The Increasing Cost of Building Fiber

AT&T CFO Pascal Desroches said that the cost of building fiber has increased and that those costs are pushing up against the company’s goal of not spending more than $900 – $1,000 per new fiber passing. Any time I see a broadband provider talking about fiber costs, my first question is: What's included in the costs? AT&T’s low target number highlights two things – its advantage of being able to overlash, and a willingness to skip neighborhoods with higher costs. AT&T’s low target price also highlights that the company is shooting for a higher margin goal than most overbuilders. The $1,000 top target cost also tells us a lot about AT&T’s market plan. To stay under that number means being very careful about where the company builds. It seems likely to me that inflation isn’t the only reason that AT&T’s costs are rising. I would guess that the company has already constructed the locations with the lowest cost per passing and that the remaining 6 million passings likely have higher costs than the places already built.