AT&T and Comcast have successfully delayed Google Fiber’s expansion around the country long enough to finish upgrades that can nearly match the upstart’s speedy internet service.

Nearly four years after Google Fiber announced it would offer gigabit speed in Nashville, most residents still have no idea when they will be able to have the service installed. Although officially announced in January 2015, Google has only managed to connect 52 apartment buildings and a limited number of single family homes in parts of Charlotte Park, Edgehill, Sylvan Heights, Sylvan Park, East and North Nashville, and Burton Hills. In all, less than 30% of the homes originally promised service actually have it, forcing Google to seek an extension from the Tennessee Public Utilities Board, which was granted last week.

Google’s problems originate within itself and its competitors. The company’s contractors have been criticized for damaging existing wiring, tearing up streets and yards, piercing water pipes causing significant water damage, and inappropriate microtrenching, which caused some of its fiber infrastructure in Nashville to be torn out of the ground by road repair crews.

But the biggest impediment keeping Google from moving faster is its two competitors — AT&T and Comcast, successfully collaborating to stall Google, giving the phone and cable company plenty of time to improve services to better compete. Both companies have also aggressively protected their customers from being poached by offering rock bottom-priced retention plans that some claim are only available in Google Fiber-ready areas.

“It’s still complicated,” Nashville Google Fiber Manager Martha Ivester told the Tennessean newspaper. “Building this fiber optic network throughout the whole city is a long process, and we never expected it wouldn’t be a long process. Obviously, we have had our challenges here.”

WZTV Nashville reports East Nashville residents were upset over road work related to Google Fiber that lasted for months, severely restricting residential parking. (2:37)

Google Fiber Huts – Nashville, Tenn.

Google’s ability to expand has been restrained for years, despite an informal alliance with city officials, primarily over pole attachment issues. Much of middle Tennessee is challenged by a difficult-to-penetrate layer of limestone close to the surface, making underground utility service difficult and expensive. Google’s negotiations with Nashville Electric Service (NES), which owns 80% of the utility poles in Nashville and AT&T, which owns the remaining 20%, have been long and contentious at times. To bring Google Fiber to a neighborhood, existing wires on utility poles have to be moved closer together to make room for Google Fiber. In real terms, that has taken several months, as AT&T and Comcast independently move at their own pace to relocate their respective lines.

An effort to use independent contractors to move all lines in unison — known as “One Touch Make Ready,” was fiercely opposed by AT&T and Comcast, claiming it would violate contracts with existing workers and could pose safety issues, despite the fact both companies use independent contractors themselves to manage wiring. Both companies successfully challenged One Touch Make Ready in court. A federal judge ruled that only the FCC could regulate poles owned by AT&T, while another judge ruled the city had no authority to order the municipally owned electric company to comply with One Touch Make Ready.

In August, the FCC issued an order allowing One Touch Make Ready to apply to AT&T’s poles, but NES still refuses to change its policy of relocating service lines one line at a time. The electric utility did not explain its reasons. AT&T also recently eased its position on One Touch Make Ready, but with NES still stonewalling, Google Fiber’s delays are likely to continue.

AT&T Fiber is being embraced by some customers tired of waiting for Google Fiber.

In the interim, both AT&T and Comcast have upgraded their respective systems. AT&T Fiber offers a fiber-to-the-home connection available in some areas while Comcast offers near-gigabit download speeds over its existing Hybrid Fiber-Coax (HFC) network. The upgrades have taken the wind out of Google Fiber for some tired of waiting.

Google has recently tried to speed progress using underground “shallow trenching” for installation, which buries cable as little as four inches deep. The company has amassed more than 24,000 permits to lay fiber under roads and yards in Nashville, which may speed some deployment, but for some it is too little, too late.

“It has been more than a year since we expected Google Fiber to serve us and they won’t tell us when they will get here, so I gave up and signed a two-year contract for AT&T Fiber service instead,” said Drew Miller. “Google Fiber just isn’t as exciting as it was when it was announced because other providers have similar service now and I get a better deal bundling it with my AT&T cellphone service.”

Attitudes like that obviously concern Google, as have reports that customers in Google Fiber-ready neighborhoods are getting very aggressively priced retention offers if they stay with their current provider.

“Comcast cut my bill from close to $200 to around $125 if I did not switch,” said Stop the Cap! reader Olivia. “I also got double internet speed. I don’t need a gigabit, so I stayed with Comcast. If I get close to their usage limit I will switch to Google then.”

Olivia notes her mother had exactly the same services from Comcast, but Comcast would not offer her the same promotion because she lived in an area not yet wired for Google Fiber.

With upgrades and aggressive customer retentions, the longer Google takes to string fiber, the fewer customers are likely to switch for what was originally “game-changing” internet speeds and service.

WTVF Nashville shows off Google’s microtrenching, burying fiber optic cables just a few inches underground. (2:36)

Pricing Comparisons

Google Fiber

• Fiber 100: $50 a month, internet speeds up to 100 Mbps
• Fiber 1000: $70 a month, internet speeds up to 1,000 Mbps, downloads and uploads
• Fiber 100 + TV: $140 a month, internet speeds up to 100 Mbps, 155+ channels, premium channels (HBO, Showtime) available
• Fiber 1000 + TV: $160 a month, internet speeds up to 1,000 Mbps, 155+ channels, premium channels (HBO, Showtime) available

AT&T

• Internet-only: $50 a month for first 12 months, then $60 thereafter. $99 installation fee. Unlimited data costs an extra $30 a month. Early termination fee: $180 (pro-rated). Speeds range from 10 to 100 Mbps
• Direct TV + Internet: $75/mo first 12 months, then $121. Customers pay a $35 activation fee and $30 a month for unlimited data. 155 channels. Speeds vary. 24 month contract required.
• Internet 1000: $90 a month during first 12 months, then $100/mo thereafter. Bundled discount can reduce cost of package to $80-90. Up to 960 Mbps downloads. Early termination fee: $180 (pro-rated).

Comcast

• Performance Starter: $20 a month, increases to $50 after two-year promotion. Up to 25 Mbps.
• Blast!: $45 a month, increases to $80 a month after two-year promotion. 150 Mbps.
• Gigabit (DOCSIS 3.1): $70 a month, increased to $140 after two-year promotion. 940/35 Mbps.

WSMV Nashville reports Google’s microtrenching has been problematic as road crews unintentionally dig up Google’s optical fiber cables mistakenly buried just two inches underground. (2:44)

A complaint from AT&T that the city of Lincoln, Neb. charged “high fees” that have “delayed its residents the benefits of AT&T’s small cell deployments,” was false and misleading, city officials tell the Federal Communications Commission.

AT&T is one of the chief proponents of industry-friendly national pole attachment and zoning reform, urging the FCC to issue a national policy that would override state and local authorities on pole attachment fees, cell tower and antenna placement, environmental/historic/tribal impact reviews, and paperwork requirements.

In short, AT&T wants to improve its chances of getting fast and inexpensive approval to place its wireless infrastructure in localities with time limits on public input and local reviews.

But Lincoln city officials tell the FCC AT&T never even applied.

“A review of our records fails to reveal any permit applications filed by AT&T for such as deployment,” Lincoln officials wrote. “That means that AT&T either deployed without permission and unknown to the city, or AT&T provided misleading statements to the Commission. Lincoln has researched our rates, submitted them to national companies for evaluation, and as a result has signed small cell agreements with three different companies.”

Local officials around the country complain that the wireless industry is misrepresenting a handful of bad actors as indicative of rampant overcharging, and that a profitable, multi-billion dollar industry is seeking a government mandate to force preferential treatment for its infrastructure at below-market rates. Local government officials who hold a position on the FCC’s Broadband Deployment Advisory Committee issued a strong opinion that the wireless industry is getting a government-sanctioned benefit its competitors do not.

“It is unfair to prioritize one industry over all others in pricing the public rights-of-way and public infrastructure access,” the local officials advised. “Equal pricing of private access to public assets is especially a concern where there is no obligation for providers to serve all residents.”

AT&T has laid off more than 16,000 employees since 2011, eliminating thousands of customer service positions while transferring others to cheap offshore call centers where some employees earn less than $2 an hour.

The company is rapidly closing call centers and consolidating others in hopes of wringing “deal synergies and cost savings” out of its operations, including DirecTV, acquired by AT&T in 2015.

Altogether, AT&T has closed 44 call centers, according to the Communications Workers of America (CWA), over the last seven years. Four call centers have been closed so far this year, including one in Harrisburg, Pa., that cost 101 jobs, some employed for over a decade. Many other call centers are being radically downsized, but have not yet been closed.

Betsy LaFontaine, a 30-year veteran at an AT&T call center in Appleton, Wisc. told The Guardian her call center has been slashed from 500 employees to less than 30 today.

“They’re liquidating us,” LaFontaine said. “This is not a poor company. On the shoulders of all its employees, we’ve made the company extremely profitable.”

AT&T took over this DirecTV call center.

While workers in Pennsylvania were offered new jobs if they were willing to move… to Kentucky, other workers would have to be willing to move overseas to keep a job with AT&T. As a cost saving measure, AT&T is offshoring an increasing amount of its customer service operation to India, Mexico, and the Philippines where it pays some English-challenged workers less than $2 an hour.

The savings from layoffs and offshoring are helping AT&T buy back shares of its own stock to help investors grow their stock portfolio’s value. The company has spent $16.45 billion on buybacks since 2013, including $419 million in the second quarter of 2018, the most AT&T has spent on buybacks since 2014.

AT&T has also banked at least $20 billion in savings from the Trump Administration’s corporate tax reform program. CEO Randall Stephenson was among the country’s biggest backers of the Trump tax cut program and was a principal member of the Business Roundtable lobbying group, which heavily lobbied Republicans to pass the measure.

According to the Institute on Taxation and Economic Policy, AT&T actually paid an effective tax rate of just 8 percent between 2008 and 2015, despite recording a profit in the United States each year, by exploiting tax breaks and loopholes. But the thought of paying even less was appealing to Stephenson.

When the measure passed, AT&T’s chief financial officer John Stephens shared the good news with shareholders.

“With the passage of tax reform, we see a significant boost to our balance sheet, reducing $20 billion of liabilities and increasing shareholder equity by a like amount,” Stephens said.

Stephenson

AT&T promised if the Trump Administration passed tax cuts and reduced the corporate tax rate to around 20%, AT&T would create 7,000 new middle class jobs paying $70,000-80,000/year. The CWA argues AT&T instead laid off an estimated 7,000 workers. AT&T disputes this, claiming the company hired 8,000 new employees in the United States so far this year and 87,000 over the past three years. AT&T also claims it promised to pay $1,000 bonuses to 200,000 employees over the next year, tied to the tax cuts. In fact, AT&T’s unions negotiated the bonuses with AT&T before the Trump Administration’s tax reform was passed.

For AT&T employees, mass layoffs come without warning. Managers at the Cleveland call center repeatedly calmed employees that its call center, open for decades, was not targeted for closure. Until it was in 2011. Most employees were laid off or offered positions in Detroit, a city two hours away.

Employees feel insecure, despite recruitment campaigns that stress AT&T is a company where stability is part of the job. In reality, an out-of-state executive can decide to close call centers and other AT&T facilities without ever having to face the employees being laid off. Many of those laid off face the prospect of competing in job markets where single, younger employees are willing to accept much less and do not have the same financial obligations veteran AT&T workers have to their families.

AT&T has increased investment in network upgrades with some of its tax savings, but much of that work is farmed out to third-party contractors. AT&T’s much larger investment is in mergers and acquisitions, acquiring Time Warner (Entertainment), Inc., for $85 billion.

Critics of the tax cut plan predicted the money would be spent on almost everything but job creation and investment.

“They can either create new jobs and capex for expansion or they can create greater shareholder wealth through dividends and stock buybacks. There are some other issues to consider, but that’s the main line of reasoning why corporate tax cuts incentivize buybacks and dividends,” Fran Reed, regulatory strategist at FactSet told US News & World Report.

A typical job offer to work in an AT&T call center. Starting salary is $22,880. Maximum pay is $37,518.

History tells the rest of the story. In 2004, a one-time tax holiday to repatriate foreign earnings temporarily cut tax rates from 35% of 5.25%.

“The primary use of the repatriated funds was to increase shareholder payouts, particularly stock buybacks, rather than increase firm investments such as capital expenditures, research and development spending,” said Stephen J. Lusch, associate professor of accounting at the University of Kansas.

In 2011, the Senate Permanent Subcommittee on Investigations found the 2004 tax break did not deliver the promised benefits of increased employment and investment. In fact, the largest recipients of the tax break downsized and collectively fired more than 20,000 employees, while enriching shareholders and executives:

U.S. Jobs Lost Rather Than Gained. After repatriating over $150 billion under the 2004 American Jobs Creation Act (AJCA), the top 15 repatriating corporations reduced their overall U.S. workforce by 20,931 jobs, while broad-based studies of all 840 repatriating corporations found no evidence that repatriated funds increased overall U.S. employment.

Research and Development Expenditures Did Not Accelerate. After repatriating over $150 billion, the 15 top repatriating corporations showed slight decreases in the pace of their U.S. research and development expenditures, while broad-based studies of all 840 repatriating corporations found no evidence that repatriation funds increased overall U.S. research and development outlays.

Stock Repurchases Increased After Repatriation. Despite a prohibition on using repatriated funds for stock repurchases, the top 15 repatriating corporations accelerated their spending on stock buybacks after repatriation, increasing them 16% from 2004 to 2005, and 38% from 2005 to 2006, while a broad-based study of all 840 repatriating corporations estimated that each extra dollar of repatriated cash was associated with an increase of between 60 and 92 cents in payouts to shareholders.

Executive Compensation Increased After Repatriation. Despite a prohibition on using repatriated funds for executive compensation, after repatriating over $150 billion, annual compensation for the top five executives at the top 15 repatriating corporations jumped 27% from 2004 to 2005, and another 30%, from 2005 to 2006, with ten of the corporations issuing restricted stock awards of $1 million or more to senior executives.

This week, the FCC announced bidding has finished for the latest Connect America Fund (CAF) broadband subsidies auction.

Once again, the FCC gave first priority to incumbent phone companies to bid for the subsidies, which defray the cost of expanding internet access to homes and businesses otherwise unprofitable to serve. Nearly $2 billion was left on the table by disinterested phone companies after the first round of bidding was complete, so the FCC’s second round opened up the leftover money to other telecom companies.

Winning bidders will receive their portion of $198 million annually in 120 monthly installments over the next ten years to build out rural networks. In return, providers must promise to deliver one broadband and voice service product at rates comparable to what urban residents pay for service. The winning bids, still to be publicly announced, will come from rural electric and phone cooperatives, satellite internet providers, fixed wireless companies, and possibly a handful of cable operators. But much of the money overall will be spent by independent phone companies rolling out slow, copper-based, DSL service.

Because the total committed will take a decade to reach providers, rural Americans will likely face a long wait before what purports to be “broadband” actually reaches their homes and businesses.

While many co-ops will spend the money to expand their own homegrown fiber-to-the-home services, most for-profit providers will rely on wireless or copper networks to deliver service.

Telefónica Spain

Overseas, broadband expansion is headed in another direction — expansion of fiber-to-the-home service, with little interest in investing significant sums on furthering old technology copper wire based DSL and fixed wireless services. The expansion is moving so quickly, Verizon made certain to sign long-term contracts with optical fiber suppliers like Corning in 2017 to guarantee they will not be affected by expected shortages in optical fiber some providers are already starting to experience.

Virtually everywhere in developed countries (except the United States), fiber broadband is quickly crowding out other technologies, despite the significant cost of replacing copper networks with new optical fiber cables. If a provider is brave enough to discount investor demand for quick returns and staying away from big budget upgrade efforts, the rewards include happier customers and a clear path to increased revenue and business success.

Not every Wall Street bank is reluctant to support fiber upgrades. Credit Suisse sees a need for optical fiber today, not tomorrow among incumbent phone and cable companies.

“The cost of building fiber is less than the cost of not building fiber,” the bank advised its clients. The reason is protecting market share and revenue. Phone companies that refuse to upgrade or move at a snail’s pace to improve their broadband product (typically DSL offering 2-12 Mbps) have lost significant market share, and those losses are accelerating. Ditching copper also saves companies millions in maintenance and repair costs.

Canada’s Telus is a case in point. Its CEO, Darren Entwistle, reports Telus’ effort to expand fiber optics across its western Canada service area is already paying off.

“We see churn rates on fiber that are 25% lower than copper,” Entwistle said. “35% lower in high-speed internet access, and 15% lower on TV — 25% lower on average. We’re seeing a reduction in repair volumes to the tune of 40%. We’re seeing a nice improvement in revenue per home of close to 10%.”

Telus promotes its fiber to the home initiative in western Canada as a boost to medical care, education, the economy, and the Canadian communities it serves. (1:31)

Telus’ chief competitor is Shaw Communications, western Canada’s largest cable company. Fiber optics allows Telus to vastly expand internet speeds and reliability, an improvement over distance sensitive DSL. Shaw Cable has boosted its own broadband speeds and offers product bundles that have been largely responsible for Telus’ lost customers, until its fiber network was switched on.

In economically challenged regions, fiber optic expansion is also growing, despite the cost. In Spain, Telefónica already provides service to 20 million Spaniards, roughly 70% of the country, and plans to continue reaching an additional two million homes and businesses a year until the country is completely wired with optical fiber. In Brazil, seven million customers will have access to fiber to the home service this year, expanding to ten million by 2020.

Verizon and AT&T regularly ring alarm bells in Congress that China is outpacing the United States in 5G wireless development, but are strangely silent about China’s vast and fast expansion into fiber optic broadband that companies like Verizon stopped significantly expanding almost a decade ago. China already has 328 million homes and businesses wired for fiber and added another five million homes in the month of June alone. AT&T will take a year to bring the same number of its own customers to its fiber to the home network.

The three countries that are most closely aligned with the mentality of most U.S. providers — the United Kingdom, Australia, and Germany — are changing their collective minds about past arguments that fiber to the home service is too costly and isn’t necessary.

The government of Martin Turnbull’s cost concerns forced a modification of the ambitious proposal by the previous government to deploy fiber to the home service to most homes and businesses in the country. That decision to spend less is coming back to haunt the country after Anne Hurley, a former chief executive of the Communications Alliance involved in the National Broadband Network (NBN), admitted the cheaper NBN will face an expensive, large-scale replacement within a decade.

ABC Australia reports on findings that the country’s slimmed-down National Broadband Network is inadequate, and parts will have to be scrapped within 5-10 years (1:37)

Turnbull’s government advocated for less expensive fiber to the neighborhood technology that would still rely on a significant amount of copper wiring installed decades ago. The result, according to figures provided to a Senate committee, found only a quarter of Australians will be able to get 100 Mbps service from the NBN, with most getting top speeds between 25-50 Mbps.

Despite claims of technical advancements in DSL technology which have claimed dramatic speed improvements, Hurley was unimpressed with performance tests in the field and declared large swaths of the remaining copper network will have to be ripped up and replaced with optical fiber in just 5-10 years.

“If you look around the world other nations are not embracing fiber-to-the-[neighborhood] and copper … so yes, it’s all going to have to go and have to be replaced,” she said.

In the United Kingdom, austerity measures from a Conservative government and a reluctant phone company proved ruinous to the government’s promise to deliver “superfast broadband” (at least 24 Mbps) over a fiber to the neighborhood network critics called inadequate from the moment it was switched on in 2012. The government had no interest in financing a fiber to the home network across the UK, and BT Openreach saw little upside from spending billions upgrading the nation’s phone lines it now was responsible for maintaining as a spun-off entity from BT. In 2015, BT Openreach’s chief technology officer called fiber to the home service in Britain “impossible” and too expensive.

Two years later, while the rest of Europe was accelerating deployment of fiber to the home service, the government was embarrassed to report its broadband initiative was a flop in comparison, and broke a key promise made in 2012 that the UK would have the fastest broadband in Europe by 2015. Instead, the UK has dropped in global speed rankings, and is now in mediocre 35th place, behind the United States and over a dozen poorer members of the EU.

What was “impossible” two years ago is now essential today. The latest government commitment is to promote optical fiber broadband using a mix of targeted direct funding, “incentives” for private companies to wire fiber without the government’s help, and a voucher program defraying costs for enterprising villages and communities that develop their own innovative broadband enhancements. The best the government is willing to promise is that by 2033 — 15 years from now — every home in the UK will have fiber broadband.

Deutsche Telekom echoed BT Openreach with claims it was impossible to deliver fiber optic broadband throughout an entire country.

Deutsche Telekom’s dependence on broadband-enhancements-on-the-cheap — namely speed improvements by using vectoring and bonded DSL are increasingly unpopular for offering too little, too late in the country. Deutsche Telekom applauded itself for supplying more than 2.5 million new households with VDSL service in 2017, bringing the total number served by copper wire DSL in Germany to around 30 million. The company, which handles landline, broadband and wireless phone services, is slowly being dragged into fiber broadband expansion, but on a much smaller scale.

In March, Telekom announced a fiber to the home project in north-east Germany’s Western Pomerania/Rügen district for 40,000 homes and businesses. The network will offer speeds up to 1 Gbps. In July, Telekom was back with another announcement it was building a fiber optic network for Stuttgart and five surrounding districts Böblingen, Esslingen, Göppingen, Ludwigsburg, and Rems-Murr, encompassing 179 cities and municipalities. But most of the work will focus on wiring business parks. Residents will have a 50% chance of getting fiber to the home service by 2025, with the rest by 2030.

In contrast, the chances of getting fiber optic broadband in the U.S. is largely dependent on which provider(s) offer service. In the northeast, Verizon and Altice/Cablevision will go head to head competing with all-fiber networks. Customers serviced by AT&T also have a good chance of getting fiber to the home service… eventually, if they live in an urban or suburban community. Overbuilders and community broadband networks generally offer fiber service as an alternative to incumbent phone and cable companies, but many consumers don’t know about these under-advertised competitors. The chances for fiber optic service are much lower if you live in an area served by a legacy independent phone company like Frontier, Consolidated, Windstream, or CenturyLink. Their cable competitors face little pressure to rush upgrades to compete with companies that still sell DSL service offering speeds below 6 Mbps.

CAF funding from the FCC offers some rural areas a practical path to upgrades with the help of public funding, but with limited funds, a significant amount will be spent on yesterday’s technology. In just a few short years, residents will be faced with a choice of costly upgrades or a dramatic increase in the number of underserved Americans stuck with inadequate broadband. Policymakers should not repeat the costly mistakes of the United Kingdom and Australia, which resulted in penny wise-pound foolish decisions that will cost taxpayers significant sums and further delay necessary upgrades for the 21st century digital economy. The time for fiber upgrades is now, not in the distant future.

AT&T does not expect to see much initial growth of FirstNet, the government-sponsored first responder wireless network built by AT&T with $6 billion in taxpayer dollars.

FirstNet relies on AT&T’s wireless network, bolstered by taxpayer-financed upgrades that will prioritize public safety users during emergencies, but allow any AT&T customer to use the enhanced network the rest of the time. FirstNet has just 110,000 subscribers as of this summer — about a year after launch. AT&T will be expanding FirstNet over the next four years, adding new cell towers, frequencies and bandwidth.

First envisioned after the events of Sept. 11, 2001, the network was designed to allow interoperability between all types of first responders, including law enforcement, fire departments, and ambulance crews. A major complaint after 9/11 was that different public safety agencies could not communicate with each other on the ground because of incompatible radio equipment. FirstNet allows agencies to deploy voice communications and data services on site, without the risk of congestion that occurs on publicly-available cell towers. All FirstNet users are given priority access, and during emergencies, the network will not allow public users to use FirstNet’s network resources.

Seventeen years later, the network is finally launching, but that is proving to be just the first hurdle. To use FirstNet, public safety agencies have to adopt AT&T as their communications provider, sign new contracts, and usually buy new equipment. A surprisingly large number of agencies are balking at changing providers, either because they dislike AT&T, its coverage, the cost, or require a rigorous bidding and procurement process.

AT&T FirstNet rate plans

Rural departments often favor Verizon Wireless, perceived to have better 4G LTE coverage and better performance in rural areas than AT&T. Ray Lehr, formerly with the Baltimore City Fire Department, is now a paid consultant for FirstNet, and admitted AT&T’s rural coverage isn’t as robust as it will be five years from now.

“Over the next five years, they have to have up to 99 percent rural coverage,” Lehr said. “There’s no reason why another carrier would do that. It just doesn’t make sense.”

For a lot of rural departments, there are coverage gaps with every wireless carrier and places where there is no coverage from any carrier. Those departments rely primarily on their existing radios for fireground communications and talking with dispatchers.

AT&T is relying on federal dollars to expand FirstNet in places where its own investment dollars are likely not being spent. AT&T also separately receives taxpayer support to build rural fixed wireless networks for consumers out of reach of traditional DSL and cable broadband.

Wall Street, which would ordinarily attack rural investment with no significant return on investment, has had little reaction to AT&T FirstNet, primarily because AT&T will be reimbursed by taxpayers for much of the construction costs, even though AT&T and its retail customers will benefit from the increased coverage and capacity FirstNet will offer most of the time.

“Investors aren’t expecting much, other than the reimbursement for the capital expenditure required to deploy the network,” Jonathan Chaplin, an analyst at New Street Research, told Communications Daily (sub. req’d.). “If public safety usage is low and AT&T can use the capacity for their core mobile users, that is probably fine.”

Other analysts agree, noting AT&T will get all the benefits offering government-paid FirstNet capacity to its retail customers, with none of the risk of losses if first responders do not flock to the new network, because it was not built with AT&T’s money.