AT&T Access Lines Fall, Only Issue is How Much, and What it Means
Lots of observers are quite worried about the gatekeeper power wielded by some access service providers. Others might argue the whole fixed network business looks challenged.
The number of access lines generating revenue for AT&T’s fixed networks business fell as much as 49 percent between 2010 and 2014. That doesn’t directly equate to “lost voice revenue” since some of the shrinkage is caused by a shift of customers to the U-verse category.
In 2012, AT&T reported having 15.7 million voice accounts supplied over legacy switched access lines. By 2014, that had dropped to about 9.2 million, a drop of nearly 41 percent in two years.
On the other hand, digital voice accounts grew from 2.9 million in 2012 to nearly 4.8 million in 2014, a gain of about 24 percent. Still, on a net basis, AT&T lost about 4.6 million voice accounts.
AT&T has a similar issue as it reports Internet access subscriptions, as many legacy digital subscriber line accounts are being displaced by the similar function on U-verse. In 2012, AT&T had about 7.7 million U-verse Internet access accounts in service. In 2014 AT&T had about 12.2 million U-verse Internet access accounts.
Digital subscriber lines in service in 2012 were about 8.7 million. By 2014 those lines had dropped to about 3.8 million.
So U-verse Internet access accounts grew 17.6 percent between 2013 and 2014, while DSL accounts shrank about 37 percent over the same time period. On a net basis, AT&T Internet access lines shrank about 2.4 percent.
To be sure, linear video subscriptions, which amounted to about 4.5 million in 2012, grew by 2014 to about 4.8 accounts.
That is why entertainment video, in the form of accounts potentially added by DirecTV, make sense to AT&T management. In addition to other potential value, the acquisition would help AT&T maintain customer account growth at a time when its other lines of consumer services are shrinking.
On a net basis, AT&T accounts dropped from 27.2 million in 2012 to 18.2 by 2014.
In a great many cases, an argument can be made the the local telco is the number-two provider of fixed network services, behind the cable TV operator.
It isn't so clear how powerful a gatekeeper function can be exercised, if these trends continue. To use the old regulatory language, it isn't so clear who the "dominant provider" is in any specific market.
Nor is it clear whether other gatekeeper functions are exercised in other parts of the ecosystem, or how the relevant markets ought to be defined.