AT&T: Fixed Broadband Has Returned to Growth and We Have 50 Million Locations in Our Sights

The latest evidence about how serious AT&T is getting about deploying high-speed broadband came from the company’s CFO John Stephens yesterday. Stephens told attendees at a financial conference that the company has a long-term goal of making AT&T high speed broadband available to 50 million locations without increasing capex above 15%. AT&T already is selling considerably more FTTN and FTTP delivered high speed broadband than legacy lower-speed DSL.

“If you look at our numbers a few years ago, we had 15 million DSL and 1 million high-speed broadband,” Stephens said. “Today we’ve got about 15 million high-speed broadband and 1 million DSL. We have gone through the transition; that’s the important story here. We’ve gone through that process and come out with the high-speed broadband products that are sticky with customers and that are winning the day.”

AT&T High Speed Broadband
When AT&T deploys high speed broadband, it quickly gains market share, according to Stephens. Overall, the company’s market share in fiber markets is in the mid-30% range. But in areas where service has been available for two years or more, the company generally gets a 50% share, he said.

“We think it is a higher share of market than competitors,” he noted. With the shift toward high speed broadband, Stephens said, “Fixed broadband has returned to growth and it will continue.” Stephens’ data points came to light just a few weeks after some financial analysts issued a research note[1] arguing that AT&T’s increased aggressiveness in deploying fiber-to-the-home is likely to hurt cable companies’ market share.

Currently, seven million of AT&T high speed broadband locations are served over fiber-to-the-premises (FTTP), with the remainder served over fiber-to-the-node. By 2019, the company expects to have FTTP available to more than 12.5 million locations, and eventually expects to reach at least 14 million locations. Stephens did not mention it, but one would assume that 5G fixed wireless service will be in the mix to help achieve the 50 million high speed broadband location goal.

Stephens credited AT&T’s shift toward software defined networks as a key factor enabling the company to reach high-speed broadband deployment goals without increasing capex. Other notable takeaways from Stephens’ question-and-answer[2] session at the UBS Global Media and Communications Conference yesterday:

  • Several times Stephens referenced the carrier’s plan to bundle broadband and wireless with its DirecTV NOW video offering, which is delivered over landline or mobile broadband. Wireless churn is less when it is bundled with DirecTV NOW[3] or HBO, and linear video churn decreases about 40% when the service is bundled with wireless.
  • As AT&T continues to win contracts to deploy the FirstNet mobile broadband public safety network in individual states, Stephens sees opportunities beyond selling connectivity to first responders.

    The company expects to also sell to mayors and other government entities, and to layer on smart city applications such as water and power management.

    Stephens also pointed to innovative devices that AT&T might offer FirstNet users such as body cameras, drones and devices that can be used to easily write reports.

References

  1. ^ research note (www.telecompetitor.com)
  2. ^ question-and-answer (seekingalpha.com)
  3. ^ DirecTV NOW (www.telecompetitor.com)

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