AT&T Fiber Build-Outs:

For the first quarter 2019, AT&T reported 297,000 AT&T fiber customer gains and 45,000 broadband net adds, with broadband revenue growing more than 8%.

As part of its 2015 acquisition of DirecTV, the FCC required that AT&T expand its deployment of its high-speed, fiber-optic broadband internet service to 12.5 million customer locations, as well as to E-rate eligible schools and libraries, by July 2019.

Speaking Wednesday, June 5th at the Credit Suisse 21st Annual Communications Conference (see webcast url below), AT&T Communications CEO John Donovan said that AT&T now has a large inventory of fiber-based assets and that their fiber build-out has already reached 14.5 million customer locations.

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Editor’s Note:

Indeed, AT&T is offering fiber based internet in the SF Bay area via a KCBS radio commercial.  However, they say availability is limited.

AT&T webcast url:  https://event.webcasts.com/starthere.jsp?ei=1245728&tp_key=70a2932a9e&tp_special=8

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AT&T will be a bit slower in future fiber build-outs.  Donovan said “We’ll continue to invest in fiber but we’ll do it based on the incremental, economic case. We’re not running to any household target.”

While it used to take AT&T 36 months to get fiber into roughly 30% of a market, AT&T can now reach 50% to 55% in 24 months time, according to Donovan.

“So I really like the cadence and the momentum that we’ve got in our brand, which is AT&T Fiber,” he said. “Where we have fiber we’re doing exceedingly well. Where we have slower speeds, sub 40 megabits per second, that’s where the majority of our churn is. But right now if you look at this year, we will add a million high-speed fiber broadband subs. And roughly two thirds of those come from cable. So we’re doing extremely well.”

AT&T’s pre-standard “5G” deployments, which will be launched in 29 cities by the end of the year, also benefit from the fiber build-out as fiber is needed for high bandwidth backhaul.  Note yet again that an AT&T representative chairs ITU-R WP 5D where IMT 2020 (radio aspects) is being standardized.

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Moffett-Nathanson report: “U.S. Broadband: Where Are AT&T Fiber’s Subscriber Gains Coming From?“

However, LightReading says that the bulk of AT&T Fiber subscriber growth is coming from AT&T.  AT&T Fiber’s subscriber base is growing rapidly.  AT&T disclosed that AT&T Fiber — the expanding FTTP portion of its footprint capable of delivering speeds up to 1 Gbit/s — gained about 1.1 million subscribers over the past year, bringing the total AT&T Fiber subscriber base to about 3.1 million.

However, AT&T appears to be benefiting largely from speed upgrades from its existing high-speed Internet customers rather than by stealing share away from cable rivals, according to a new subscribers only analysis of the U.S. broadband market by MoffettNathanson titled “U.S. Broadband: Where Are AT&T Fiber’s Subscriber Gains Coming From?”

“The short answer appears to be… from AT&T itself,” wrote Craig Moffett, lead analyst with Moffett-Nathanson, surmising that the bulk of new AT&T Fiber subs are coming from the company’s own broadband subscriber base, usually in the form of upgrades or migrations of existing U-verse customers.

Moffet said AT&T’s broader “IP Broadband” category” — which includes AT&T Fiber and U-verse/fiber-to-the-neighborhood customers — has posted comparatively modest subscriber gains over the past year.

Source: Company reports, MoffettNathanson estimates and analysis

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“Therefore, unless AT&T’s U-verse broadband customers are suddenly fleeing for other providers in droves (unlikely), one obvious possibility is that many, or even most, of AT&T’s fiber gains are simply migrations of their existing customer base from one product to another,” Moffett explained, estimating that about 81% of AT&T Fiber net adds over Q1 2018 to Q1 2019 were migrations from U-verse.

Moffett said that migration story isn’t necessarily a surprising one. While the initial U-verse deployments in the early 2000s targeted some of the densest parts of the telco’s footprint, AT&T has predictably targeted FTTP deployments in many of the same dense areas, he added.

Also of note: AT&T Fiber’s base tier is $60 per month for a symmetrical 80 Mbit/s to 100 Mbit/s, the same as the U-verse standalone broadband product. “Even if a customer doesn’t really need faster upload speeds, if AT&T offers to upgrade a customer for no added cost why wouldn’t they switch?” Moffett asks.

And though AT&T Fiber subscribers appear to be largely coming way of upgrades or migrations of existing AT&T broadband subs, Moffett said that doesn’t mean that AT&T Fiber won’t have a bigger impact on competitors (like cable operators) eventually. “It’s just that it’s not having much impact yet,” he wrote, adding that AT&T Fiber’s expansion, expected to pass 14 million residential and small business locations by June 2019, remains a threat to cable that’s “worth watching.”

According to Moffett’s report, US MSOs added 1.04 million broadband subs in Q1, up from 962,000 in the year-ago quarter. US telcos added just 23,000 broadband subs in Q1 fueled by ongoing depletion of legacy DSL subs, but improved from a year-ago loss of 44,000 customers. The US satellite broadband sector, still a small player, added 15,000 subs in the quarter.

Combined, US broadband providers added 1.07 million subs in Q1 — a year-on-year growth rate of 2.9% — for a grand total of 107.81 million subs. Broken down by provider type, US cable led with 71.58 million, followed by the telcos (34.4 million) and satellite (1.82 million).