This seems to make a lot of sense to me, but not for the reasons mentioned in the article.
I think the true driver is Verizon moving to 4G and the expiring Apple contract.
At 100mbts down, Verizon is going to crush AT&T without their next generation. Crush them. Even with AT&T at 21mbps, Verizon is going to be 500% faster. And we all know how bad AT&T backbone has been.
Years of being cheap on infrastructure and managing wall street earnings has caught up with AT&T.
Thank heaven for competition. Verizon made a poor choice not going with the iPhone, so they are cranking their network speed up and getting ready to steal the iPhone exclusive from AT&T.
Imagine this: Verizon @ 100 mbps with the iPhone exclusive. AT&T will be kicked to the basement. This is clearly Verizon's play.
The big winner is Apple. With market power, blazing fast pipes, and unlimited data deals, Apple is going to have the fertile soil to innovate.
AT&T sees this too. They have no choice but to seriously invest in their backbone, jump to 21 mbps, and by 2011 be in the same ballpark as Verizon.
I always thought it was odd that AT&T leaked they wanted a one year extension. But with Verizon coming online this year, and AT&T not being able to roll-out their next generation until about 1 year later, the 1 year extension allows AT&T to block Verizon.
The other big winner is us. This is going to force innovation across the board from Apple, Google, Motorola, SonyEriccson, etc.
It's amazing to see what competition can do for an industry. Look at the same company's behavior around the crappy games with their ISP business.