How (and when) AT&T will kiss copper goodbyeHow (and when) AT&T will kiss copper goodbye

AT&T has been laying the groundwork for the decommissioning of its extensive copper network. This week, the company shed a lot more detail on when it expects to retire the vast majority of its copper, how it will pursue the transition and what products it has developed as an alternative to plain old telephone service, or POTS, that can run on either fiber or wireless networks.

Timing-wise, AT&T plans to shut down copper-based services across the vast majority of its US territory by the end of 2029, timing that coincides with the company's plan to build fiber to 45 million locations within its legacy wireline footprint. AT&T's copper shutdown plan does not currently include California – AT&T is working with regulators there to establish a framework for AT&T to retire its copper services in the Golden State.

AT&T has plenty of operational and financial reasons to retire its copper network. Notably, services based on the platform can no longer keep pace with the needs of most customers and it's a heavy expense that AT&T would like to remove from the books.

Copper, which is replete with active components, is an "energy hog," requires a lot of labor to maintain, and its IT stack is a "morass," Susan Johnson, AT&T's EVP and GM of wireline transformation and global supply chain, explained Tuesday at the company's investor day.

And it's costly. Johnson, who presented new details about AT&T's copper retirement plans, estimated that AT&T currently spends about $6 billion annually on direct costs to keep its copper network running. About 40% of it is tied to direct customer costs (such as installation and customer care) and another 60% is more fixed and geographic (power, network maintenance and real estate costs). That $6 billion figure does not include any capex tied to the business or any legacy IT costs, she pointed out.

"This is a call to action. This is a descaling business with high fixed costs," Johnson said.

AT&T also presented some updated footprint stats: It runs 88 million total wireline locations, with 21 million voice-only and 67 million that are broadband-capable. However, just 5% of AT&T's residential subscribers are still using copper-based voice technology.

POTS replacement

AT&T has also developed new products to aid the transition, most notably AT&T Phone-Advanced. That product, which can run on AT&T's fiber or wireless networks, is a like-for-like replacement for POTS, including support for local and long-distance calling, call forwarding, caller ID, call waiting and E911 location detection. It also includes three-way calling, a 24-hour battery backup and anonymous call blocking. Phone-Advanced can also support other types of services that have historically relied on POTS, including fax machines, alarm systems and medical monitoring devices.

AT&T has developed a new device for its Phone-Advanced service. It's valued at $188, but AT&T currently is promoting it online for just $1.

AT&T recently revealed in a filing that it conducted performance tests of Phone-Advanced in September spanning some 2 million calls.

AT&T's copper exit plan also includes "legacy emulation" for larger enterprise customers that aren't yet ready to upgrade their legacy equipment. That product, Johnson explained, allows them to retain their existing on-premises equipment while AT&T upgrades the network.

AT&T will prioritize its transition at its 4,600 wire centers that house and support components such as the voice switch and are supported by remote terminals and pedestals. In wire centers in low-density areas (including some that support a mere four copper customers per square mile), AT&T will offer copper customers access to mobility services (including fixed wireless access) and the aforementioned Phone-Advanced service. It will also rely on competitive alternatives, including satellite connectivity, Johnson said.

In denser "fiber first" areas that represent about 50% of AT&T's land area and roughly 90% of the population, AT&T intends to shift copper customers to fiber, which also can operate the Phone-Advanced service.

Tied in, AT&T will try to make some money off the transition by reselling copper as it is decommissioned and to repurpose and lease out central offices located in "very desirable real estate locations," Johnson said.

"Modernizing our network and exiting copper substantially simplifies our wireline footprint," she said. "We're going to need less people, less power, less infrastructure and we'll be able to target the $6 billion of costs tied to legacy services."

Seeking regulatory relief

Johnson acknowledged that the copper shutdown plan faces regulatory hurdles. "We've been working at the state and at the federal level to update the regulatory frameworks," she said. With California the current exception, AT&T has been able to pave the way for the transition by modernizing copper-related regulations in 20 of the 21 states where it operates wireline networks.

AT&T gained FCC approval earlier this year to stop all new copper-based orders in 60 wire centers across 13 states, Johnson noted.

"Without those two pieces on the regulatory front, we would not have the confidence that we can move forward on the regulatory side," Johnson said.

AT&T CEO John Stankey believes coming changes at the White House and the FCC will also ease the path forward.

"I believe the administration change is going to help on this," he said. He expects the FCC, set to be led by current Republican Commissioner Brendan Carr, to "lean in aggressively from a policy perspective to try to move this along faster than maybe the previous administration." The current administration is not dead set against this pivot away from copper, but has put forth a more "cautious posture," Stankey said.

Editor's note: The story was corrected to note that AT&T gained FCC approval to stop all new copper-based orders in 60 wire centers across 13 states. A previous version of the story said AT&T has received approval from the FCC to halt all new copper-based "inward orders."