It's not entirely clear how AT&T plans to reach an additional 20 million homes, but there are a number of possibilities, including its fiber joint venture and BEAD funding. (AT&T)
AT&T aims to deploy fiber optic broadband to 30 million locations by the end of 2025. But its ultimate goal could be much higher.
Chief Operating Officer Jeff McElfresh said at an investor conference this week that demand for fiber remains high despite the volatile economic environment and that its rollout is still providing the right level of returns. With that in mind, he added that the 30 million target it set in May 2021 "is not the full extent of the market opportunity as I see it." "We're going to be on this journey for a while. I mean, we think there are 50 million urban and suburban homes in the U.S. that need fiber," McElfresh said. "We're fighting a constant battle. We're not going to sit here and just look at this year or next year."
It's not entirely clear how AT&T plans to reach an additional 20 million homes, but there are several possibilities.
First, the carrier recently announced plans to bring fiber to an additional 1.5 million locations outside its ILEC footprint through a joint venture with private equity firm BlackRock Alternatives. AT&T CEO John Stankey said that if the business model for the joint venture can be successfully demonstrated, the adoption rate could go up.
McElfresh also pointed to the $42.5 billion Broadband Equity, Access and Deployment (BEAD) program as another avenue for expansion beyond its goals, reiterating the carrier's previously expressed interest in the grant.
"BEAD gives you the opportunity to fill in areas that economically you may not have prioritized," he explained. That includes areas within its legacy copper footprint.
AT&T says it wants to phase out 50 percent of its copper footprint by 2025 and reinvest the savings from lower network maintenance costs in more fiber.
"If you think about the actual cost of carrying 511,000 square miles of underutilized copper network -- think about all the access circuits, think about all the maintenance and support, think about all the energy we use -- we're in the early stages of the wireline transformation. -We're in the early stages of a wireline retrofit," McElfresh said. "So over the next two to three years, you'll see us taking costs from that part of the franchise and reinvesting them into the future of the company, and that should be a good virtuous cycle that generates a good return for investors."
BEAD funds aren't expected to start actually flowing from the states to the carriers until next year. But in the meantime, AT&T is pursuing state and local funding opportunities. AT&T executives previously told Fierce that the carrier has identified more than $1 billion in major grant opportunities, but said there is no limit to the amount of funding it may seek.
