AT&T on track to connect 3.5M more locations with FTTH in 2018, says analyst

ATT sign
AT&T plans to expand its high-speed internet deployment and reach more than 50 million customer locations with competitive broadband over the next few years.

AT&T could equip an additional 3.5 million sites with FTTH next year, according to Jefferies analysts who met with the telco’s top management this week.

Jefferies said in a research note that the telco’s ongoing FTTH rollout is being met with good customer reception and APRU forecasts.

"AT&T’s FTTH service is performing well with churn lower than anticipated and ARPU largely as expected, supporting a shorter payback on investment than initially anticipated," Jefferies said in a research note. "Build commitments are proceeding ahead of schedule, with an incremental 3.5mn locations coming in 2018."

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From all accounts, AT&T continues to progress with its FTTH build.

At the end of the third quarter, AT&T announced that its latest target market for expansion was Tulsa, Oklahoma, noting that customers in certain select areas of Tulsa, Jenks, Owasso and "surrounding communities" now have access to the ultrafast service. After bringing FTTP to Tulsa, the service provider said it has now deployed gigabit fiber to parts of 55 metro areas nationwide, with plans to reach at least 75 metros eventually.

At that time, AT&T said it expects the fiber footprint expansion to improve churn trends, as it will enable customers to bundle broadband with DirecTV and wireless services, particularly in areas where it only offered copper-based services.

Earlier, the service provider said that upon completing its 12.5 million locations buildout requirement set by the FCC to get approval of its DirecTV deal, it could reach a total of about 14 million FTTP customer locations.

However, FTTP is just one part of AT&T’s overall last-mile broadband strategy. The service provider is also keen on expanding its copper-based broadband footprint using a mix of VDSL2 and Gfast technologies.

John Stephens, CFO of AT&T, told investors during the third-quarter earnings call that AT&T plans to expand its high-speed internet deployment and reach more than 50 million customer locations with competitive broadband over the next few years.

AT&T CFO
John Stephens

“This includes our previously announced plans to reach 14 million customer locations with fiber-to-the-prem, our existing VDSL footprint, where we offer speeds of at least 50 megabits or higher, and the existing 8 million businesses who are either using or within 1,000 feet of existing fiber capabilities,” Stephens said.

AT&T is using Gfast technology to drive fiber-like speeds over copper and existing coax, with a focus on serving MDUs. In August, AT&T began rolling out Gfast-based services in 22 metro markets across the United States, illustrating the service provider’s move to extend higher speed wireline broadband services in premises where it can’t make a business case for all fiber.

In all, AT&T estimates that 80% of the buildings in the U.S. don’t currently have a fiber connection, but have an abundance of coax and copper that can be used to deliver higher broadband speeds.

Unsurprisingly, AT&T will focus on targeting areas where it currently delivers DirecTV service in MDUs that have existing coax to offer 500 Mbps services.