AT&T claims VMware by Broadcom offered it a 1,050 percent price rise

And that Broadcom has prevented vendors from selling to the telco giant

AT&T has claimed that Broadcom made it an offer to increase prices by 1,050 percent, and may be influencing other vendors to make a migration harder.

The claim of the colossal price hike came in an email [PDF] filed in evidence by AT&T in its case alleging Broadcom hasn't honored a contract that would allow the carrier to acquire an additional two years of support services for its VMware estate.

The email was penned by AT&T executive vice president and general manager Susan A Johnson and appears to be addressed to Broadcom CEO Hock Tan.

"After a 10 plus year strategic relationship with Broadcom … I am sad to report that we appear to be at an impasse on our VMware deal," Johnson wrote on August 19. "The latest offer that we have received would put us at an average of $REDACTED per year for a 5 year deal, where we currently pay $REDACTED per year to support previously purchased perpetual licenses with a right to renew support through September, 2026.

"This proposed annual increase of +1,050 percent in one year is extreme and certainly not how we expect strategic partners to engage in doing business with AT&T."

Another filing [PDF], which details the views of vice president of global technology and operations David J Brickhaus, rebuts Broadcom's byassertion that AT&T uses lots of old and unsupported VMware software. Brickhaus admits AT&T does use some end-of-life code, but only on three percent of its servers that don't run mission-critical software and can't be upgraded to run newer VMware products.

Brickhaus's testimony also accuses Broadcom of mischaracterizing AT&T's migration plans.

"My team and others at AT&T have been exploring a possible migration away from the VMware software since Broadcom announced in December 2023 that it would force customers to employ a new, more costly subscription model for its VMware software licenses," the filing reads.

AT&T's migration quandary

Another filing [PDF] reports the views of AT&T vice president of global technology planning, Gordon Mansfield, regarding the work required to migrate from VMware to an alternative product.

Johnson's letter of August 19 states "the cost to migrate away from VMware (projected at $40-$50M) has a very quick payback and strong IRR [internal rate of return], especially given the high licensing costs proposed. As a result, we are planning to prioritize investment to migrate off of VMware."

Mansfield's filing offers a different view and states "VMware software is embedded in the products that AT&T purchases from its vendors and uses to keep the network functioning. Because of this, AT&T cannot make a unilateral decision to end use of the VMware software. Instead, AT&T must work with its vendors to replace the VMware software and develop a different solution."

AT&T has investigated doing so "since at least December 2023," and Mansfield rates that effort as requiring "a significant investment in engineering work to replace the VMware software, which will be costly and time-consuming."

Just choosing a VMware alternative and getting it ready for lab testing could take a year, Mansfield argued, and it could take years to complete a migration.

He then dropped the following nugget:

"Moreover, Defendants have not made it easy to do so since we understand that they are preventing some vendors from selling certain products to us."

Your guess about that assertion is as good as ours, dear reader. The docket for the case lists several documents that are now sealed – and therefore available only to participants in the case.

The case continues - indeed it is yet to reach court. ®