AT&T's $10B enterprise spending plan will deepen its SDN-based on-demand, cloud service footprints

AT&T (NYSE: T) is making a big bet on its global enterprise operations with plans to invest nearly $10 billion in its networks to boost the reach of wireless, cloud storage and security services.

This latest investment announcement comes on the heels of the telco revealing during its fourth quarter 2015 earnings call that its capital budget would total $22 billion.

One of the initial targets for the $10 billion investment will be to integrate over 6,000 km of fiber in Mexico that currently is used to backhaul its wireless operations into its wireline network. Under that plan it will enhance those fiber assets to by investing more in its global network nodes and adding hundreds of salespeople focused on selling business solutions to Mexico-based businesses.

Being able to leverage and extend these fiber assets in Mexico means that AT&T can immediately address more business customers over its own fiber network and control the experience it provides in delivering Ethernet and cloud-based services. Over time, the new fiber connectivity also could potentially enable it to reduce last mile access costs it has to pay to Mexican incumbent telco America Movil.

In 2014, AT&T sold off its stake in America Movil, a key Latin American off-net international partner, as one of the concessions it needed to make to complete its DirecTV deal.  

America Movil continues to be a major interconnection partner for AT&T in the Latin American business segment. Through an agreement in established in 2013 to use the Mexican telco's local network connections, the telco was able to connect to 15 countries, including Argentina, Chile and Colombia.

From a broader business services perspective, the provider also plans to improve on four key areas: connectivity, network on demand, Internet of Things, NetBond, Security and Collaboration. A number of these initiatives play into AT&T's ongoing SDN and NFV and overall plan to become more of a software-driven provider.

By leveraging the software elements of SDN and NFV it is placing through its network, the service provider plans to expand its on demand function which lets the telco deliver integrated solutions faster while enabling customers easily add or change network services quickly.

Momentum for on-demand services has continued to grow for AT&T as it roped in over 250 customers for the service as of the end of 2015 in the United States. Being able to offer the on-demand service in other countries outside of the United States will enable it to more effectively respond to business customers that want such capabilities to address specific events taking place in their business.

No less important is NetBond, the telco's technology that bonds networking and computing resources together and automates functions that are often performed manually. AT&T plans to roll out additional NetBond features, extend connections to more cloud providers, and expand the capability in Asia-Pacific, EMEA and the U.S. and Canada.

Business services continue to be a two-part story for AT&T. Similar to its ILEC peers, AT&T continues to see growing pains in the segment as legacy copper-based service such as Frame Relay and ATM decline amidst growth in IP/VPNs, cloud and Ethernet.

During the fourth quarter it reported that overall Business Solutions declined slightly year-over-year to $18.2 million, down slightly from $18.7 million as strategic business gains offset legacy declines. Total business wireline data revenue was $4.7 billion.

However, AT&T saw strategic business services revenues rise 10.3 percent to $2.8 billion. The service provider said that strategic business services like cloud and Ethernet continue see double-digit revenue gains.

Randall Stephenson, CEO of AT&T, told investors during the earnings call that the carrier is seeing growing momentum around next-gen services like Ethernet and its SDN-enabled Netbond VPN capability, helping it win more business market share.

For more:
- see the release
- Reuters has this article

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