Is AT&T Serious About Building Fiber?

AT&T_Building_-_NashvilleAT&T has been in the news a lot lately with announcements of new markets where it will launch gigabit fiber. This all started in April of 2013 when AT&T announced that it would bring fiber to Austin, Texas immediately following the Google announcement to build there.

But since then Google upped their game and announced a long list of cities where they were considering gigabit fiber, many of them in AT&T markets. It seems that AT&T felt obligated to respond to this, and so in April of this year they released a major press announcement that they were going to bring their AT&T Uverse, with ‘GigaPower’ service to up to 100 cities and municipalities nationwide, including 21 new markets. These new markets include major NFL cities like Atlanta, Miami, Chicago, Houston, San Antonio, San Diego, Dallas, Cleveland and many other large metropolitan areas.

In the last week we started to see this announcement come to fruition when AT&T announced deals with Winston Salem and Durham, North Carolina where AT&T said they would begin fiber construction within a ‘few weeks’. AT&T is working on similar arrangements with Carrboro, Cary, Chapel Hill and Raleigh in North Carolina.

These announcements are great and it’s wonderful to see AT&T making a commitment to expand broadband with fiber instead of copper. I’ve always thought it was just a matter of time until AT&T followed Verizon and their FiOS product. AT&T has done a pretty remarkable job milking the most they can out of their copper network, but the demand for HD video and now ultra HD video is putting a huge strain on their Uverse product

But then I noticed that AT&T might be telling a different story to their shareholders. At the end of April AT&T announced that it was cutting capital spending by $2 billion per year in 2014 and 2015 compared to previous estimates. This dropped annual capital spending from $22 billion to $20 billion, still pretty large numbers. But this budget reflects spending on both wireline and wireless capital so there was no telling by that announcement what this cut meant in terms of each business line. But a few weeks ago George Notter, an analyst for Jeffries announced that within those numbers that AT&T had ‘significantly reduced’ capital spending on the wireline network.

And so one wonders how AT&T is going to fulfill all of these expansion claims? It’s going to require many billions of dollars to even get started with fiber in major markets like the ones that they have announced as fiber candidates.

Meanwhile, AT&T has been telling the FCC that they want to drop millions of copper customers as part of the IP transition. As I discussed last week, this FCC initiative was intended to figure out how to change the network that carriers use to communicate to all-IP. But AT&T has hijacked that proceeding to talk about moving copper customers to wireless service. And that transition to wireless will cost money as well.

This all just doesn’t add up. If AT&T is really getting ready to expand fiber to this many new markets then there should be a major up-tick in landline capital spending. After all, Verizon spent over $23 billion on their FiOS fiber network, and as I look at the list of cities, AT&T’s plans seem to be even larger than what FiOS has done.

So I ask, is AT&T really planning on aggressively expanding gigabit fiber to all of these markets? Even if they only intend to cherry pick in each market they would require a significant increase in capital spending.

Meanwhile AT&T will be needing a lot of cash to acquire DirectTV and one has to wonder if that has any impact on their capital plans. It’s very hard to figure out large companies and AT&T has always been the most difficult carrier to decipher. They often make conflicting statements from different parts of the business and this seems like one such case. As somebody who supports building more fiber infrastructure I hope that their claims are not just hype and that the dollars for fiber construction will appear somehow when they are needed. What I suspect is the various business lines within the company are having a furious tug-of-war right now. We’ll just have to see how this plays out. But since most of their profits come from wireless, one has to suspect that has the upper hand.

2 thoughts on “Is AT&T Serious About Building Fiber?

  1. Pingback: Is AT&T Serious About Building Fiber? | Bro...

  2. Pingback: AT&T To Expand Ultra-fast Fiber Network To 21 New Major Metropolitan AreasBig Online News | Big Online News

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