- One could argue that the race to fiber began with BEAD
- But if there was any doubt about a race to fiber, that was dispelled when Verizon announced it was buying Frontier Communications
- Now, AT&T is doubling down on its fiber ambitions with 4 new partnerships and a plan to expand the Gigapower JV build
Immediately after Verizon announced last week that it was buying Frontier Communications, people started saying “the race for fiber assets is on!” And perhaps they are right because yesterday AT&T and BlackRock announced they want to grow their Gigapower fiber joint venture more than originally planned. AT&T also announced four new partnerships to expand its fiber network faster.
And this morning at the Goldman Sachs Communacopia conference, AT&T CEO John Stankey spoke about AT&T’s fiber ambitions. He said, “My scale ambition is to be first and biggest as we go through this cycle that allows us to call more shots as the industry forms and plays over time.”
In terms of the Gigapower joint venture, the company said it is looking for opportunities to expand its fiber footprint beyond the initial 1.5 million locations announced in December 2022. “This Gigapower expansion may include growth in its existing geographies as well as the addition of new geographies,” stated AT&T and BlackRock.
Gigapower is an open access networking JV, meaning that AT&T and BlackRock are deploying the fiber, but they’re looking for multiple internet service provider (ISP) tenants to lease the network. The JV is ramping so well that it’s now targeting additional geographies for growth.
AT&T also said yesterday it is pursuing other opportunities where it will be leasing open-access networks in areas not served by AT&T or Gigapower. To that end, AT&T has struck four new agreements with commercial open-access providers: Boldyn Networks, Digital Infrastructure Group, PRIME FiBER and Ubiquity.
AT&T said it selected each company because they provide opportunities to expand AT&T Fiber to new service areas without existing fiber options.
- With Boldyn Networks, AT&T will focus on providing network infrastructure at more than 75 U.S. Armed Forces bases nationwide across all military branches. Boldyn Networks is initially building at Fort Bliss in El Paso, Texas, and joint bases in San Antonio, Texas.
- Digital Infrastructure Group is a U.S. and Canada-based wholesale fiber developer, which is currently expanding into new regions across the U.S.
- PRIME FiBER is a new open-access fiber provider. AT&T says its agreement with PRIME FiBER builds on its long-time relationship with Prime Communications, which is AT&T’s largest authorized retailer. PRIME FiBER is initially building in Florida.
- And finally, Ubiquity will be providing access for AT&T to its multifamily communities and private homeowners’ associations on a targeted basis nationally. It will also build exclusive greenfield areas for AT&T, initially in Minnesota.
In addition to the Gigapower expansion and the wholesale agreements with the four named companies, AT&T continues to organically build fiber at scale in-footprint and remains on track to pass 30 million locations with fiber by the end of 2025. The company says the better-than-expected returns it’s seeing on its fiber investment may cause it to go beyond the 30-million target to potentially 45 million locations passed.
Today at Communacopia, Stankey said that AT&T “kind of framed the JV model” with Gigapower.
He also said AT&T will make a good tenant on others’ open-access networks because it’s already developed the necessary back-office skills to operate on a network with other ISPS.
In summary, Stankey said AT&T’s fiber strategy includes building more fiber, doing the JV with Gigapower and creating partnerships with other open-access fiber providers.
The race for fiber is on!
One could argue that the race to fiber began when the U.S. government passed the Infrastructure Investment and Jobs Act in November 2021, and as part of that, it formed the Broadband Equity, Access and Deployment (BEAD) program to close the digital divide and bring (mostly) fiber broadband to unserved locations.
Since then, there’s been a lot of movement toward fiber, with private equity joining the fray. But Verizon’s move to purchase Frontier is a clear starting gun in the race to fiber. Analysts are speculating which other fiber companies might get snapped up by the three big wireless carriers.
New Street Research penned a note, suggesting that Verizon should also buy Lumen Technologies. The analysts noted that Verizon has about 18 million fiber locations, growing by 500,000 annually. “We think they could build to 23 million with good returns in their footprint,” wrote New Street. “Frontier can build to 10-12 million. We suspect Lumen could build to 10-12 million. Taken together, Verizon could have 43-47 million fiber locations by the end of the decade. Verizon would have fiber assets covering about 30% of their wireless footprint.”
The New Street analysts said this would close the fiber gap with AT&T and give Verizon a strong fiber asset advantage over T-Mobile.
The analysts at Evercore, led by Vijay Jayant, wrote that the deal was “yet another indicator that the U.S. market is rapidly moving toward a converged fixed and wireless connectivity marketplace.” They predict that convergence will ultimately play out, as it has in Europe, with a move toward persistent price discounting. But in the meantime, “time to market and scale are critical.”
And the analysts at TD Cowen said, “AT&T is pushing convergence, thus, the other carriers must reluctantly follow as the wireless carrier that moves fastest wins. Expect fiber roll-ups to commence. T-Mobile could overbid for the Frontier assets.”
