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AT&T: Mining the MDU Market

Alan Breznick
12/14/2016
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Ed Balcerzak's mission is to make AT&T the leader of the MDU space.

Balcerzak, senior vice president of commercial and connected communities for AT&T Inc. (NYSE: T), is leading the company's drive to hook up apartment buildings, townhouses and other multiple dwelling units (MDUs) within the company's vast US footprint for broadband and video service. During the past 18 months, AT&T has focused on deploying its fiber lines to MDUs in many of its markets, as part of its larger push to roll out all-fiber networks to 14 million homes and businesses nationwide.

So far, AT&T has extended a gigabit connection via fiber links to multi-family buildings with a total of 500,000 units, or one-sixth of its 3 million customer locations now passed by fiber. Plans call for expanding that all-fiber reach to millions of other MDU units over the next few years -- as well as tapping satellite TV, G.fast, millimeter-wave, 5G, OTT video and other new technologies to expand on their broadband investment -- as the multi-family segment continues to surge throughout the US.

"Definitely, we're all in," Balcerzak said. "We certainly characterize it as a fast growing segment of the market."

US government and real estate industry statistics back up this assessment of the oft-neglected or overlooked MDU space. With renter-occupied households now numbering nearly 44 million, or about 37% of all US households, new rental apartment buildings and townhouse developments have been steadily going up in metro areas around the country, especially such rapidly growing cities as Dallas, Denver and Miami. Market projections indicate that the surge in multi-family building construction will continue over the next few years as millennials come of age and income levels rise yet many remain unwilling or unable to buy single-family homes.

"There's a lot of demand coming from millennials," Balcerzak noted. "They seem to be staying in apartments longer than previous generations."

Seeking to cater to this budding market segment, AT&T has been rolling out its AT&T Internet 1000 (formerly known as AT&T GigaPower) service to MDU residents. While more than half of the multi-family units are still served by AT&T's copper lines, Balcerzak expects the balance to shift soon. "It's coming down every day," he said.

Beyond utilizing its growing fiber network to reach the MDU audience, AT&T is using its nationwide satellite TV provider, DirecTV, to attract more apartment residents to video and other AT&T services. In addition, the company is counting on its new OTT service, DirecTV Now, to entice apartment dwellers who want video service without committing to an annual contract, installing a set-top box or waiting for installation work. (See AT&T Debuts DirecTV Now on New Video Platform.)

AT&T also intends to use a combination of fixed-wireless, point-to-point Internet solutions with DirecTV or DirecTV Now to extend the reach of its broadband and video services to multi-family units outside its wired footprint. The company is targeting additional apartment communities for this solution in such major metro areas as Boston, Chicago, Denver, New Jersey, New York, Philadelphia, Phoenix, Seattle and Washington, DC.

"We're looking at a number of different things," Balcerzak said. "They want video. [But] the way they want to watch video is changing."

Further, AT&T is weighing ways to use other, newer technologies to go where it doesn't make economic or technical sense for fiber to go. As previously reported, for instance, the company is now testing G.fast over copper lines, fixed wireless and 5G in select locations within its expansive territories. (See AT&T Explores G.fast for MDUs and AT&T 5G Trials to Start With Fixed 15GHz Tests.)

Of course, AT&T will be operating in very competitive environment. Large cable operators such as Comcast Corp. (Nasdaq: CMCSA, CMCSK), Charter Communications Inc. and Cox Communications Inc. are also busily expanding and enhancing their broadband and video offerings around the country.

"Cable, in general, is always a viable competitor," Balcerzak said. "Cable is always a major player in this space."

Nevertheless, Balcerzak expressed confidence that AT&T will be successful. Noting that there are something like 23 million MDU units within the 21 states that his company serves (although not all of these living units are within cities where AT&T provides service), he is aiming to capture a large chunk of them. "We want to win in this marketplace," he said.

This blog is sponsored by AT&T. It is the eighth part of a ten-part series titled "Behind the Speeds," examining next-generation broadband technologies and what it takes to keep customers connected.

— Alan Breznick, Cable/Video Practice Leader, Light Reading

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