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AT&T said supply chain shortages will delay construction of fiber in about 500,000 homes that it originally planned to wire this year and warned that the shortages could have an even bigger impact on other businesses. who buy fiber.
“Until the second quarter, we hadn’t really felt an impact from the supply chain disruptions that are happening across the industry. But since the start of the third quarter, we have seen upheavals in all areas, including in fiber supply, ”AT&T Executive Vice President and CFO Pascal Desroches said yesterday during a virtual conference organized by Oppenheimer.
AT&T previously told investors to expect “3 million homes to pass [with fiber] this year, ”said Desroches. “We will probably arrive a little light, probably around 2.5 [million]. “
The planned deployment of 3 million locations includes all of the fiber construction that AT&T completed in the first seven months of 2021. As we wrote previously, AT&T is expanding its fiber constructions to approximately 90 metropolitan areas, with new locations comprised primarily of homes and businesses close to AT & T’s existing fiber optic facilities.
Global shortages disrupt industries
Global semiconductor shortages have disrupted the plans of much of the tech industry and automakers. The broadband industry is hampered by shortages of chips, other components, and fiber itself.
AT&T generally has no problem getting low-cost fiber, Desroches said. “We are the largest buyer of fiber in the country and we have prices that are the best and most competitive in the industry,” he said. “We are really happy with the ability to secure the stocks of fiber at attractive prices and the ability to execute the development at scale, which many others do not have. “
AT&T expects to catch up with its initial estimates for fiber construction in the years after 2021, in large part because of what Desroches has called its “privileged place in the supply chain” and its “committed prices.” As AT&T said in a press release yesterday, AT&T “is working closely with the wider fiber ecosystem to address this short-term dislocation” and “is confident that it will meet the goal of 30 million customer sites of the company reached by the end of 2025 ”.
AT&T had deployed fiber to approximately 15 million locations by early 2021, so the plan is to double that figure by 2025. There are approximately 53 million households in AT & T’s home Internet service area. in the 21 states, leaving over $ 20 million where AT&T has no plans to upgrade old copper lines to fiber.
Internet providers without a privileged place in the supply chain will have a harder time getting fiber than AT&T, said Desroches. “We don’t think it’s going to affect us in the long term, but I think it’s a very important context. If we are in pain, I can only imagine what others are going through in the industry,” did he declare.
Although Desroches “did not name AT & T’s fiber supplier, he noted that it was an American company with national and international locations. CommScope and Corning would fit that description,” wrote FierceTelecom. The latter recently highlighted an increase in orders in its optical segment, but CFO Tony Tripeny warned during Corning’s second quarter earnings call that he was already facing disruption in the business chain. ‘supply and expected “glass supply to remain short or tight over the next few quarters.”
Small ISPs feel the pain of scarcity
A trade group that represents rural ISPs described the shortages its members face in a case filed with the Federal Communications Commission last month.
“NTCA members report widespread delays in obtaining communications equipment of all kinds, which extend not only to electronics (such as routers, optical network terminals, and facility equipment). “CPE” customers) but also to fiber. The delay appears to have started shortly after the start of the COVID-19 pandemic and has intensified since then, ”according to the NTCA – The Rural Broadband Association file.
The NTCA conducted an informal survey of its members and found that the ‘minimum delay reported by members was generally three to four weeks, with some members reporting a delay of more than 12 weeks and in some cases not being unable to obtain equipment for the 2021 construction season.
AT&T loves fiber but doesn’t want everyone to get it
Desroches argued that symmetrical fiber speeds are becoming a necessity and said, “There is no better technology for connectivity.”
“As a result of what you have seen over the past year during the pandemic, the need to do what we are doing now: two-way communication [via video conference]- can only happen with symmetrical speeds, “he said.” I think everyone had an ah-ha moment, ‘we have to roll out the fiber.’ We’ve been a believer in it for a long time and it’s really an opportunity that looks at that opportunity. “
AT&T has repeatedly touted the superiority of fiber when speaking to investors despite the fight against nationwide fiber construction. In March, AT&T told the United States that it shouldn’t require high download speeds when funding ISPs, saying rural people don’t need fiber and should be happy with internet service that only provides download speeds of 10 Mbps.
AT&T does not want to face competition from fiber in places it deems insufficiently profitable for upgrades. AT&T’s statement in March said funding faster networks in areas not served by fiber “would unnecessarily devalue private investment and waste broadband dollars.”
Fiber, a big source of money for AT&T
Desroches said AT & T’s goal is to get at least 40% of households to subscribe to fiber in areas where AT&T deploys it. “We believe that in some markets we will have the opportunity to do better than that,” he said.
Fiber helps AT&T increase revenues for home Internet subscribers and large businesses. “Deploying this is so critical because the ability to grow both your business and your mainstream business is attractive, and we believe these investments will provide us with returns on investment in the middle of time,” he said. .
Desroches also spoke briefly about AT & T’s home wireless internet service, stating, “There is a place for fixed wireless in some rural communities where it is difficult to run the economy through fiber and fiber construction. it may be a good idea to use a fixed wireless solution. “
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