Verizon Wireless Spectrum Purchase A Death Blow To DSL?

Verizon has shed itself of many of its less profitable operations, specifically landlines, with sales to HawaiiTel, FairPoint, and Frontier. It appears Verizon did not let the money they received for those assets sit idle. The billions they got for the sale of of their more rural landline systems were put to good use, expanding their wireless and FiOS offerings.

With Verizon's recent purchase of additional wireless spectrum (to the tune of $3.6 billion) from a number of cable companies, they expect to be able to provide 4G LTE services to just about everyone in the US. The cable companies owned the wireless spectrum but hadn't done much with it. How better to provide such services than selling off the unused spectrum and then partnering with the buyer to bundle cable services (video, Internet, digital phone) with wireless services (phone, Internet, and video). The cable companies get to offer wireless services without having to put a dime into wireless infrastructure and Verizon gets to offer cable services, again without having to spend a dime on cable infrastructure. It's a win-win situation for cable and wireless.

But maybe not so much for some Verizon landline customers, particularly those also subscribing to DSL.

DSL has become the red-headed stepchild of Verizon, with little investment being put into it. Verizon DSL subscriptions have been declining as competitors like cable and fiber have been able to offer data speed many times that of DSL. DSL technology has been running out of steam, just about reaching its speed limit due to the limited bandwidth of the installed copper phone lines.

That doesn't mean the DSL is dead as a number of other telephone companies, mostly small independents and rural telcos will offer it for some time as it's “the only game in town.” The WP In-Laws have FairPoint DSL, something that became available in their small rural town about a year and a half ago. Before that they were using Verizon Wireless Broadband. For them DSL provides a consistently better and faster connection. Cell site congestion would often slow the Verizon Wireless Broadband connection to speed barely better than the dial up connection they'd used before that. But who knows who long that will be true once Verizon starts offering 4G LTE services? At that point DSL might be seen as a less desirable service and customers will start dropping it in favor of the wireless service.

It will be interesting to see where all of this will take us and how long it will take before the remaining landline operations start feeling squeezed even more than they have been.