Maintaining fiber install costs
While AT&T knows annual labor costs are an inevitable part of building a fiber network, the modular fiber technology eases the pain of regular labor price increases.
AT&T noted that labor is the biggest cost when deploying fiber. Since 2023, AT&T’s total cost to build has risen by less than 2%.
Desroches said that the “ability to make the installation is much more modular and making sure we're getting it right the first time has been a real efficiency gain as we've scaled the fiber network.”
Scaling its fiber reach to more subscribers and locations continued in the second quarter.
As of the end of the first quarter, AT&T’s fiber network covered 23.8 million consumer locations and is expected to pass over 30 million locations by mid-year. At that time, AT&T reaffirmed its broader target of reaching more than 50 million fiber locations by 2029 through a combination of organic buildouts, GigaPower, and other commercial open-access agreements.
The company can also leverage its size to enhance its buying power with key suppliers. In October 2024, AT&T secured a multi-year purchase agreement with Corning to provide fiber, cable, and connectivity solutions that will enable it to expand its fiber broadband network and meet the build-out requirements of the Broadband Equity, Access, and Deployment program (BEAD).
As Corning’s most significant customer with preferential volume status for Corning’s connectivity solutions, AT&T can accelerate its network expansion and enhance network performance while minimizing deployment costs. The agreement, valued at over $1 billion, builds on the decades-long collaboration between AT&T and Corning.
“We're able to get really good unit pricing on our materials as well,” Desroches said. “I wouldn't underestimate the benefit of that because of our scale. And our suppliers will make sure that we are getting the best possible deal. So, all those things together are really what drives the overall cost equation, but we feel good about being able to continue to manage that well.”
Bundling fiber and wireless
As AT&T scales its fiber reach within and outside of its traditional territories via the Lumen deal and Gigapower, it will be able to reach more consumers with a bundle of wireless and fiber broadband.
Within its fiber footprint, AT&T’s wireless share is 500 basis points higher.
Desroches said that wireless is another return factor for its fiber installations. “When we first started to greenlight the cases for fiber installation, we never considered wireless to be a part of it,” he said. “In fact, today, when the team does their execution in figuring out what we can return on it. Wireless is just an added component. It's not the core of the case.”
To further its bond via its converged/bundled strategy, the provider offers the AT&T Guarantee, which aims to provide reliable connectivity, competitive deals, and prompt customer service. Specifically, the guarantee includes bill credits for service interruptions, deals on smartphones, and a commitment to connect customers with tech support within 5 minutes or offer a callback.
Since launching the AT&T Guarantee in January, it has seen improved net promoter scores among its wireless and fiber customers following a network event.
Desroches said that the ongoing uptick in wireless subscriptions, where it has fiber, makes the fiber returns even more attractive.
“Look, over time, does it continue to get a little more expensive to build? Yeah,” he said. “But the cases are so accretive that I don't expect at any point in the foreseeable future for me to say, No, we're not going to build anymore because we're not getting the return on it.”
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