AT&T dedicates 40% of $40B capex budget to wireline, wireless business services

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Over 40% of AT&T’s 2-year total will be dedicated to expanding and enhancing the telco's global portfolio of mobile and integrated business solutions.

AT&T plans to allocate a large portion of its 2-year, $40 billion capex budget to invest in integrated wireless and wireline solutions for its business customers, a clear reflection of how strategic services are eclipsing legacy TDM circuits.

Over 40% of the telco’s 2-year total will be dedicated to helping AT&T expand and enhance its global portfolio of mobile and integrated business solutions. Specifically, the service provider will expand services across six main domains: software-centric solutions, cybersecurity, internet of things (IoT), collaboration, connectivity, and Wi-Fi.

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For AT&T Business Solutions customers, the key advantage it brings to the table is wide scale and availability.

“Businesses are seeking agility in three areas,” said Steve McGaw, CMO for AT&T Business Solutions, in a release. “They want operational efficiency, an empowered workforce and highly secure networking.”

By increasing focus on software-centric solutions like SD-WAN and Network on Demand, AT&T can give business customers more flexibility in how they order and provision services across multiple sites. While AT&T has not revealed many details about its SD-WAN progress, the telco said it offers its premises-based, over-the-top solution in 52 countries.

Driven by high-profile attacks on internet companies like Dyn, cybersecurity is also becoming a concern for businesses. In particular, the service provider plans to ramp investments in building out AT&T Threat Intellect to improve its processes and tools, while continuing to equip its security experts with necessary security training.

AT&T said its cybersecurity effort will “improve [its] data-powered analytics and virtualized security capabilities, and facilitate the innovation of new security approaches and solutions within [its] AT&T Foundry locations.”

At the same time, AT&T’s investment will also address business users’ desire for higher speed wireline bandwidth via Ethernet and mobile broadband. Having already built out fiber to over 1 million business locations, AT&T plans to increase fiber density in existing and new markets.

Having a global mobility plan that incorporates current mobile 4G LTE and Wi-Fi capabilities ensures that businesses can get access to their applications and critical data to operate regardless of location.

Continued focus on virtualization

A key enabler of the business service expansion is leveraging AT&T’s ongoing investments in SDN and data analytics.

AT&T’s aggressive stance on virtualization is on display at this week’s Mobile World Congress. The service provider announced that it has joined Orange and Colt Technology Services to work with the MEF and TM Forum to release what it says is the first set of standard application programming interfaces (APIs) for orchestrated Carrier Ethernet services.

Service providers will be able to use the jointly developed standardized APIs at the end of 2017.

In 2016, AT&T exceeded its goal to virtualize its network by converting 30% of its network to SDN. AT&T surpassed that goal and met 34% of its network and is on its way to 75% by 2020.

John Donovan, chief strategy officer and group president for AT&T Technology and operations, told investors during the AT&T Innovation Summit in San Francisco that when AT&T hits the 55% mark, “you hit the tipping point and it becomes your primary operations, not the new thing any longer.”

Wireline, wireless business growth ramps

Ramping up investments in wireline and wireless business services makes sense, particularly as AT&T is seeing ongoing revenue acceleration in both segments.

During the fourth quarter, AT&T reported that declines in legacy products and business investment were partially offset by continued growth in strategic business services. Strategic wireline and wireless services revenues were up 8.3% year over year and make up 38% of business wireline revenues. Total business wireline revenues were $7.7 billion, down 4.6% year over year.

AT&T noted that growth in mobility and strategic business services helped offset declines in legacy wireline services, a trend that will likely continue into the rest of 2017. Within the overall mix, 75% of AT&T’s business services revenues are wireless and strategic services. Business wireless service revenues were up 3.9%.