with Tom Hughes, vice president, Small Business Project Management, AT&T
AT&T (NYSE: T) has set an aggressive path to enhance the reach of its fiber network into more buildings to serve businesses through its fiber-to-the-building (FTTB) program as part of its multi-billion dollar Project VIP initiative it debuted in 2012. The service provider has set a goal to reach 1 million business customer locations with fiber. Building on the work it has done thus far, the service provider recently introduced its Business Fiber service, which will ultimately provide up to 1 Gbps services to buildings that have been equipped with fiber in 2015. One of the key voices in developing new products for AT&T's FTTB effort is Tom Hughes, vice president of Small Business Product Management. Sean Buckley, senior editor of FierceTelecom, sat down with Hughes to talk about the progress AT&T has made with its FTTB initiative and the new Business Fiber product.
FierceTelecom: AT&T has been making progress with the fiber-to-the-building (FTTB) portion of the Project VIP initiative. Can you give us a sense of where you are at right now in terms of buildouts and how the new Business Fiber service fits?
Hughes: From an overall program perspective, the fiber-to-the-building (FTTB) program is part of the Project VIP initiative we launched a few years ago. We're making great progress on the overall build. We're on pace to hit about 500,000 business customer locations reached so we're making steady progress towards the number we said we ultimately would hit, which is a million customer business customer locations reached. What you saw us announce with Business Fiber is the culmination of a multi-month product development effort that began when we announced the fiber-to-the-building effort back in 2012. We had designs to put a product in the marketplace that would allow us to have higher bandwidth speeds available for our customers in fiber lit buildings than we have just on the U-verse network in general.
FierceTelecom: What is the customer mix in these buildings? Is it large enterprises, single location business, or multi-site small medium businesses?
Hughes: At the initial launch, we have services from 25 Mbps to 300 Mbps asymmetric and symmetric because we expect a wide range of customers in these buildings to want this service. Some of the small businesses that are looking for a broadband service similar to what they have today, we believe the 25 Mbps service would be very appealing to them. We'll have some larger customers, or customers that have larger bandwidth needs, that are going to want the 100 Mbps or 300 Mbps service because they are going to have a greater need for the speed and the connectivity.
FierceTelecom: Given the amount of fiber you're rolling out into these buildings, do you envision driving the availability of more Ethernet into these buildings?
Hughes: Absolutely. We've been building each building and bringing them on-net with an Ethernet Multiplexer (EMUX) for two years. During that time, until we launched AT&T Business Fiber last week, that's exactly what we have been selling. We have been selling Ethernet as a managed service. We believe and expect going forward, we'll continue selling that service. Our customers that want and need a managed service and putting fiber into these buildings allow us better cycle times for Ethernet managed Internet service (MIS) as well.
FierceTelecom: Do you think bringing fiber into more buildings gives you a competitive advantage over cable and others in the areas where you're making these builds?
Hughes: We believe we have a competitive advantage now. We had what I call the lower speed available with U-verse and IP broadband in these buildings before. What we have now is two flavors of broadband: asymmetric and now a symmetrical service of 25 to 300 Mbps. That's something our competition doesn't have in these buildings and then we still have the managed Internet service available for customers as well. Now we have two flavors of broadband as well as the managed Internet product available to sell to customers.
FierceTelecom: Another service area this build could help bolster is your ongoing user-defined cloud strategy. Do you see cloud as one of the major drivers for FTTB?
Hughes: What we're seeing across the marketplace in general is that customers want more bandwidth. Three or four years ago in the small to medium business space, you'd sell a customer 3-6 Mbps and they were fine. Now what we're seeing, generally speaking, is customers do want 12-24 Mbps, and in some cases they want 100 and 300 Mbps services. Why do they want that? A big part of it is, as you mentioned, cloud-based services. More and more applications are moving to the cloud. Customers that have multiple office locations will use the higher bandwidth for things like videoconferencing across their offices for transporting large data files over the Internet between their offices. All of that is driving the higher need from the customer perspective for bandwidth.
FierceTelecom: Can you talk about the process of the build? How has the process been for gaining permits for rights-of-way and working with building owners?
Hughes: When we launched the project a couple of years ago, one of the things that we did was an inventory of all of the buildings that are in our footprint. We looked at multi-tenant buildings, including those with at least six or more tenants, which have a greater propensity to buy. Then, the process is we looked for opportunities to leverage the fiber footprint that we already have in place today. We extended that fiber into buildings and we placed an EMUX in there. Part of the process might need some permitting to do some fiber trenching or to place additional conduit. We also have the opportunity to work with building owners and property managers to gain access into those buildings. We believe that when AT&T brings fiber into the building, their building becomes more marketable to prospective tenants. From their perspective what they do is manage properties and lease to tenants. What we try to do when we bring the fiber in is enhance the value that they bring to their clients and potential clients and make their property more marketable.
FierceTelecom: Looking forward, are you going to bring FTTB services to more markets in the near future?
Hughes: We will have an announcement in the next few weeks, but we definitely have plans to do a phase 2 launch this year. Assuming all goes well, we'll do another launch after that. We're going to phase this project in multiple regions at a time. Over the course of time, we expect to have the Business Fiber service across a wide part of our footprint. Again, this particular service is only available where we have fiber-to-the-building.