NFV (Network functions virtualization)

AT&T Expects Capex Reductions From SDN

AT&T said Thursday that it is expecting its efforts to move more of its network functionality onto a software platform will bring dividends for the operator in the future.

AT&T Inc. (NYSE: T) has been working on bringing virtualized capabilities to its networks for a year or so now. Basically, the operator wants to replace dedicated hardware in its network with software running on standard servers that handle the network functions. (See AT&T Spotlights Early SDN Efforts and SDN, NFV Not Slashing Wireless Capex Yet.)

The operator has mostly stressed that its long-term SDN strategy will allow it to be more flexible with network resources and -- eventually -- enable customers to provision services more effectively. On the operator's second quarter earnings call, however, CFO John Stephens noted that the strategy should also allow the operator to see cost savings in the future. (See AT&T Reveals Audacious SDN Plans.)

Stephens said on the call that AT&T's capital expenditure (capex) for the year will be in the "$18 billion range." This compares to around $20 billion in 2014. The operator is completing its LTE deployment and other major projects. (See AT&T to Buy Iusacell, Plans Lower Capex For 2015.)

Stephens was asked on the call if technology upgrades like 5G wireless networks in the coming years could cause similar capex spikes. Stephens pointed at the SDN upgrades as a potential way to control such spikes in the future.

"I think there's a real opportunity with some of the opportunities that are happening on a software-defined basis to bring that investment down," Stephens said.

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That's not to say AT&T won't be spending billions on other priorities in the future. In particular, Stephens said that -- depending on conditions connected to the expected closure of its DirecTV buy -- AT&T is still interested in acquiring 600MHz broadcast spectrum for future wireless services. (See Wheeler Blesses AT&T-DirecTV Deal and FCC Delays Incentive Auction Vote.)

Stephens said that AT&T is "interested" but will be "prudent in investigating the opportunities."

For the quarter, AT&T reported net income of $3 billion, compared to $3.5 billion during the second quarter of 2014. AT&T had revenues of $33 billion, up 1.4% from in the same period 12 months ago.

The operator added 2.1 million net wireless subscribers for the quarter.

— Dan Jones, Mobile Editor, Light Reading

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