Stop the Cap
directs your attention to the fact that AT&T's recent talk about network upgrades have started making investors nervous. AT&T has traditionally put investor returns far ahead of fixed-line network infrastructure investment or customer support, and their recent announcement of 1 Gbps fiber to the home service in Austin
in particular seems to have thrown some investors for a loop. Ovum Research senior analyst Kamalini Ganguly, for example, seems confused as to how AT&T intends to pay for what AT&T promises are substantial upgrades
The jump from 45/6Mbps to 1/1Gbps for consumers raises questions around its strategy. The cost issue looms large. Deploying 1Gbps point-to-point FTTH will continue to cost much more than GPON FTTH, which in turn still costs a lot more than FTTN – even with vectoring. AT&T needs to explain better what has changed from last year in the business case for FTTH over FTTN.
So where's the disconnect? Ganguly doesn't appear to understand that AT&T's network upgrades on the fixed line side of their heavily promoted "Project VIP" initiative are mostly (with a few key exceptions) theatrical in nature. AKA fiber to the press release.
For one, AT&T appears to have done some mathematics magic in terms of the number of U-Verse users that will see upgrades as part of the fixed-line budget upgrade tally for Project VIP. As noted previously
, the telco is using fuzzy-if-not-entirely-misleading math and counting long-ago-slated U-Verse expansion efforts in places they ran into bureaucratic headaches (like San Francisco) as new expansion. With 75 and 100 Mbps speeds in the pipeline
that's not to say some users won't see improvements, but they're of the very slow-and-steady variety most investors like.
There's also the fact that while AT&T insists their "GigaPower" 1 Gbps effort in Austin will be a large scale affair, it's primarily going to be aimed at select, high-end development communities moving forward. In context, these heavier infrastructure investments will be very selective in nature and investment-phobic investors don't have much to worry about. It's a different story for consumers, as the "tl;dr" version is that AT&T is promoting largely phantom fixed-line network expansion to sell regulators on their attempt to gut state regulations so they can walk away from tens of millions of DSL users
they don't want to upgrade.