AT&T’s CTO and president of AT&T Labs Andre Fuetsch this week said the carrier is planning on a decrease in capital spending in the next several years thanks to the benefits of its software-defined networking (SDN) and network function virtualization (NFV) efforts.
“It’s certainly not going up,” Fuetsch said of AT&T’s capex figure at Nomura’s 2016 Media, Telecom and Internet Conference. “It’s certainly going down.”
In the second quarter, AT&T said it spent a total of around $5.5 billion on capital expenditures across its businesses. Though the carrier didn’t break out capital expenditures on its mobility business, Wells Fargo Securities seems to have pegged the total around $2.7 billion.
Wells Fargo Senior Analyst Jennifer Fritzsche said in a recent research note the top four carriers spent a combined $7.3 billion on capex in the second quarter, with known quantities of $2.8 billion from Verizon, $1.4 billion from T-Mobile and $376 million from Sprint.
According to Fuetsch, AT&T’s “downward trend” in network spending will come courtesy of “efficiencies we’re gaining from vitalization and software.”
“As we deploy more and more virtual functions, and as the hardware that we’re running those virtual functions, as that becomes more commoditized, all those efficiencies we gain back,” Fuetsch explained. “We have the option of turning those investments back into the network or keeping those. So I would say, again, it’s hard to speculate here, but definitely a downward trajectory is what we’re looking at.”
AT&T has previously said it is aiming to virtualize three quarters of its network by 2020. The carrier earlier this year said it virtualized 5.7 percent of its network in 2015 and is targeting the virtualization of 30 percent of its network by the end of this year.
Fuetsch said AT&T is already seeing returns from its SDN and NFV initiatives, and expects to see more operational savings as SDN and NFV automation take over technician duties. According to Fuetsch, AT&T has managed to put in more than double the capacity into its network in 2015 and 2016 at 75 percent of what it cost them in 2013 and 2014.
“You already see the economics, the efficiencies coming in from these new technologies,” Fuetsch said. “Going forward, we will continue to see the cost-per-megabyte transported to continue to drop. And we’re in the business of connectivity, and that’s what it’s really all about.”