AT&T (NYSE: T) continues to be bullish on how software-defined networks (SDN) will enable the service provider to accelerate service turn up and allow customers to take control over their service provisioning experience.
Speaking at the UBS 42nd Annual Global Media and Communications Conference, John Stephens, CFO of AT&T, said that the company is starting to see capex savings from its Domain 2.0 initiatives and its move to SDN.
"Part of what we're seeing in the capex is the acceleration of the savings in software-defined networks, but there's still room to grow," Stephens said. "You're seeing some of our announcements with our vendors signing up and joining us to do more in the software-defined network area."
He pointed out SDN's role in the "AT&T Network on Demand" capability that is being deployed as part of its User Defined Network Cloud (UDNC) strategy that the telco launched in Austin earlier this year.
AT&T is initially applying the SDN-based on-demand capabilities to its Ethernet service suite. Over time, the service provider will make available the new capability to allow business customers to provision other services such as Internet VPN and VoIP at a later date.
"Like what we're doing in Austin with one of our major customers where they can get on their computer system and order their speeds," Stephens said. "If they want to ramp up their capacity and it's instantly deployed--we don't have to roll trucks, we don't have to send out repairs and cycle times are very short."
Stephens added that the actual benefits of implementing SDN take a long time to realize for a company the size of AT&T.
"As we're going through and testing these kinds of activities, you'll continue to see us improve," Stephens said. "It's a long process for a large company, but we're making significant progress on it, which is why it's important to get the fiber out into the network."
While AT&T isn't quantifying SDN savings yet, Stephens said that the shift eliminates the need to send workers up to towers or on truck rolls and lets customers make adjustments to how they experience the network much more quickly, which can produce more revenue.
"If you can take layers of boxes out of your network because they're software controlled, or customers can increase speeds, you can save truck rolls, you can save installation and cycle times," Stephens said. "When you save cycle times, you don't save any more costs, but you generate more revenue because customers don't have to wait 30 days to get the service turned on."
Looking forward, Stephens said its capital expenditures in 2015 will be $18 billion, down from $21 billion in 2013.
As it moves to complete the buildout of fiber to business buildings and expand U-verse to more locations via the Project VIP program, the service provider is returning to more normalized levels of capex spending, around 15 percent of service revenues.
At this point, the service provider has completed the buildout of fiber to more than 600,000 buildings with a goal to reach a total of 1 million business customer locations.
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