AT&T Communications CEO Jeff McElfresh highlighted the potential for the operator to boost average revenue per user (ARPU) by offering multi-gigabit capabilities on its fiber infrastructure, shedding more light on an ambitious network expansion plan.
The operator recently bumped up speeds on its lower broadband tiers to 300 Mbps and 500 Mbps, and currently offers a 1-gig plan as its premium service. Speaking at a Bernstein investor conference, McElfresh said it could add even more options to the table, noting its fiber assets are “multi-gig enabled.” That gives AT&T the opportunity to “now begin to offer different speed tiers and different use categories across that fiber network to provide for some price discrimination, to help us grow our ARPU [average revenue per user] as we grow our penetration in that fiber,” he said.
His comments follow a statement from AT&T Broadband EVP and GM Rick Welday in April, who said he expected most broadband speed tiers to climb above 1 gig over time. Neither executive offered a timeline for when AT&T might begin offering multi-gig service.
AT&T is far from the only one eyeing multi-gig moves. For example, Altice USA is aiming to roll out a new 10 Gbps service by end-2022, while Alaskan operator GCI is starting with 2 Gbps before working its way up to 10 gigs. Notably, though, GCI said it’s not planning to charge extra for its 2-gig offering.
The comments come as AT&T presses ahead with a plan to drastically increase its fiber coverage. During an investor day event in May, AT&T executives outlined plans to boost capital spending and more than double its fiber footprint to reach 30 million customers locations by the end of 2025. AT&T CEO John Stankey subsequently stated it might raise that target as costs improve and it identifies opportunities to generate incremental revenue with add-on services.
McElfresh said AT&T is pursuing a hybrid strategy with its fiber, noting 70% of fiber gross adds are new accounts and it uses those to help generate wireless additions as well. “We know where we have fiber we win, period,” he said. He added since 2019 AT&T has worked to unify its fiber strategy across wireless, residential and enterprise to drive faster deployments, yield and customer penetration, all of which he said help fuel future investments.
In terms of its current build plan, McElfresh said the operator is focused on 90 metro markets within its existing footprint and noted “well over half” of its fiber investment will cover brownfield areas “that we’ve not served effectively and have lost market share or are losing market share as a result of a non-competitive product.” However, “as we gain more success with the right kind of penetration and ARPU mixes, we will free up incremental capital dollars to maybe expand a little bit further into more true greenfield areas.”