AT&T, CenturyLink, Frontier see utility with copper but want flexibility in technology transition

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LAS VEGAS--Copper wire retirement may be a concern for competitive providers, but AT&T (NYSE: T), CenturyLink (NYSE: CTL) and Frontier (Nasdaq: FTR) said during a session at the COMPTEL Plus trade show that they are still finding value in telecom's ubiquitous access medium.

These three telcos don't envision a wholesale replacement of their copper facilities, but rather would like to have the flexibility to retire them if there's a reason to do so.

While CenturyLink is upgrading its network to IP and adding fiber, it sees copper retirement and the IP transition as a two-part issue. It says that the IP transition should have three common characteristics: a state-by-state interconnection model, redundancy and flexibility.

CenturyLink has shut down copper and replaced it with fiber in only a few select areas.

"Today, we have retired some copper, but where we have done it is very, very rare," said Bill Cheek, president of Wholesale Markets Group for CenturyLink. "We have network notifications we put out and there have been very few objections, and those that have come, we have been able to rectify those in short order."

Maintaining flexibility
Cheek said that while he does not see a day where the company would retire all of its copper facilities, it wants "to have flexibility if we need to retire the copper because we don't want to be mandated to maintain two networks since the economics don't work."

If CenturyLink were to face a similar natural disaster like Verizon (NYSE: VZ) did with Hurricane Sandy in New Jersey, it would replace the damaged copper with fiber.

"We're not in the wireless game so if that were to happen to us, we would likely overbuild probably with fiber because it would give broadband capability our customers would need," Cheek said.

Similarly, AT&T does not expect a wholesale change out of copper but sees using it in different ways for new consumer and business applications.

To AT&T, the retirement of TDM services does not mean it is going to take out copper. Instead, the service provider will still require copper for some its key services such as its fiber to the node (FTTN)-based U-verse service, central office (CO)-based IP DSL service and Ethernet over Copper for businesses.

"This doesn't necessarily mean that it's going to completely be retired, but it will change," said Gary Ludgood, senior vice president of Global Networks Field Operations of AT&T. "What you'll see is the loops become shorter and shorter as the technology evolves."

While AT&T does not have a broad copper retirement plan, Ludgood agrees with CenturyLink that it can't manage multiple IP and TDM-based networks.

"There's just no way that multiple networks can be maintained," he said. "The question that I am posing to my engineering counterparts is how many lines do you have to loose on a switch before you do something about the switch?"

Frontier, which has spent the better half of the last four years upgrading the rural lines it purchased from Verizon, sees continual utility in copper.

Meanwhile, it has upgraded its last mile facilities to IP-based DSLAMs and remote terminal-based Broadband Loop Carriers in the last mile over a hybrid copper/fiber FTTN network. Frontier does not have any immediate plans to eliminate TDM-based services, but sees a hybrid copper and fiber environment.

Simultaneously, the service provider has been upgrading its core network with fiber and optical ROADM technologies to support the growth of its consumer and business broadband services.

"Our philosophy should be is we let customers help guide where we're going to invest in the future," said Dan McCarthy, president and COO for Frontier Communications. "We're going to deliver the right products at the right prices and we're really agnostic whether we're going to deliver it over copper or fiber."

Like other telcos, Frontier has built out fiber to many of its remote DSLAMs to backhaul last mile traffic. It also has been updating its aging ATM core network with Ethernet.

The service provider is also using its copper network to deliver higher speed EoC services of up to 100 Mbps and beyond for businesses.

On the consumer front, the service provider has been using various copper bonding techniques to enhance traditional ADSL2+ and increasingly VDSL2 to get up to 40 Mbps in some markets. It is also planning G.Fast trials later this year.

"When we talk about copper from a technology perspective it is alive and well for us and we're enhancing it quite a bit and we're enhancing it by investing in fiber deep in the core, and when I say deep in the core it's fiber to every single one of those DSLAMs," McCarthy said. "The ubiquity of the copper network is the compelling reason why we're going to continue to invest and use it."

Business needs are different
Regardless of the ILECs' approaches with their copper networks, the key question for competitive carriers, particularly those that service primarily business customers, is where do these transitions leave the competitive providers?

Echoing a similar sentiment made by Windstream's (Nasdaq: WIN) CEO Jeff Gardner during the keynote speech on Monday, Granite Communications, which also was represented on the panel discussion, says that the IP transition and copper retirement issue has to take into account what effect it could have on the business customer.

Today, Granite adds on average 1,000 plain old telephone service (POTS) lines a day for its multi-site business customers.

"There's a myth, and the myth is that all customers are rapidly migrating off the copper network and it's a myth because a huge number of customers aren't moving," said Sam Kline, senior vice president, Corporate Strategy for Granite Telecommunications. "Business customers are not moving as fast as residential customers."

Unlike a consumer, the landline phone in a business is the conduit it needs to communicate with its customers. And despite advancements in IP-based technologies, it's still unclear that they can provide all of the same features a business needs today.

However, Granite is well aware that the IP and copper transition ultimately will happen. As it moves forward, service providers will need to be able to craft solutions that meet the unique needs of different kinds of customers like the local gas station or a large bank.  

"We think that the transition is going to take much longer for businesses, but it is going to require a whole series of services and features that aren't presently available in some of the technologies," Kline said. "When that happens, it won't be one-size-fits-all because different businesses will need different features."

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