AT&T lights 1.6M FTTH customers with services, says it's on track to meet FCC commitments

AT&T (NYSE: T) is making steady progress in rolling out its GigaPower FTTH service to more customers with its wireline region as it looks to stave off competition from cable operators like Comcast (NASDAQ: CMCSA) and upstart provider Google Fiber (NASDAQ: GOOG).

Speaking to investors during the first earnings call, John Stephens, CFO of AT&T, said that the provider has already connected over 1 million customers with FTTH and that it will meet its FCC obligations to wire customers as part of the DirecTV deal.

To get approval for its DirecTV deal, the FCC mandated that AT&T commit to build out FTTH services to 11.7 million customer locations.

"With GigaPower we're at 1.6 million fiber-to-the-premises locations that are active today and we're on track with our FCC commitments and are confident we'll meet those on a timely basis," Stephens said. "Our capex plans for this year and our longer-term multi-year plans include fully funding all of that activity so we're optimistic about that."

In December 2015, AT&T announced plans to build out FTTH service to parts of 38 additional metro areas. With service having already been up and running in 18 metros that build would more than double the amount of metro areas it serves to a total of 56.

At the same time, AT&T continues to convert more of its legacy DSL customers to either FTTH or its IP-based broadband U-verse broadband platform.

These conversions depend on what market a customer happens to reside in today.

"On the broadband side, we're through most of the opportunity of where they have DSL or where they have the choice of either GigaPower or high speed broadband products," Stephens said. "About 95 percent have already transferred, but the rest of it is legacy DSL footprint."

Stephens added that "we'll continue to support those and continue to provide good service, but the team has worked hard to upgrade people to the higher speeds to get better quality."

AT&T added 186,000 new IP broadband customers to end the quarter with a total of 12.5 million. Meantime, DSL subscribers declined to 1.7 million from 1.9 million.

For more:
- see the earnings release
- hear the earnings call (reg. req.)

Special Report: Verizon and Frontier begin new transitions: Tracking wireline telecom earnings in Q1 2016

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