AT&T's aggressive fiber expansion effort to businesses continues to bear fruit as the service provider now reaches nearly 400,000 business buildings with its own lit fiber facilities.
Because of AT&T’s aggressive build out, the service provider now covers over 1.8 million U.S. business customer locations. The telco said it is “adding thousands more buildings each month.”
The fiber network provides bandwidth needed to support data-intensive services like video conferencing, collaboration, and cloud services.
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However, there’s a clear line between what it is deemed as on-net and near-net connections.
On-net fiber means that each fiber that goes into a building is connected directly to a service provider’s facilities and traffic passes directly onto its own network. This includes buildings where there are businesses present and not cell towers.
Near-net means that a service provider may have fiber passing by or nearby a building that has multiple businesses.
AT&T has over 1.1 million global route miles of fiber. The service provider said that it has 8 million business customer locations nationwide that are either on or within 1,000 feet of its fiber, which is otherwise known as near-net connections.
According to Vertical Systems Group's Fiber Gap report, the amount of buildings with available fiber jumped to 49.6% in 2016. What’s significant about this number is that in 2004, only 10.9% of commercial buildings in the U.S. were connected to fiber.
A unique class
When it comes to on-net fiber in business buildings, AT&T is clearly in a unique class. Vertical Systems Group revealed in its recent U.S. Fiber Lit Buildings LEADERBOARD report that AT&T is among 11 service providers with the largest amount of on-net building fiber.
The research group said that retail and wholesale fiber providers with 10,000 or more on-net fiber-lit commercial buildings in the U.S. qualify for this new benchmark.
Perhaps not surprisingly, the top 11 providers on VSG’s list include a mixture of traditional telcos, cable providers and a competitive carrier: AT&T, Verizon, Spectrum Enterprise, CenturyLink, Comcast, Level 3, Cox, Lightower, Zayo, Altice USA and Frontier.
While AT&T may be at the top, the service provider will continue to face growing competition from other telcos like CenturyLink, as well as aggressive cable operators such as Spectrum and Comcast—all of which are also expanding their own on-net fiber footprints.
By acquiring Level 3 Communications, CenturyLink increased its on-net building reach by nearly 75% to approximately 75,000, including 10,000 buildings in EMEA and Latin America, giving the telco a larger footprint to deliver Ethernet and software-defined services.
But AT&T also must be aware of the efforts being made by Comcast and Spectrum Business to enhance their fiber and on-net building reach for business customers.
While Charter’s Spectrum has not reported fourth-quarter earnings yet, Comcast Business saw revenues rise 12.2% to $1.68 billion. The cable MSO said the revenue jump was related to increases in the number of customers receiving its small and medium-sized business services offerings.
Enabling Ethernet
The other factor in the on-net building race is that AT&T is part of an elite group of U.S. Ethernet providers that can support this high-speed service on its own network.
Ethernet, along with strategic services such as cloud and other software-based services, were key contributors to AT&T’s wireline business services growth during the fourth quarter 2017. Business service revenues were up due to an increase in wireless equipment and strategic services. Business wireline revenue went up 0.8% sequentially.
In business wireline, AT&T noted that fourth-quarter declines in legacy products were partially offset by continued growth in strategic business services. Total business wireline revenues were $7.4 billion, down 3.5% year over year but up sequentially.
AT&T’s fourth-quarter strategic business services revenues grew by nearly 6%, or $176 million, versus the year-earlier quarter. These services represent 42% of total business wireline revenues and more than 70% of wireline data revenues and have an annualized revenue stream of more than $12 billion. This growth helped offset a decline of more than $400 million in legacy service revenues in the quarter.
Like its presence as an on-net fiber leader, AT&T remains the dominant Ethernet provider in the United States. On VSG’s latest on-net fiber leaderboard, seven service providers have an ongoing spot on VSG’s Carrier Ethernet Leaderboard report. These providers include AT&T, Verizon, Spectrum Enterprise, CenturyLink, Comcast, Level 3 and Cox.
Rosemary Cochran, principal of Vertical Systems Group, noted that the presence of fiber has coincided with the growth of Ethernet in the domestic U.S. market.
“As those upgrades take place, one of the drivers is trying to get more bandwidth so there’s a correlation between higher bandwidth services and having that fiber in the building," Cochran said.