AT&T’s CEO of communications, John Donovan, laid out some details of AT&T’s strategy on 5G during a Credit Suisse Communications Conference call. Donovan reiterated earlier talking points presented by AT&T officials suggesting that 5G initially will be an enterprise-driven technology.
Speaking with Credit Suisse analyst Douglas Mitchelson, Donovan touted AT&T’s 5G deployments in 19 markets across the U.S. “If you look at 5G right now, I would argue we’re the world leader,” he said, according to a transcript provided by Seeking Alpha. “I think we’re certainly the leader in the U.S.”
He attributed that success in part to AT&T’s perspective on 5G use cases in the near term. He said that the rollout of 5G will be inherently different from that of 3G and 4G, where the consumer took center stage. With 5G, enterprise will drive the initial uses cases.
“We got into this habit of saying, ‘if I can't imagine it as a consumer, then it must not be there,’” he said. “I think with 5G, we’re going to go back to how technology was deployed pre-2005, which [was] R&D-ed by the government, bought by enterprises, got on a better cost and scale curve and then moved to consumers. That’s how we see 5G playing out.”
He added that factors like network coverage and the number of wireless subscribers are less important for 5G networks today. “When people say, what can 5G do? What's more important is what is it doing for health care?” he said. “You would really size it based on its impact, and a little less on how much network coverage do you have and how many consumers do you have on a 5G network.”
AT&T’s 5G deployment strategy
Donovan pointed out that AT&T’s 19 5G market deployments to date have been in-line with this view of the technology. “Instead of launching in a market [where] you try to build a network and then you sell a handset and have a consumer walking in the street trying to find a network, we’ve been focused on 5G being an enterprise play,” he said.
In Chicago—one of the 19 markets where AT&T has launched 5G—AT&T is deploying “advanced 5G” in the patient intake and ambulatory care at Rush Hospital, he said. In Austin, another one of AT&T’s 5G markets, the carrier is involved in a Samsung robotic manufacturing deployment, and are helping to build a campus for Magic Leap.
AT&T is deploying millimeter wave (mmWave) 5G across its first wave of cities. Donovan said the mmWave networks are live in 19 of those cities so far, and that AT&T will have launched in 29 total cities by the end of 2019.
The carrier plans to have a nationwide 5G network up and running by the first half of 2020, Donovan said, deployed on the sub-6 GHz spectrum.
Donovan mentioned that AT&T’s 5G build-out is benefiting from its FirstNet contract, which is funding a lot of “tower climbs” that are needed for 5G early-stage deployments. “That's an extremely big benefit,” he said.
He added that the carrier will rely on software-defined networking for its denser 5G builds. “I think that the 5G is going to be on a decline curve of cost per megabyte, cost per subscriber, that drops much faster than previous technologies as a result of that,” he said.
Consumer pricing is still a big unknown
When pressed on consumer-facing factors of 5G, such as what price points might AT&T charge for 5G access, Donovan argued it’s too early to tell. “5G has the opportunity not only to put more value in the network, but to alter what the business model is,” he said, noting that 5G apps themselves may become premium-priced, evolving into what he called a “three-sided business model.
“That's not really all that clear yet,” he said.