Both AT&T and Verizon saw continued strong growth in wireless in this week's earnings reports, but took a bit of a beating in terms of DSL subscriber counts in their un-upgraded markets and overall broadband growth. Verizon lost 103,000 DSL lines during the fourth quarter of 2011, while AT&T lost 636,000 DSL lines. In AT&T's case the company wound up posting a net loss of 49,000 broadband customers thanks to the addition of 587,000 U-Verse Internet customers. Neither company is keeping pace with cable industry additions, however.

Where are the DSL users going? Neither company breaks down market or subscriber specific defection paths. Some are obviously migrating to the faster FiOS or U-Verse options being offered by the telcos. However, many are signing up for faster cable services in markets neither AT&T or Verizon wanted to spend money to upgrade.

Last summer, AT&T CEO Randall Stephenson went so far as to call DSL "obsolete" -- a problem when that's the only broadband product you're selling.

As we noted earlier this week, despite Verizon's $24 billion FTTH FiOS investment, there's still 30% of their footprint that won't be joining the modern broadband age anytime soon. AT&T's initial investment in U-Verse was significantly less aggressive and costly, but the number of customers not upgraded to U-Verse sits around 50% of their footprint. Even when upgraded to U-Verse, AT&T's not matching cable when it comes to speeds. The reasons for the AT&T DSL departures and slow broadband growth are clear: AT&T didn't put enough money back into the last mile network.

Both cable companies and customers stuck on slow DSL can thank telco investors for the stagnation. Investors whined, griped and complained ceaselessly over the last few years about any attempt by AT&T and Verizon to put money back into the network -- even when cash was clearly on hand. Now neither company can seriously compete with cable in the markets investors never wanted upgraded in the first place, which will result in a subscriber hit -- that investors will then complain about.

Annoyed customers stuck on slower DSL may eventually see faster speeds, but right now both U-Verse and FiOS expansion plans are frozen, meaning cable broadband will rule the roost for the foreseeable future. While there are a variety of new DSL technologies that bond lines and quell crosstalk pushing last mile DSL speeds higher, they've not yet been seriously deployed and still face distance constraints. Right now the focus is on wireless, with the telcos pretty clearly not caring what happens in a large number of landline markets where millions of users are still clodding along at 1.5 to 3 Mbps.