Will AT&T's grand FTTH plan live up to its promise?
AT&T (NYSE: T) fed into the growing 1 Gbps fiber to the home (FTTH) craze earlier this week when it announced its plans to extend its last-mile fiber network to 100 of what it calls candidate cities and municipalities nationwide, including 21 new major metropolitan areas.
But the $1 million question is: Will it actually make good on this promise?
Similar to its initial launch in Austin, Texas, AT&T's initiative came once again after Google Fiber (NASDAQ: GOOG) announced that it would work with 34 communities. Much like Google's earlier proclamation, which also talked about working with its proposed communities, this is hardly a slam dunk for AT&T.
For one, AT&T made it clear in the announcement that this initiative won't affect capital levels. This could mean that perhaps it could target high-end Greenfield housing developments that don't have an existing copper network installed. The company maintains that it expects its wired IP broadband network will reach 57 million customer locations in its 22-state wireline footprint by the end of 2015.
Like its initial deployment in Austin, AT&T spokesman Josh Gelinas said in a Charlotte Observer report that this latest initiative has nothing to do with Google Fiber. "It was not spurred on in any way by Google," he said. "This is a service our customers want."
AT&T may continue to say its moves aren't related to the Internet search giant, but it's still hard to overlook the influence that Google Fiber has had on driving the telco and others like CenturyLink to pursue a broader FTTH strategy.
Before this latest deployment proposal, AT&T CEO Randall Stephenson told investors during a number of investor conferences that the company would like to get the same treatment that Google received with local community regulators. One of the key factors will be to gain access to a streamlined permitting process to get access to rights of way so it can install fiber and related termination equipment that will support the service.
Stephenson has said that when it first began rolling out U-verse in 2000, AT&T had to convince municipalities to get permission to install service, but "all of a sudden Google comes along and invests in Kansas City, and they get the municipalities to do things that encourage them to invest."
For this latest network drive, AT&T said it would weigh various factors such as access to network facilities, what communities show the strongest investment cases based on anticipated demand and the most receptive policies.
One market where AT&T is confident that it will deliver the fiber-based service is North Carolina.
AT&T North Carolina President Vanessa Harrison told the Charlotte Business Journal that the state's public policy makes it an attractive spot to build out service. "We definitely attribute a lot of this to the public policy environment that the General Assembly here in North Carolina has created, which is one that encourages investments and innovation."
While delivering a 1 Gbps fiber-based connection is certainly the end game, in Austin, AT&T is only delivering a 300 Mbps service today with plans to roll out 1 Gbps later this year. However, according to a GigaOM report, one customer that signed up for its GigaPower revealed they are only getting a 70/50 Mbps connection--far less than 300 Mbps.
Outside of the Austin market, the majority of AT&T users will continue to be served by its lower speed DSL services.
Through its Project VIP initiative, the telco is upgrading existing and new U-verse customers with a fiber to the node (FTTN) architecture that can support up to 45 Mbps and later 75 Mbps--two speeds that are far below what cable operators like Comcast and Time Warner Cable offer today. Time Warner Cable, for example, just launched a 300 Mbps tier in New York City and Los Angeles.
It will be at least another year or two before we see just how serious AT&T is going to be with its FTTH drive. However, it's clear that AT&T and Google Fiber are changing the perception of what high-speed broadband is.--Sean