How AT&T is expanding its broadband network

“It’s where we spend the majority of our capital,” he said, “it’s what our customers touch each and every day.”

McElfresh reported that, over the next three to five years, AT&T will complete both the expansion of its fiber footprint and the modernization of its wireless network. Regarding fiber, he reported that AT&T intends to expand its reach to more than 50 million locations by 2029 and is ending this year with 29 million locations passed. McElfresh explained that AT&T will expand the network incrementally, adding an average of 3 million locations annually, reaching 45 million by 2029. For the additional 5 million, AT&T intends to expand its Gigapower and commercial open access network relationships.

Investing in fiber growth

McElfresh described AT&T’s fiber investment strategy as having three distinct aspects:

• The cost to build, which drives cost per passing.
• The cost to connect a customer’s home or a business when they order service.
• The cost to maintain and repair that network.

The cost to build

McElfresh reported that over the past two years, AT&T’s cost per passing has increased by less than 2% annually, which he said is very important in an inflationary market.

“The key reason that we’ve been successful at bending that cost curve,” he said, “is the way we’ve chosen to architect and engineer our fiber network.”

He explained that AT&T has focused on ease of installation at endpoints in the network, resulting in higher material costs but increasing efficiency.

“We just plug in prefabricated connectors,” he said, “And this plug-and-play approach lowers our labor cost for building fiber.”

McElfresh also reported that the scale and pace at which AT&T is building makes it an attractive partner to vendors, pointing to a recent deal with Corning as an example.

“That deal enables us to accelerate our fiber network expansion and enhance network performance while minimizing deployment costs,” he said.

The cost to connect

McElfresh described the “cost to connect” as the cost to penetrate the company’s build and bring revenues onto the network.

A large aspect of AT&T’s strategy in this arena has been improving the customer and technical skills of frontline employees through training. McElfresh said this investment in training has improved install quality and helped set the stage for easier future installations.

“Our same-day completion rates and post-install network reliability have both reached all-time highs,” he said. “But more importantly, when our frontline experts connect a home for the very first time, they ensure that the connection is durable, and that location is enabled for customer self-install in the future.”

He reported that giving customers the ability to perform the fiber installation themselves is important for two reasons: it meets the customers’ demand for immediate service and vastly increases efficiency—AT&T only has to send the customer a gateway.

“Today, approximately one in four of our FiberNet activations are performed by the customers themselves through a self-install,” said McElfresh. “No technician; no truck roll. And as we scale this network and we continue to penetrate this network, the self-install rate will improve to one in three. And as a higher percentage of our net growth comes from self-install, the more capital-efficient our program becomes at penetrating fiber, which enables us to reinvest those savings into building more fiber.”

The cost to maintain

According to McElfresh, the improvements that AT&T has made have improved expenses for maintenance and repairs.

“The cost for us to maintain a fiber subscriber is 35% less than copper subscribers due to significantly fewer calls to care and the fiber network being superior in reliability and requiring fewer repairs and truck rolls,” he said.

He explained that the savings, in turn, unlock financial capacity to further invest in expanding the footprint and customer acquisitions.

Keeping up with growth

McElfresh reported that AT&T is confident that it will still drive meaningful returns as the footprint continues to expand.

“The bottom line is that the results are even better than we had anticipated,” said McElfresh. “Time to revenue is faster, the quality of the revenue is better, and customers are staying with us longer.”