AT&T Abandons Copper Lines, Invests $5.75 Billion in Fiber Optics for 60% Market Share Boost

AT&T, a prominent telecommunications giant, is accelerating its strategic shift by abandoning traditional copper telephone lines in favor of investing in fiber optic cables. This move is driven by the increasing demand for data-intensive applications, including advanced artificial intelligence tools. The company's chief executive officer, John Stankey, highlighted the advantages of fiber optics, particularly its symmetry, which allows for equal upload and download speeds. This symmetry is crucial for supporting the growing need for high-speed data transmission, which is essential for the next generation of data-intensive applications.

The transition to fiber optics is part of AT&T's broader strategy to stay competitive in an era of rapidly increasing data traffic. By investing in fiber optic infrastructure, AT&T aims to provide faster and more reliable internet services to its customers. This investment is expected to enhance the company's ability to handle the surge in data demand, driven by the proliferation of smart devices, streaming services, and other data-intensive applications.

The shift to fiber optics also aligns with AT&T's long-term vision of becoming a leading provider of high-speed internet services. The company's focus on fiber optics is a strategic move to position itself as a key player in the future of telecommunications. By investing in this technology, AT&T is not only addressing the current demand for high-speed internet but also preparing for future technological advancements that will require even faster and more reliable data transmission.

AT&T's chief financial officer, Pascal Desroches, emphasized that fiber optics offer the fastest transmission speeds and the lowest maintenance costs compared to traditional copper cables. The company is currently encouraging users to switch from copper lines, which incur an annual maintenance cost of $6 billion. AT&T is aggressively laying fiber optic cables to meet the increasing demand for data, including new data-intensive AI tools.

AT&T is employing a three-pronged strategy to cover users: 5G mobile networks, fixed wireless services for home internet access, and fiber optic lines as the core investment. In May, AT&T announced the acquisition of Lumen Technologies Inc.'s consumer fiber business for $5.75 billion. If approved by regulators, the deal is expected to close in the first half of next year, enabling AT&T to expand into major cities like Denver and Las Vegas, furthering its growth objectives.

Stankey noted that the acquisition will add approximately 4.5 million active households to AT&T's coverage, with the potential to reach nearly 10 million households in areas with significant investment value. The company aims to cover 60 million households with fiber optics by 2030, with the possibility of extending this to 70 million households.

Desroches pointed out that replacing aging copper cables with fiber optics can reduce energy consumption by 70% and maintenance costs by 35%, while also generating cash from selling the copper metal. He added that the underground copper cables, if sold at current prices, would yield substantial returns.

AT&T believes that this transition will increase its market share in the wireless phone sector, where it currently trails behind Verizon and T-Mobile US. Data indicates that over 40% of AT&T's fiber optic users also subscribe to its wireless phone services. Desroches stated, "I don't like being in third place in any area; that's the reason for our reform."