AT&T to Move Copper Customers to Wireless

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AT&T plans to remove copper infrastructure without upgrading customers to fiber, it announced at its Analyst & Investor Day event, saving billions of dollars but potentially leaving millions without a wireline Internet connection. “We have many square miles outside of our fiber footprint, that we have very little to no demand that’s existing in this part of our footprint,” said Jeffery Scott McElfresh, CEO of AT&T Communications LLC. “We are transitioning customers that are in that part of the footprint to a better product served by wireless in many instances.”

The removal of copper is part of a long-term effort to reduce the copper footprint 50 percent by 2025, increasing speeds and rationalizing a cost base of $6 billion. “As we increase speed and pace in our copper sunset activities across our entire footprint, those savings start to reveal themselves on the bottom line of our multi-year plan,” McElfresh said. “Now controlling the timing and profitability curve while we migrate customers to our next-generation fiber and 5G services is essential to our transformation.” 

From this effort, AT&T expects incremental transformation savings of $1 billion in 2022 and $1.5 billion in 2023, driven primarily by the optimization of field dispatch and customer service, energy and real estate savings from the continued transition from our legacy copper network, and consolidation of back-end platforms and rationalization, according to McElfresh. “It’s about simplicity and focus,” he said. “These are good ways to think about what we’re doing to transform our legacy or copper network footprint and all the fixed and variable costs that go along with running and maintaining a very large copper network that’s carried the load for decades.”

The result of AT&T’s simplification will be that around 30 million locations could lose access to their copper lines without obtaining a wireline substitute, according to Jonathan Chaplin, analyst, New Wireless Research. This would include shutting down the 15 million “long loop” lines which would be provided a 5G fixed wireless service. These numbers include locations passed, not homes served. How local governments will react is unknown at this time, according to New Street Research. 

“If AT&T intends on substituting fixed wireless connections for copper and the fixed wireless meets the functional test, then again, there does not appear to be a legal problem, but if doing so makes it difficult for the state to fund a wireline network in the area, it may cause a political and policy problem,” Chaplin wrote in an investor note. 

McElfresh said the majority of the states in AT&T’s 21-state footprint have signed off on the fiber strategy, but Chaplin questioned whether the size of the retirements might precipitate a political backlash. However, public reaction may be offset by the federal money flowing to rural areas to bolster broadband deployment and private efforts for next generation wireless, according to Chaplin. That said, technological transitions are tricky and AT&T’s timing is not tied to the new federally funded builds in unserved and underserved areas.

“We know that AT&T wishes to utilize the federal dollars to expand the areas it reaches by fiber. Our point is that the way AT&T times the retirement may impact where and how much of the federal broadband dollars it receives,” Chaplin wrote.

By J. Sharpe Smith, Inside Tower Technology Editor

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