As AT&T plans to increase broadband investment after the recent decision to spin out its WarnerMedia business, CEO John Stankey expects fixed wireless to be part of the picture but broad coverage is still a few years out.
Asked by JP Morgan analysts Monday when an AT&T fixed wireless product would be ubiquitous across the operator’s footprint, Stankey pegged the 2023 timeframe for covering most people in the U.S.
“I would expect with our stepped-up investment you’ll see that happen in what I would call a more ubiquitous fashion starting in ‘23, you get into the majority of U.S. population,” Stankey said during JP Morgan’s Global Technology, Media and Communications conference. “I think it’s going to take into ’24, ’25 to start delivering the kind of speeds nationwide that probably the FCC and government will ultimately end up defining as the new standard of broadband.”
Currently the FCC minimum speed threshold for broadband is 25 Mbps down, 3 Mbps up - but some have called for increases, including senators urging the commission for minimum speeds of 100 Mbps for both upload and download.
He suggested that fixed wireless could be a good replacement for legacy DSL connections, in outer reaches of what was AT&T’s ILEC footprint.
AT&T already offers a 4G LTE fixed wireless service and competitors Verizon and T-Mobile have been pushing ahead with their own respective services for both 4G LTE and 5G. Earlier this year AT&T opened up 5G fixed wireless, with access to low-band and millimeter wave 5G spectrum and LTE, as an option for business customers. Just last week T-Mobile pushed harder into the small and medium business market with a new FWA service, which utilizes a self-install Nokia 5G router.
Wireless and fixed assets “powerful combo”
With a renewed focus on connectivity in light of the pending WarnerMedia and Discovery tie-up, Stankey said AT&T is aiming to be the best broadband provider, whether that’s with wireless or fixed service.
And believes there’s a “really powerful combination” bringing wireless and fiber together, pointing to customer satisfaction with good churn rates that he said are lower for customers who take both fiber and mobile service when compared to the macro wireless environment.
In an April report, Cowen analysis of survey data pointed to a related trend for AT&T, determining that broadband and cable MVNO customers taking an operator’s wireline service were more likely to subscribe to wireless.
“We found that being a wireless customer in the respective ILEC footprint only modestly helped boost wireline adoption,” wrote Cowen analysts in the report. “However, for AT&T/Verizon subscribers that do take the respective carrier’s wireline broadband, they have a far higher propensity to also bundle wireless.”
During Monday’s virtual event, JP Morgan analysts questioned what’s different now that makes the long-talked about concept of convergence able to be done well. AT&T’s chief executive acknowledged it’s a difficult task but pointed to early starting signs.
Stankey himself is testing out a prototype router that has 5G as a backup for his fixed broadband service at home. When recent issues in Texas resulted in power outages, the router continued to run on backup battery and connect to the 5G network.
“That was a really nice seamless experience for some of those spikes that were occurring,” he noted.
Stankey also pointed to AT&T’s heavy investment in spectrum (most recently to the tune of $23.4 billion for C-band licenses in the 3.7 GHz range) and the increasing affordability of chip technology.
“The fact you have a lot of licensed spectrum that can offer just an incredible service in the home in conjunction with a fixed connection I do believe you are going to start to see this occur,” he said.
More importantly, according to Stankey, customers' networking needs are becoming more complex – whether it’s on mobile devices or devices at home.
Part of that also stems from changed working environments and businesses with employees that may be more distributed.
“Aside from a technical integration, just the ability of a service provider to be able to begin addressing that [complexity] and making it simpler for a customer is an opportunity now moving forward,” he said. “And frankly that’s a place where AT&T should be able to go and play and I think the company is going to invest to play there.”
While AT&T is making big moves to channel its energy and investment on fiber and wireless, some analysts say the operator is still positioned to be third behind T-Mobile and Verizon in the 5G race.