Editor’s Corner—AT&T’s Gfast gamble is about ramping speeds, stealing cable broadband share

Sean Buckley, FierceTelecom

AT&T is making a big bet that its Gfast plans could enhance its broadband fortunes, giving the telco a weapon to more effectively challenge cable operators that have been able to rapidly ramp broadband share over existing HFC facilities.

By deploying Gfast in multi-dwelling units (MDUs) outside of its traditional 22-state territory, AT&T can potentially grab broadband dollars away from Comcast and Verizon in markets like Boston. This comes after it conducted trials Minneapolis. AT&T will initially target eight cities that have properties equipped with the hybrid fiber/copper and coax technology.

And while the move has to meet a number of variables, it's necessary for AT&T to revamp broadband share. Consider the fact that Comcast’s aggressive DOCSIS 3.1 migration is enabling it to deliver speeds of up to 1 Gbps over existing coax, something AT&T and Verizon have only been able to do by deploying FTTH, for example. In the second quarter alone, seven of the largest cable operators signed up 461,997 residential high-speed internet users, while telcos lost 233,260 subscribers.

AT&T's focus to extend higher speed wireline broadband services in premises where it can’t make a business case for all fiber, particularly in multi-dwelling units.

Michael Weissman, chairman of the Gfast Council, told FierceTelecom what’s significant about the AT&T move is that unlike other telcos it’s the beginning of a large-scale network roll out.

“The most interesting thing about the AT&T announcement is it’s not a pilot,” Weissman said. “In general that’s a step ahead of others.”

G.fast has established itself as a key enabler of higher-speed broadband connections, with 22 service providers in 18 countries having deployed or trialed the technology as of 2016. Ovum has forecast that there will be 30 million Gfast subscribers by 2021.

Teresa Mastrangelo, principal analyst for Broadband Trends, agreed and added Gfast’s main allure is its ability to deliver greater speeds over existing copper or coax wiring.  

“With aggregate speeds up to 2Gbps, G.fast is offering operators an opportunity to address both the competitive environment and time-to-market pressures, but it is the ability to offer these faster speeds that is the #1 key driver for operator interest in Gfast,” Mastrangelo said.

Out of region opportunities, challenges

Having already installed fiber into 5.5 million locations across 57 metro markets, AT&T may be an advocate of FTTH, but the service provider is realistic that it just can’t make a case for fiber installation everywhere. This is even a bigger issue when AT&T goes out of its wireline region where it has no infrastructure.

For AT&T, the allure of Gfast is clear: it allows AT&T to offer higher broadband speeds over existing wiring while minimizing disruption to existing MDU residents.

According to the company’s own estimates, 80% of the buildings in the U.S. don’t currently have a fiber connection, but have plenty of coax and copper.

“We’re tapping into the existing internet infrastructure in some multifamily properties to bring ultra-fast internet in less time and with less disruption than replacing the network with fiber,” said Ed Balcerzak, SVP of AT&T Connected Communities, in a release announcing the Gfast rollout.

Such a strategy makes sense. Consumers that desire higher speed will be able to turn to AT&T as an alternative to Comcast, Verizon and other providers.

While the telco did not specifically point it out in its release, AT&T could turn to the wiring it gained after purchased DirecTV, which had wired up a large amount of MDUs with coax for satellite TV. This would allow the telco to deliver up to 500 Mbps services and later 1 Gbps, depending on the condition of the wiring.

Even so, AT&T will face a likely battle with landlords and other building owners in MDUs where it may not have existing coax or copper wiring. While AT&T has a strong market power, the service provider won’t be immune to battles with landlords who may not want to add another provider into their buildings. 

Jeff Heynen, consulting director, and senior research analyst for S&P Global Market Intelligence, agrees that dealing with landlords who have established agreements with cable operators, could be a key issue for AT&T

“I think the biggest challenge for AT&T will be convincing the landlords to switch from their existing provider, which is generally cable,” Heynen said. “If you recall, cable operators used to be able to sign 10-year exclusivity arrangements with building owners. The FCC ended these back in 2007, I think. But that hasn’t stopped cable operators from lobbying the landlords to continue working with them exclusively.

Regardless of the challenges, AT&T has the potential to bundle faster Gfast-based services with DirecTV and even wireless.

While not calling out Gfast specifically, John Stephens, CFO of AT&T, said that it is seeing churn in areas where it only has DirecTV.  

“We’re seeing on an out of footprint basis where we don’t have fiber, subscriber losses to competitors that can bundle,” Stephens said.

New standards boost bandwidth

Offering 500 Mbps may be the initial threshold AT&T and other providers are looking for, but a host of emerging standards will enable AT&T and others trialing Gfast to deliver 1 Gbps and higher speeds.

A number of service providers are trialing coordinated dynamic time allocation (cDTA) and 212 Mhz transmission.

By using 212 MHz Gfast standard, service providers could double the usable spectrum to increase bandwidth performance. When combined with cDTA, service providers will see an improvement in Gfast upstream performance.

cDTA dynamically balances upstream and downstream capacity to match residential traffic patterns in real time and also is specifically designed to extend this performance over existing phone and internet wiring.

Weissman said that cDTA will give service providers overall better options to deliver higher-bandwidth options. A service provider could offer a 1 Gbps/500 Mbps speed service, for example.

“This technology provides a lot more capabilities because if I tell you we support 1 Gbps, that’s probably support in a total capacity of aggregate traffic, but it does not allow a provider to offer a 1 Gbps service,” Weissman said. “Service providers need 1.5 Gbps or 2 Gbps, but in reality with cDTA they don’t have to allocate the extra bandwidth.”

For service providers like AT&T, deploying Gfast could not come at a better time, particularly as cable continues to enjoy a dominant lead in the U.S. broadband market—a trend that continued into the second quarter. AT&T currently holds the third spot in the overall broadband race, trailing Comcast and Charter.

If the service provider can successfully get a large portion of MDUs wired up with Gfast, AT&T has a chance at regaining new subscriber broadband ground at a time when its legacy DSL base has continued to erode.Sean