AT&T made headlines in August when it became the sixth – yes, sixth – fiber provider to announce deployment plans for Mesa, Arizona. While it might seem strange for the operator to target such a crowded market, it appears that challenge could be exactly the point.
Speaking at an investor conference on Tuesday, AT&T COO Jeff McElfresh indicated the operator is experimenting in markets like Mesa to see what happens when it flexes its fiber muscle outside of its traditional ILEC footprint.
“There's some attractive markets” where AT&T isn’t the legacy wireline incumbent but has a market presence with its wireless service, he explained. “We want to prove to you and ourselves that we can actually achieve the returns we believe are possible by expanding our fiber out of footprint.”
McElfresh declined to specify how many out-of-footprint passings it might eventually tackle, but noted “there’s plenty of opportunity.” And while AT&T isn’t the only one pursuing that opportunity, he said the operator has the scale to build quickly and efficiently and absorb the hefty upfront capital investment fiber demands.
“This is hard work. This isn't easy to do. Others have tried. Large companies have tried. They've left some assets stranded in markets A, B and C,” he stated. “You’ve got to have the physical infrastructure like a company like AT&T has to bear the brunt of what a large fiber investment really requires.”
The idea of AT&T building outside its traditional territory is not new. AT&T CEO John Stankey floated the possibility during an investor conference in December 2021. At the time, he indicated it might target areas where fiber deployments could boost its wireless and enterprise businesses.
McElfresh added AT&T believes can defray the cost of some of its out-of-footprint forays with grants from the billions in broadband funding coming down the pipeline. Such subsidies, he said, would change the return profile of its fiber builds.
So far this year, AT&T has secured grant awards for fiber projects in Indiana, Kentucky, Louisiana, Tennessee and Texas.
But grant projects and potential out-of-footprint expansion aside, AT&T has its hands full with a plan to reach 30 million locations with fiber by 2025. It ended Q3 with 18.5 million passings.
“As we sit here today, there are more or less about 10,000 neighborhoods where women and men are digging dirt, laying the fiber and installing service today across this nation. So, it's a very large-scale operation,” McElfresh concluded.