Cable operators have talked a big game about the faster broadband speeds their DOCSIS upgrades will bring, but AT&T EVP of Technology Operations Chris Sambar told Fierce he’s not even remotely worried they’ll pose a competitive threat to its fiber products.
“I think that to get to DOCSIS 4 they’re going to have to spend a lot of money and I think they know it. I think that’s why I think they keep messing around with multi-gig speeds that are asymmetrical and have terrible uploads,” he said. “We already have 10 gigabit speeds working in the lab, we announced that late last year. So I believe we are already ahead of them on multi-gigabit symmetrical. We’ll be ahead of them on 10-gig symmetrical by years.”
“I almost feel bad for them,” he added. Sambar continued he has “a lot of confidence” in AT&T’s ability to defend against cable and indicated it has plans to go on the offense.
AT&T last year unveiled a goal to double its fiber footprint to 30 million customer locations by end-2025. In December, AT&T CEO John Stankey stated the operator was looking beyond just edge outs and assessing strategic opportunities to extend fiber to greenfield markets outside of its traditional ILEC footprint.
Sambar said these could include areas where a telco LEC hasn’t already deployed and doesn’t plan to rollout fiber and the only other option is cable. Asked what kind of markets it might target, Sambar said its moves will largely depend on AT&T’s calculations around achievable penetration rates and return on capital spent.
“If you look at the net promoter scores that we pay attention to on fiber compared to cable internet, we see between 3 and 5x higher customer satisfaction and net promoter scores on fiber than we do on cable,” he explained. “People are increasingly dissatisfied with cable, especially as we innovate and make our products better and better.”
Other moves outside of AT&T’s footprint could be fueled by government funding from some of the broadband initiatives recently passed by Congress. In addition to the $65 billion allocated for broadband in November’s Infrastructure Investment and Jobs Act, there are also billions being made available as states allocate funding they received as part of the earlier American Rescue Plan Act.
Sambar told Fierce “there is no limit to how much” funding it’ll apply for given the glut of money on the table. Thus far, he said AT&T has scoped out well over $1 billion in funding opportunities it believes are good options to apply for, but said it’s still in the early stages of its assessment.
Pursuing funding opportunities outside its traditional footprint makes sense because AT&T can reuse any fiber it builds for those projects to connect its wireless towers and business customers.
“Out of AT&T’s footprint I don’t have a lot of fiber, but I’m leasing it from somebody, I’m leasing it from a competitor” to connect towers and enterprise clients, he explained. “For me to go in there and bid and expand my LEC footprint and become an operator there for wired broadband fiber is great for me because I can take all of those leased circuits that are on somebody else’s fiber and I can put all that on my AT&T fiber…my fiber economics are really, really good because I’m putting a lot of different endpoints on that fiber.”
Speaking about its fiber build more generally, Sambar said AT&T will cover most but not all of its existing DSL footprint, with market decisions based on economic factors and expected penetration rates. He acknowledged this could leave it open to attacks in some of the areas where it’s not planning an upgrade.
“I have no doubt that some competitors will view our footprint as an opportunity, just as we will view their footprint as an opportunity,” he concluded.
AT&T passed 2.6 million new locations with fiber in 2021. It did not provide a target for 2022 on its recent Q4 earnings call, but analysts at New Street Reseach predicted it would reach an additional 3.5 million this year on the way to its 30 million target.