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AT&T plans rate increase for broadband service, hopes customers will be willing to pony up cash for higher rates

The state of broadband in U.S. was described in an in depth analysis at DailyTech last year as "pathetic" and "disgraceful".  The industry is plagued with poor service quality, substandard data rates, zealous attempts to limit file-sharing, and most of all high prices.

Fittingly, San Antonion-based AT&T, notorious for at one time suspending user's right to free speech, announced a rate hike.  The rate hike, a $5 flat rate increase to subscribers' current monthly fee, may be financially lucrative for the company, but is likely to make no one else very happy.  The increase, announced Monday by a company spokesman will go into effect in March.  All states besides those acquired by the buyout of Bell South will be effected.  Bell South operated in Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee, so these states are exempt.

There are some other notable exceptions to the increase.  The increase, while applying to the vast majority of accounts, only applies to the three slowest connections speeds; 768 kbps, 1.5 Mbps, and 3.0 Mbps.  The 1.5 Mbps service tier is AT&T's most used, with 14.2 million subscribers.  Most of these subscribers will be hit with the rate increase.

New subscribers to the 768 kbps service will be exempt, but most people don't choose this option.  Also exempt are customers who signed up under special promotion packages.  These customers are exempt for the remainder of their promotion's term. 

AT&T informed customers of the increase by email beginning last week.  AT&T spokesman Michael Coe states that the increase is to, "to better reflect the value of our broadband service."

AT&T has been having a tough time financially, ever since Chairman and Chief Executive Randall Stephenson announced that he saw weaknesses in the current consumer broadband and cell phone markets.   AT&T has also recently announced a controversial new filtering plan to snoop on consumer's use and block "rogue" file sharing traffic.

The consumer internet world has been having a tough time in the U.S. and abroad of late.  In France, the government threatens an internet tax which would raise prices.  In the U.S. domain tasters exploit the system to take domains and ad-revenue from legitimate users.   Meanwhile, Time Warner recently announced an even more scary proposal for the consumer broadand industry -- usage based billing schemes.  Normal consumer broadband is speed limited, but has no monthly bandwidth limit, to the delight of many downloaders.  Unfortunately, Time Warner labels these individuals "devil users" and looks to curb a feeling of entitlement to "all you can eat" internet.

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Worst Broadband in the Developed World
By blowfish on 2/5/2008 3:21:45 PM , Rating: 2
All hail the mighty AT&T. These kinds of developments will really help to keep the US ahead of the game in technology. Perhaps the chip makers should limit cpu clock speeds to help control excessive internet usage, which is clearly bad for the corporate bottom line. I mean, the very idea of it - sharing - where's the profit in that?

RE: Worst Broadband in the Developed World
By OAKside24 on 2/5/2008 11:23:25 PM , Rating: 2
If there's ever some real competition between ISPs, something new and innovative, I wish nothing but the worst upon AT&T and these stagnate, price gouging, greedy corporations. Something like what Netflix's done (see: annihilation) to Blockbuster.

RE: Worst Broadband in the Developed World
By masher2 on 2/6/2008 12:58:21 AM , Rating: 2
It's very easy to toss around words like "gouging" and "greedy", but you may not be aware that the telecomm industry average return on investment has been running under 4% on average the past five years. Meaning, those "money-grubbing" shareholders would have done much better to just put their money in the bank instead. And the five years before this were even's really been a very low-profit industry for quite some time.

RE: Worst Broadband in the Developed World
By Christopher1 on 2/6/2008 8:04:18 AM , Rating: 1
Are you joking? Excuse me, but my cousin owns stock in both AT&T and Verizon, and he has been getting a lot more than a 4% return on investment in his stocks. Closer to 20% to 40% for both.

You need to stop taking the numbers of these companies as the wrote truth, and look at the numbers of the neutral people and get the REAL numbers.

The oil companies have been groaning for years that they only get a paltry 1% profit...... but when the feds actually looked at it, it was more like 50% profit!

By masher2 on 2/6/2008 9:51:40 AM , Rating: 2
> "my cousin owns stock in both AT&T and Verizon, and he has been getting a lot more than a 4% return "

This is an excellent example of the logical fallacy known as 'misleading vividness'. The industry (and corporate statistics for AT&T) are given below:

Note the 2.82% ROI for the five-year telecomm industry average, and AT&T's industry-leading value of 5.10...still less than you'll get from a decent bank CD.

Stock price changes, especially in the short term, don't equate to company profitability. A company can report a huge loss, for instance, and the stock value rise-- simply because the loss wasn't as severe as analysts feared.

"Young lady, in this house we obey the laws of thermodynamics!" -- Homer Simpson

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