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AT&T to extend wireline IP network to 57M customer locations

Migrate hard to reach rural copper customers to 4G LTE
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AT&T (NYSE: T) on Wednesday unveiled a multi-faceted initiative, Project Velocity IP (or VIP) that aims to upgrade much of its wireline network to an IP-based infrastructure and migrate some of its harder-to-reach copper customers to 4G LTE wireless services.

The migration plan for the rural customers is part of a broader plan the telco is undertaking to upgrade both its wireless and wireline networks towards an all IP infrastructure.

"Revenues in our key growth areas--wireless data, U-verse and strategic business services--are all growing at a strong double-digit rate. Project VIP expands our potential in these key platforms and makes them available to many more customers," said Randall Stephenson, CEO and chairman of AT&T, in a release announcing the new initiative.

The telco has developed a four-pronged strategy that it says will enhance and expand its wireline IP network to 57 million customer locations (both consumer and SMB): U-verse expansion; U-verse IPDSLAM; upgraded speeds; and bringing fiber to multi-tenant office buildings.

With U-verse, AT&T will expand the service coverage to over one-third or about 8.5 million additional customer locations, enabling it to potentially serve a total of 33 million customer locations by the end of 2015. As it has previewed before, AT&T will also deploy IP DSLAM service, including broadband data and VoIP, to 2 million locations in its wireline service area by the end of 2013.  

Leveraging new innovations in hybrid copper/fiber techniques including VDSL2 with bonding, Project VIP will upgrade U-verse speeds to up to 75 Mbps, while U-verse IPDSLAM customers will be able to get up to 45 Mbps with a foundation for higher speeds.  

Of course, the big question on the industry's mind is what AT&T is going to do with its rural copper customers?

While AT&T did consider spinning off its rural wireline assets like Verizon (NYSE: VZ) had done with its sale to FairPoint (Nasdaq: FRP), AT&T decided the regulatory implications would be too challenging. Instead, the telco decided that in the 25 percent of the wireline locations where it can't upgrade the wireline facilities to IP, it will extend its 4G LTE wireless network to offer those customers broadband data and voice services, adding that ultimately the 4G LTE network will cover 99 percent of its in-region wireline customer locations.

Finally, AT&T plans to expand its fiber network to reach an additional 1 million business customer locations with a focus on serving the 50 percent of multi-tenant business buildings in its wireline serving area. By doing this it is laying foundation to deliver higher speed IP services such as cloud and Ethernet to an even larger customer base.

The Fiber to the Business (FTTB) initiative comes at a time when AT&T is seeing a strong uptick in strategic IP services like Ethernet as traditional legacy services such as Frame Relay continue to decline. Like other traditional telcos, AT&T reported that its Q3, strategic business services revenues grew 11.4 percent year-over-year.

For more:
- see the release
- and here's the webcast
- here's FierceWireless' coverage

Special report: Wireline telecom earnings in the third quarter

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