020.”

In recent days, I spoke with several AT&T technicians, each of whom asked to remain anonymous to avoid reprisals. They said supervisors statewide are alerting workers that the company’s traditional copper-wire network and central switching offices will start being phased out beginning in 2018.

They’re also saying that one scenario being discussed among AT&T insiders is for Frontier to acquire AT&T’s California landline phone network, just as it did April 1 with Verizon’s system.

AT&T and Frontier aren’t strangers. In 2014, Frontier spent $2 billion purchasing AT&T’s landlines in Connecticut. Frontier subsequently issued $10 million in credits to customers to atone for a less-than-seamless transition.

I spoke with Ken McNeely, president of AT&T California. He said it’s “unlikely” that the company will sell its landline network in the state.

“We are not looking to do that,” he said.

I conveyed what I’d been hearing from the company’s technicians — that supervisors are notifying staff about old technology being put out to pasture.

McNeely didn’t deny such meetings are taking place. “We’d be negligent if we weren’t already training our technicians in new technology,” he said.

So, on the one hand, AT&T says it’s aiming to have all customers using “new technology” by 2020 and admits it’s preparing staffers for a digital future. On the other, it says there are no plans to jettison the old-school copper wires now running into many people’s homes.

If I had to guess, I’d say the company is trying to have it both ways to avoid talking down the value of its landline network prior to a possible sale.

For what it’s worth, I also spoke with Melinda White, Frontier’s regional president. She said she wasn’t aware of any talks with AT&T about acquiring the company’s California landlines.

Yet AT&T has been busy in Sacramento trying to pass legislation that would — yup — make it easier to get rid of its copper landlines by 2020.

Assemblyman Evan Low (D-Campbell) introduced a bill this month that would allow phone companies to kill off copper and switch all phone service to wireless and high-speed Internet systems.

He said this legislation, AB 2395 is needed “because right now we have a 21st-century economy operating on a 20th-century IT network.” AT&T is a key backer of the bill.

However, critics say the true intent of the legislation is to allow AT&T to stop investing in rural areas where copper landline networks are expensive to maintain.

“Rather than modernizing phone service, this bill would take us back to the dark days when consumers were totally at the mercy of AT&T,” said Mark Toney, executive director of the advocacy group Turn. “It would eliminate the most basic consumer protections, regardless of the enormous impact abandoning copper could have on emergency services and vital communications.”

Rural County Representatives of California, another advocacy group, said the legislation would “allow a mechanism for legacy carriers to relinquish their decades-old obligations that guarantee basic two-way telephone service via a landline.”

AT&T’s McNeely said the bill is aimed mainly at educating California consumers about their telecom choices. He said 85% of AT&T’s customers already receive phone service via broadband Internet connections or mobile devices, so the important thing is to allocate resources appropriately.

“With each passing year, the copper network becomes less and less efficient,” McNeely said. “If no one’s using it, let us turn it off.”

Or sell it, presumably.

Which brings us back to where we started: Will AT&T follow Verizon in selling its landlines to Frontier?

Could be. Or not.

All we know at this point is that AT&T is definitely gearing up for changes, and those changes definitely involve its landlines.

Oh, and we also know that when Frontier says it expects the transition from one provider to another to go seamlessly, a lot of people are probably going to experience seams. As of Monday, I was still getting dozens of emails daily from former Verizon customers griping about service disruptions.

The email address once again to reach White, Frontier’s regional president, is [email protected].

David Lazarus’ column runs Tuesdays and Fridays. He also can be seen daily on KTLA-TV Channel 5 and followed on Twitter @Davidlaz. Send your tips or feedback to [email protected].

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