AT&T's Motives for Fast Fiber Expansion Come Under Scrutiny

 
 
By Michelle Maisto  |  Posted 2014-05-05 Email Print this article Print
 
 
 
 
 
 
 

NEWS ANALYSIS: While some question AT&T’s motives in announcing plans to expand its fiber network, it’s hard to argue with the offer of 1G bps speeds.

AT&T’s April announcement that it has eyes on 100 candidate cities and municipalities where it would like to expand its fiber network that's capable of 1 Gbps speeds brought out a few calls of “astroturfing”—the practice of masking the moneyed or influential backers of an effort while pretending grassroots support is driving it.

DSL Reports, for example, called the announcement a “bluff of immense proportion.”

AT&T would like for people to think they’re “engaged in a massive new deployment of fiber to the home,” when what they’re really doing is upgrading a few deployments, where fiber was already present and service was capped at DSL speeds, said the report.

U-verse with Gigapower, it added, “is a show pony designed to help the company pretend they’re not being outmaneuvered in their core business by a search engine company.”

And indeed, that last part is likely the primary motivator behind AT&T’s announcement. The company is aggressively expanding its reach well beyond wireless services and has called the “cost dynamics” of fiber “really encouraging.” But the biggest prompt behind the press release was likely Google’s announced intentions to expand Google Fiber to 34 more cities.

After Google announced plans to bring Fiber to Austin, Texas, AT&T quickly followed. Ditto for North Carolina.

“AT&T's new service appears designed to directly challenge Google Fiber since the company is planning services for most of the same markets as Google and says it is also considering services in urban areas where Google remains uncommitted,” Charles King, principal analyst with PundIT, told eWEEK.

“Interestingly enough,” he continued, AT&T is also reportedly resorting to some of the same regulatory arm twisting Google has been accused of—mainly in demanding that local regulators allow services to be rolled-out piecemeal and according to an area's potential profitability (rather than deploying services across entire communities as cable operators typically do).”

But even the latter isn’t exactly an area for calling foul.

“AT&T has no obligation to roll out broadband to everyone, let alone high-speed broadband. It’s entirely up to AT&T where it wants to roll out GigaPower, and it’s entitled to do it based on where it makes the most economic sense,” Jan Dawson, chief analyst with Jackdaw Research, told eWEEK.

“The carriers have argued all along that Google’s Fiber ‘experiment’ was unfair because it cherry-picked communities where it was particularly economical to provide service,” Dawson continued. “Now they’re simply doing the same and extracting the same concessions from municipalities in the process. Verizon has long focused its FiOS rollout on the areas where it felt it could make money, and everyone else will do the same.”

Accusations that AT&T is pretending to lay down fiber, instead of letting more come out of the spigot where the hose is already in place, are also kind of moot. AT&T said in its April 21 press release that the fiber build-out isn’t expected to impact its 2014 “capital investment plans.”

“We have a long history of re-investing to bring our customers the latest benefits of technology, and in this case the economics make sense,” an AT&T spokesperson told eWEEK.

“Building on the existing capabilities of our network, the cost to deploy fiber is less with advances in civil construction, power and project management,” he added. “Municipal policies that lower our cost of permitting, energy and construction practices play a significant role in our deployment decisions.”

Google has also said that it provides a checklist to cities, making clear how the cities can speed along the process or make themselves more likely to receive the service. (Streamlining the permitting process is on the list.)

While AT&T no doubt likes to present itself as anxious to meet a national need and support innovation—more than publicly air its intentions to beat Google at this game—it's hard to find fault with its efforts if the bottom line is that more people will have access to very high-speed Internet service.

Comcast, seeking approval to merge with Time Warner Cable, has insisted that the deal won’t reduce competition in the industry because the two don’t compete—which is exactly the problem. In too much of the United States, consumers only have one option for high-speed Internet services.

“What consumers will care about is whether faster speeds and better services are available, and it certainly looks like they will be in at least some of those cities,” said Dawson, of the AT&T announcement. “Consumers don’t care about the architecture, how much it will cost or any of this other stuff. It’s inside baseball, frankly.”

 

Follow Michelle Maisto on Twitter.

 
 
 
 
 
 
 
 
 
 
 

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