AT&T execs stress importance of BEAD geographic areas

There was a lot of excitement at last week’s Fierce Telecom U.S. Broadband Summit related to the $42.5 billion in Broadband Equity, Access & Deployment (BEAD) funds. But a few people threw a wet blanket on the excitement. Rick Cimerman, VP of External & State Affairs at NCTA – The Internet & Television Association, pointed out that broadband providers already, collectively, spend as much as $100 billion per year on infrastructure. Cimerman made it seem as if the BEAD funds didn’t amount to much.

However, Jeff Luong, VP of Network Engineering at AT&T, disagreed. He said, during a fireside chat with Fierce Telecom, that the combination of public funds in addition to private investments will be a lot of money that will allow for “the industry, and us as a country, to expand connectivity.”

He stressed that BEAD money isn’t exactly “free money.” He said, “Every dollar that we’re getting in terms of government subsidies actually requires private investment to make it work. In addition to that, once you get the network built, no network is static. And it is very expensive to operate these networks in these rural areas. This is not free money. This is a co-investment to cover areas that previously have been uneconomical for anybody to cover.”

AT&T is talking to many states about its interest in participating in BEAD. And it’s reviewing states’ proposed application processes and making comments. Luong said AT&T is particularly looking at where it is best to build.

This may end up being one of the most difficult aspects of the state BEAD process. Luong explained that the maps of the unserved and underserved show a lot of non-contiguous areas. And then carriers such as AT&T have to map those areas against their existing facilities in a state, and they also have to look at physical barriers such as freeways and rivers that would be too expensive to cross.

In a separate conversation with Fierce Telecom, Erin Scarborough, AT&T’s president of Broadband & Connectivity Initiatives, said AT&T needs flexibility in terms of service areas in the BEAD bidding process.

Carriers would like to build where it makes the most sense for them. But isn’t that why so many areas are already unserved and underserved in the first place?

Asked what he would recommend to states that are trying to figure out the best solution, Luong said, “The best way for states to approach that challenge is to create a process, a system that encourages as many providers to participate as possible. The more carriers that participate in the program the more areas will be proposed. The whole process is: the carriers get to propose their location, but ultimately it is the state that helps define what areas they will allocate the funding for. And it’s a negotiation process.”

Scarborough said, “You want to make sure multiple providers are bidding. You’ll get more bids if you have flexible serving areas.”

Vanderburgh County, Indiana

Luong cited a recently completed project in Vanderburgh County, Indiana, as an example of a successful public/private partnership. AT&T worked with Vanderburgh County to deliver fiber broadband to 20,000 residents in a largely rural, farming area. For the project Vanderburgh County used $9.9 million in federal funds from the American Rescue Plan Act (ARPA) of 2020, and AT&T covered the remaining $29.7 million.

Luong said the contract covered an area that was all within AT&T’s legacy footprint. But after the contract was signed, a customer in Frontier territory asked why it wasn’t getting access to the new fiber network. The county asked if AT&T could also connect that customer, and after some negotiation, the customer was included in the project.

Luong said the example shows that if governments allow some negotiation, that results in the best outcome, “rather than drawing boxes on a map without a clear understanding of where different carriers have assets.”

In general, AT&T encourages states to select proposals for builds that cover the widest swath of unserved and underserved locations possible to maximize efficiency.

AT&T’s fiber in and out of footprint

AT&T plans to pass at least 30 million consumer and business locations with fiber in its traditional service areas by the end of 2025. It currently passes about 26 million, so it needs to close a 4-million gap to hit its target by December 31, 2025.

Retiring copper is a side-benefit of all the fiber deployment that AT&T is doing in its 21-state footprint.

Out of its footprint, AT&T has a joint venture with the investment firm BlackRock called Gigapower. The joint venture operates completely separate from AT&T. Gigapower has its own management team, and AT&T is an investor in Gigapower as well as a customer.

The interesting thing about Gigapower is that it is building open access networks, which AT&T will use. But other internet service providers may also contract with Gigapower to use its networks, as well.

Currently, AT&T has contracted with Gigapower to operate in Las Vegas, Nevada; Mesa, Arizona; the northeast region of Pennsylvania; and in the Alabama Panhandle area.

Luong said the open access model allows AT&T to not just take fiber to new customer homes but also offer all its products and services such as whole-home Wi-Fi and enhanced security, and it provides the chance to also bundle that with wireless services.

He said AT&T spends about $20 billion per year on infrastructure investments, “and even at a $20-billion-a-year clip, we cannot build out in all the areas we deem as economical.” Whereas, the JV with Gigapower has the benefit of bringing in private capital.

But there can be downsides to open access networks: such as too many providers offering internet service in one area to the point where they don’t get a very good profit.

Luong said AT&T advocates for “a commercially-established open access network, which is very different than open access networks elsewhere in the world, which are government-mandated open access networks.”

He said open access will work better “when you have market-based dynamics” that determine how much you invest and how many entities are contracted to participate in a network.