I watched the entire webcast of AT&T’s analyst conference yesterday, where the big news was the company’s plan to invest $14 billion over three years to bring broadband to 300 million customers located in largely rural areas. We reported on the basic facts about the company’s new program, dubbed Project Velocity IP (VIP) yesterday, but today I thought I’d take a deeper dive into the topic, drawing on some of the additional details that were revealed at yesterday’s event.
The Eureka Springs, Ark. example
At yesterday’s event, AT&T Senior Executive Vice President of Technology and Network Operations John Donovan pointed to Eureka Springs, Ark. as an example of a community that will be receiving new broadband options as part of AT&T’s expansion plans. I did a Google search and found that the town is a county seat with a population just under 2,000.
As Donovan explained, AT&T’s plans in Eureka Springs are three-fold. The company plans to expand broadband with IP into the town center, to extend IP broadband to remote population centers using fiber from cellsites and to use LTE to provide wireless voice and data in outlying areas.
Wireless and wireline synergies were a key theme for AT&T yesterday — and the idea of using cellsite fiber to also carry residential broadband traffic makes a lot of sense. On the flip side, AT&T also anticipates using fiber that was deployed to support its U-verse residential broadband offering to also support small cell deployments. Donovan noted that in Orange County, Calif. about 40% of the small cells the company plans to deploy can be served with U-verse fiber for backhaul.
AT&T’s plan to serve outlying areas only with traditional mobile LTE service was a disappointment, however. Some industry observers had speculated that the company might offer a fixed LTE offering similar to Verizon’s HomeFusion service, which includes a special antenna designed to improve signal strength. But that sort of offering is not part of AT&T’s plan, executives said.
Connect America Fund impact?
What I’m wondering now is whether people in AT&T’s local service territory whose only broadband option is mobile LTE will be considered as “served” households when the FCC gets around to implementing Phase 2 of the Connect America Fund. That program aims to ensure that all Americans have access to broadband at speeds of at least 4 Mbps downstream and 1 Mbps upstream – and any of the nation’s larger price cap carriers that have not deployed broadband to all of their customers by the time the program kicks off could be in danger of essentially losing those lines in a reverse auction. The incumbent price cap carriers would first get a right of first refusal to accept Connect America Fund support at levels calculated through a cost model. But AT&T did not participate in Phase 1 of the program and may not be interested in Phase 2 either. The company did not respond to questions from Telecompetitor about how the CAF program fits in with its expansion plans.
LTE should be able to meet the CAF bandwidth target. But it’s not clear if LTE usage caps would prevent homes that can only get LTE from being considered as “served” by broadband. On the other hand, the FCC would have a strong motivation to let LTE slide because limited CAF funds could go a lot further if the number of unserved homes were minimized.
An AT&T spokeperson did say in an email to us that “we fully intend to serve our entire customer base and we will not stop serving anyone.”
AT&T embraces small cells
Although AT&T’s rural wireless strategy was disappointing, the carrier is considerably more ambitious with its small cell deployment plans which, according to the company, will comprise 50% of its cellsite densification plans by 2015. The company also noted that 90% of its mobile traffic will be on Ethernet backhaul by the end of this year, with an additional 5% gaining Ethernet backhaul by 2015.
Broadband speed upgrades
AT&T has taken some heat for not deploying fiber all the way to the end user as part of its U-verse upgrades. But the company has some fairly ambitious plans for boosting the speeds it can deliver using its DSL infrastructure. The company now plans to offer speeds as high as 75 Mbps to 90% of its U-verse triple play customers, including 75% who can get speeds up to 100 Mbps. Almost 80% of customers served through AT&T’s IPDSLAM technology (i.e. U-verse without video) will be able to get speeds up to 45 Mbps, including 50% who will be able to get speeds up to 75 Mbps.
AT&T will leverage a range of technologies – including pair bonding, vectoring and rate adaption to support the higher speeds, Donovan said.
Inching onto other carriers’ turf
AT&T’s announcement yesterday that it will take its Wireless Home Phone landline replacement offering and its Digital Life home monitoring and automation service nationwide tended to get lost amid the investment news. Nevertheless these are important developments in that AT&T will be competing directly with other price cap carriers on their own turf. Traditionally that was something the carriers avoided, believing that they would simple erode one another’s customer bases.
Verizon fired the first shot across the bow when it made HomeFusion available anywhere it offers LTE. Perhaps one reason AT&T hasn’t launched a similar offering is that its LTE deployment is not yet as broad as Verizon’s. But Wireless HomePhone at least gives AT&T a nationwide fixed wireless voice option.
AT&T’s Digital Life offering could be particularly disruptive in that it uses 3G for communications to the central monitoring station, facilitating AT&T’s ability to launch it nationwide. Home monitoring and automation offerings from some other carriers and cable companies require a landline broadband connection — and although some of those companies say customers can use broadband from any carrier, those companies to date have only launched service within their own landline broadband footprint.
One thought on “A Deeper Dive on AT&T’s Investment Plans”
The key phrase in all of this is "our customer base". A lot of what AT&T talked about the other day had to do with their customer base in areas where they are the landline provider. That is key. Where they are not the landline provider, they won't be doing much, according to my reading of the statements. 99% of AT&T's wireless service here in Oklahoma is in areas where they are also the landline provider. That is also where they have upgraded their entire system to HSPA+ with Enhanced Backhaul "4G" and are building LTE. In areas where they are not the landline provider, they only provide 2G/EDGE coverage. I hope I am misunderstanding their statement, but I don't think I am.