- AT&T is saying goodbye to the old — and on with the new
- The CSP is moving fast on copper retirement with an $850 million deal
- The deal includes a sale-leaseback for 70 COs
AT&T talks a big talk about its fiber broadband ambitions. It’s also putting the pedal to the medal on copper retirement, with a new $850 million deal as the stepping stone.
The operator last week disclosed it signed a sale-leaseback deal of 74 central office (CO) facilities — used to house and connect equipment for copper networks — to real estate developer Reign Capital.
What that means is AT&T will no longer own these COs, but it will make lease payments to Reign Capital for the space it needs to still serve copper customers, who make up around 5% of AT&T’s residential subscriber base.
This move is “great news” for AT&T, said Recon Analytics Principal Roger Entner, as it “monetizes the empty space in prime locations.” It also comes as the company plots to shutter most of its legacy copper network by the end of 2029.
AT&T isn’t the only operator looking to make better use of its old CO buildings. Ziply Fiber for instance is repurposing its legacy assets for enterprise data center colocation. Lumen, which is getting quite busy on the data center front, is doing the same.
With the sale-leaseback deal, AT&T said it hopes to not just cut down operating costs and free up “valuable real estate,” but also reduce the company’s power consumption.
Further dialing up its copper wind-down, AT&T plans to stop selling legacy copper products in about 1,300 wire centers, CEO John Stankey said on Monday’s Q4 earnings call. That’s around a quarter of the company’s total wire centers in its footprint.
“We look forward to working with the Carr FCC to accelerate and advance policies and actions [and] stimulate investment and modernization of the U.S. communications infrastructure,” said Stankey.
To help transition customers off copper, AT&T last year released Phone Advanced, which is essentially a landline phone replacement that works on both the company’s wireless and broadband networks.
Speed bumps on the copper retirement road
While retiring copper would cut AT&T’s operating expenses, Edward Jones analyst David Heger has said the company’s effort still requires “significant negotiation with state and federal regulators to gain full approval.”
Indeed, requirements to maintain old copper networks have been a thorn in the side for AT&T and other operators like Brightspeed and Consolidated Communications. They’re building out fiber but need to keep copper lines running in case fiber can’t reach customers living in remote locations. Copper theft is another pain point, as it can take longer to repair and replace these cables than it would for fiber — resulting in longer service disruptions.
For AT&T’s part, Entner said he thinks the operator will succeed in its copper retirement goals, but noted, “The only hard state is California.” There, AT&T wanted out of its Carrier of Last Resort (COLR) duties, but the state refused.
Addressing copper concerns is one area where the Federal Communications Commission (FCC) could have a “significant market impact,” New Street Research policy analyst Blair Levin has said.
Chairman Brendan Carr has been vocal about many telecom issues, but copper retirement is one subject he hasn’t talked too much about — yet.