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Why AT&T Is Betting Big on Network Virtualization

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Oct. 19 2017, Updated 10:38 a.m. ET

AT&T’s network performance

A telecommunication (or telecom) company’s network performance plays a crucial role in customer retention. AT&T’s (T) postpaid phone churn rate improved YoY (year-over-year) to 0.79% in 2Q17 as compared to 0.84% in 2Q16. This was good news for AT&T because, during this time, its rivals Sprint (S) and T-Mobile (TMUS) were using pricing techniques to lure users from their larger competitors AT&T and Verizon (VZ).

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AT&T spent a great deal on its VIP (Project Velocity IP), a program aimed at improving its wireline and wireless broadband infrastructure. Also, the telecom company is focusing on SDN (software-defined networking) and NFV (network function virtualization) technologies to improve its network. AT&T has virtualized nearly 40% of its network functions and is aiming to reach 55% by the end of 2017 and approximately 75% by the end of 2020.

RootMetrics

As per RootMetrics’ 1H17 RootScore report, at the national level, AT&T secured second place in five out of six network performance categories: network reliability, data performance, overall performance, call performance, and speed performance. Additionally, AT&T shared the top spot in the text performance segment. AT&T has earned scores of 92.9 for overall network performance as compared with T-Mobile’s score of 86.5, Sprint’s score of 87.9, and Verizon’s score of 94.5.

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