AT&T is seeing its best cost-per-megabyte gains for two decades, according to its top technologist, John Donovan.
In fact, Donovan said today that, after two decades in which its networks failed to match Moore's Law improvements in performance, AT&T has now caught and exceeded that standard and will continue to improve by moving things from hardware to software and doing smarter planning of capital outlays.
In a wide-ranging presentation at Citi's 2016 Global Internet, Media and Telecommunications Conference, the senior executive VP-technology and operations for AT&T Inc. (NYSE: T) said his company remains laser-focused on lowering its cost per megabyte and that focus is driving other strategies, including its view of 5G and small cells and its ongoing fiber deployment.
By integrating its wireless and wireline network planning, it is not only able to justify extending fiber deeper into its network, to make more efficient use of available wireless spectrum, but can also sell a wider range of services to enterprises, from WiFi to its NetBond and Network on Demand offers. (See AT&T: SDN Is Slashing Provisioning Cycle Times by up to 95%.)
Donovan kicked off the discussion by calling this "the most exciting time for technologists" in his long career because "all dimensions of the network are in movement," including the core, the access and the software and operations that glue everything together. Then, over the course of the 45-minute Q&A session, he calmly laid out the dramatic changes underway at AT&T that, he says, are letting the company meet capacity demands at much lower cost, roll out new services faster and plan its network investments more efficiently. (See Donovan Touts AT&T's Software Push.)
He referred to Netbond, AT&T's SDN-based secure VPN access to popular cloud platforms, as "a franchise changer," in that it gave enterprises the secure connections to the cloud they needed and prevented the virtual private network business from being decimated by a mass shift to basic Internet access to cloud. AT&T's other SDN-based offering, Network on Demand, is "the fastest growing thing I've seen, from a customer adoption standpoint," Donovan said. (See AT&T NetBond Getting Amazon Ties.)
The ability to beat Moore's Law actually happened about five years ago on the network side. The picture continues to improve as more things are moved into software and commodity hardware does more of the hard work within the network as well, enabling reductions in capex and opex, he stated.
"We have put out these ratios for percentages on the new platform to help give guidance to our supply community of how aggressive we want to be on this, and to the financial community as well, so you have an understanding of some of the impacts of these things," he said, referring to AT&T's aggressive plan to go all-IP and have 75% of its functions virtualized by 2020.
"When you go to software-defined networking for the delivery of fundamental services, opex is dramatically cheaper and capex is as well, because you go to more commodity hardware," he said. "So we will keep putting those numbers out -- the supply community needs them, because they need to be able to forecast how ambitious they need to be in directing their R&D investments."
Part of achieving those capex gains while continuing to meet rising demand for bandwidth is AT&T's integrated planning. While its Project VIP local fiber deployment initiative has wound down, the company is still able to push fiber more deeply into some areas, based on the need for business services or backhaul for cell towers and small cells, Donovan said.
"We have a really good cost curve on incremental costs for wireless," he said. "We are still putting fiber out where it is economic -- that is a big part of our program."
AT&T is "doing everything everyone else is doing on 5G" but its tight focus on cost-per-megabyte means that the carrier doesn't feel the urgency to be first to deploy the next generation of wireless -- unless it identifies cost advantages. "We haven't been overly public, because what we want to do is keep the option of being early, in the middle or at the back-end, depending on whether we decide to optimize speed, availability or cost."
What it comes down to is managing some massive transformations in customer behavior, Donovan said, as users have shifted to using Bluetooth and WiFi in the last 1,000 feet, cellular wireless in the last couple of miles and everything else on a densely packed wireline network.
"We need to seamlessly manage that stuff so that we get the right yield -- that is what we are after, to get customers on the right network, get the right cost structure for all of those networks and meet the demand with a minimum cost," he said. "Right now we have done a really good job of dealing with some of these pretty massive transitions in user behavior."
One place AT&T hasn't expanded as rapidly as expected is in small cell deployment, but Donovan views that from the broader lens of integrated network planning as well. On the heels of "fast shot clock" initiatives at the federal and local regulatory levels -- which insured more rapid approval of cell tower permits -- AT&T was able to deploy more cell towers faster and in some places that weren't previously available, cutting the need for small cells. But the company has been aggressive on in-building work and is selling WiFi and other services, alongside NetBond and Network on Demand, to a growing base of business customers.
— Carol Wilson, Editor-at-Large, Light Reading