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    AT&T CEO Stephenson Talks Comcast, Fiber, Spectrum and Project Stream

    By
    Michelle Maisto
    -
    March 9, 2014
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      AT&T CEO Randall Stephenson, speaking at the Morgan Stanley Technology, Media and Telecom Conference March 6, shared his thinking about the year ahead, including Comcast’s $45 billion proposed buyout of Time Warner cable and the spectrum auctions planned for mid-2015.

      “We’ve spent a lot of time, obviously, reviewing the [Comcast] transaction and it creates an impressive business. In fact, it’s a business that’s going to cover 80 percent of the households in the U.S. … and it’s going to be vertically integrated with content.”

      Stephenson said he expects the deal will be aggressively reviewed by regulators but ultimately pass—as well as compete with AT&T’s own plans.

      In December, AT&T launched U-verse with GigaPower, an all-fiber Internet network, in the city of Austin, Texas. This summer, it will expand the technology to Dallas, and continue expanding it. Building out a consumer broadband is a final step in the Project Velocity IP (VIP) plan AT&T introduced in November 2012.

      “Some people question, ‘Do you really wanted to invest that much into last mile capability?’ and I think we are proving that was the right decision. We are having terrific success with it.”

      In light of AT&T’s new competitor in the space, Stephenson said AT&T plans to be “more aggressive and assertive” as it deploys the technology around the country and especially when it comes to deploying fiber to businesses.

      “We are going to hit 1 million new business locations with fiber this year. IP broadband, our Ethernet deployments are going great. In fact, we have a category, Strategic Services and Business, we call it, and it’s basically VPN, Ethernet, fiber-based solutions IP broadband,” Stephenson continued.

      “That is now a $9 billion revenue stream. Coming into this year, that revenue stream was growing by 10 percent, exiting this year it’s [going to be] growing over 17 percent and it’s had a nice momentum as we walk through the course of the year. So we’re very encouraged as we move into next year. Our equation on this is we need to get those Strategic Services growing over 20 percent and beyond 30 percent of total revenues. Once we do that, we have a sustainable growth business on the Enterprise business side.”

      AT&T will also face competition from Google, which is also working on fiber deployments and made the fiber-friendly Austin, Texas, its second deployment city. In February, Google announced plans to expand Google Fiber to 34 additional communities in nine metro areas.

      It All Comes Down to Video

      Stephenson said he feels pretty good about AT&T’s spectrum situation for the next few years, but with the pace video is growing at, there’s no time to rest contented.

      “The data explosion is now turning into a video explosion, and video is what is now driving the traffic on the network. And it’s impressive, the level of video that’s traversing these networks. We think it’s a wonderful growth opportunity for the industry,” said Stephenson.

      “In fact, we have a Project Stream that is all about one thing and that is equipping the mobile network to accommodate video. It’s re-architecting a number of elements of the network to accommodate video, and obviously LTE broadcast technology is going to be a vital part of that. But that said, we are going to need—the industry is going to need—another round of spectrum.”

      The Federal Communications Commission (FCC) and new Chairman Tom Wheeler have a “very, very big” task ahead of them, and it’s going to be something of a miracle to pull it off, said Stephenson.

      “Tom Wheeler is a very bright man. He understands what he has in front of him, but to get the buyers and the sellers at a place where the clearing prices create blocks of spectrum that are truly a value to the carriers is going to be difficult,” he added. “I’m hopeful that this thing comes off in 2015. I think the industry is very hopeful that it comes off. We need it. The industry is going to need it. But time will tell.”

      EDITOR’S NOTE: This text has been corrected to reflect that AT&T’s project is called Project Stream, not Project Xtreme.

      Follow Michelle Maisto on Twitter.

      Michelle Maisto
      Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.
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