As AT&T looks to meet its goal to extend its consumer fiber broadband network to 30 million sites by 2025, the goal is to continue to scale organically and through targeted partnerships.
John Stankey, CEO, president, and director of AT&T told investors at Goldman Sach’s Communicopia conference that the focus is on enabling service to as many sites as possible.
“I think it's a race to scale,” he said. “We like how our fiber business is performing and the economics of the business.”
For AT&T, fiber broadband APRU and adoption have surpassed its initial expectations.
“When I looked at the original business case back in 2014, we dramatically undershot what the ARPUs are being driven,” Stankey said. “We're getting the penetration rates when we build faster than expected. And for all of you in the room that does modeling, you know when you touch those things, that will drive better returns.”
Fiber partnership approach
While AT&T has continued to expand its fiber broadband footprint in its traditional wireline region, the service provider has begun to move into other territories via its GigaPower initiative.
AT&T and investment management company BlackRock formed Gigapower, a wholesale joint venture to provide fiber broadband services to Internet service providers and businesses across parts of the US. The venture is part of AT&T's plans to ramp up its fiber broadband rollout.
GigaPower plans to provide fiber network services to Internet service providers (ISPs) and other US businesses, mainly focusing on customers outside AT&T’s traditional 21-state wireline service footprint. Gigapower's network will use XGS-PON technology and has the potential to deliver up to 20Gbps.
Stankey sees partnerships like Gigapower as a tool to further expand its fiber broadband network.
“We need to think about what you can do organically, but we've also stated what we will do with partnerships,” he said. “The GigaPower dynamic allows us to go out and bring in partners and get owned and operated, so to speak, fiber, where we can put our brand, our product set, and our ability to bundle and bring the service together in a way that we do in-region, out of the region with a partner.”
Stankey also said it will partner with other fiber providers that could bundle AT&T’s wireless service for consumers and businesses.
“The third leg of that stool that we should be looking at is what are the other partnerships that we can do for people who own fiber infrastructure around the United States that need a great wireless product to go on top of it or maybe even need back-office capabilities to put on top of that infrastructure or where there's open-access capabilities that start to emerge under some of the BEAD builds,” he said.
AT&T has not yet revealed any specific metrics about Gigapower. However, Stankey intimated that it will likely provide this guidance in 2024.
“We are tracking our ARPUs, our penetration rates, all those things we should do,” he said. “As we get into the early part of next year, we'll be able to come back and say, "Look, we entered these markets. This is our penetration rate and the ARPUs we're getting. We think the terminal shares are this:" and build the confidence that that model is equally as effective as what we do in our organic builds in our traditional footprint.”
Taking share
When AT&T brings fiber broadband into a new market, the focus for the company is to lure customers away from cable operators.
Like others AT&T has seen pressures like lower household moves, which has impacted its volume, Stankey said that AT&T is “still a share taker.”
“While organic growth in the market would be nice, at the end of the day, when we go build fiber, the game is about taking share in those footprints that we build fiber,” he said. “And we're successfully doing that. I've shared that our rate of penetration has dramatically improved.”
Another critical point for AT&T Fiber is that the telco is gaining more density in the markets where it offers fiber today.
“If you go back to 2014/2015 when we built our first markets, we're penetrating in the first year twice as many customers as we did back then,” Stankey said. “We're building enough where the community talks about it, and people know about it. And two, we're getting better tactically in what we do to bring customers on.”
He added, "If you can get that penetration rate twice as fast in the first year, that dramatically advances payback in the business case.”
Sean Buckley
Sean is responsible for establishing and executing the editorial strategies of Lightwave and Broadband Technology Report across their websites, email newsletters, events, and other information products.