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(Bloomberg) — AT&T Inc. executives made the case for giving up on copper landlines and investing in fiber-optic cable on Bloomberg TV’s Chief Future Officer.
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“It has the fastest speed,” Chief Financial Officer Pascal Desroches said in the interview. “It has the lowest cost to maintain relative to your traditional copper, which is what we were upgrading.”
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The Dallas-based telecom giant, whose roots go back to the earliest days of the telephone, has been pushing customers to give up their copper lines, which cost the company $6 billion annually to maintain. AT&T is laying fiber-optic cable which can handle more traffic, including an expected boom from a new generation of data-heavy artificial intelligence tools.
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“The beauty of fiber is it’s symmetrical,” Chief Executive Officer John Stankey said in the joint interview. “It sends the same amount of data up as it sends down.”
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AT&T has a three-pronged strategy to reach customers, including a 5G mobile network and fixed wireless access, which uses a wireless link to provide internet access for homes. Fiber-optic lines are where the company is making the biggest bet.
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In May, AT&T announced the $5.75 billion acquisition of Lumen Technologies Inc.’s consumer fiber business. The addition, expected to close in the first half of next year after gaining regulatory approval, will help AT&T reach major cities like Denver and Las Vegas. It will also help AT&T achieve its expansion targets.
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“We’re picking up about 4 1/2 million active homes that have been passed and connected in a footprint that can probably grow to close to 10 million homes that are attractive to invest in,” Stankey said.
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The company has set a goal of 60 million US households passed with fiber by 2030, a number that could rise to 70 million after that.
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Swapping aging copper lines for fiber means a 70% reduction in energy consumption and a 35% saving in maintenance costs, according to Desroches. AT&T can also generate cash from the sale of the metal.
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“We have a lot of copper still in the ground, and at these prices, we will make a return,” Desroches said.
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The company also believes the switch will boost its share of the wireless phone market, where it trails Verizon Communications Inc. and T-Mobile US Inc. in total customers. More than 40% of the AT&T’s fiber customers also subscribe to its wireless phone service.
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“I don’t like being No. 3 in anything, so let’s start with that,” Desroches said.
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