The news last week about AT&T’s Gigapower joint venture with investment firm BlackRock was not a total surprise to anyone who heard or read comments from one AT&T executive earlier this month. Addressing investors at a conference, AT&T COO Jeff McElfresh said the company was exploring options for offering fiber broadband outside its traditional local service territory — and those are exactly the areas that the Gigapower network will serve.
What was more surprising was that AT&T opted to build the network through a joint venture. Another surprise: The network, which will serve 1.5 million locations, will use an open access approach in which other providers will be able to offer service over the network.
But while the joint venture open access approach may be surprising, it would seem to be quite logical. AT&T doesn’t have to foot the whole bill for building the network and it doesn’t have to rely on sales to its own end users to recover costs. In other words, it’s a potentially lower-risk approach.
AT&T BlackRock Gigapower JV
The announcement about Gigapower reiterated some themes that McElfresh relayed to investors at the investor conference in early December. At that time, he pointed to the company’s nationwide wireless presence as an asset for potential out-of-region expansion – a theme that was also referenced in the Gigapower announcement, which said that AT&T “will leverage its nationwide wireless sales capabilities to sell fiber to customers in Gigapower territories.”
As McElfresh noted, out-of-region fiber expansion will give AT&T representatives in those areas something else to sell besides wireless.
Unsurprisingly, AT&T did not reveal specifics about the out-of-region markets where the Gigapower network will be built. But some other McElfresh comments from the investor conference suggest those markets won’t be limited to areas that lack a strong cable and competitive provider.
“This is a scale game, this is hard work – this isn’t easy to do,” McElfresh said. “Others have tried. Large companies have tried. . . You’ve got to have the physical infrastructure like AT&T has to bear the brunt of what a large fiber investment really requires.”
He also noted that some large companies that tried and failed have left some stranded assets, which suggests that the company might be looking at acquiring some of those assets out of the region.
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Out-of-region fiber expansion will give AT&T representatives in those areas something else to sell besides wireless.