Highlights of AT&T CFO and CTO remarks at Morgan Stanley Investor Conference

Network quality driven by significant investments in 5G and fiber:

AT&T believes that its recent and anticipated network investments will bolster its network foundation to compete as the need for high-quality connectivity only continues to increase.  At a Morgan Stanley European Investor Conference, AT&T CFO John Stephens indicated that AT&T’s integrated fiber strategy is expected to improve the company’s connectivity offering for both consumer and enterprise markets and enhance its 5G network quality in a cost-efficient manner.

COVID-19 Impact:

AT&T CTO Andre Fuetsch said:  “Obviously what happened was everyone basically started working, started schooling from home, and all of a sudden we had to readjust our lives to work from home, learn from home, and all of a sudden we had to adapt very quickly to that.  Within our homes, we had to have these different personas that we normally don’t do — whether it’s doing your day job, performing that duty, helping your children get online so they can do their schooling, and then all the other things in life. That was a blurring, in a way, of these sort of enterprise and consumer segments coming together.”

“All of this technology is great, but at the end of it, we are humans and anything we can do to help facilitate [and] build better, stronger human connections” will benefit society at large, Fuetsch added. “This year we’re really getting pushed and challenged to do that. I really think this type of technology is just going to make things better.”

Artificial Intelligence (AI) Improves Operations:

Some of these technologies, like Artificial Intelligence (AI), are already helping AT&T improve its operations, especially among its field technicians, he said, noting that AT&T’s entire routing and scheduling program relies heavily on AI.

“Any given day we have 35,000 network technicians driving around in trucks installing, and repairing, and maintaining our network. It’s essentially a very complex logistics algorithm and, as you can imagine with a company of our scale, just a single percentage improvement in efficiencies can lead to big, big dollars,” Fuetsch said.

AT&T is also trialing the use of drones with computer vision analytics to help improve inspections of its roughly 70,000 cell sites. When those drones take flight, they are scanning towers, looking for excessive heat dissipation, corrosion, loose cables, and bird nests, among other signs that indicate a required repair.

“All of this is getting fed back into a neural network, which is basically AI based,” and that program identifies the repair checklist, the technician and skill sets required, and the parts needed to remedy the problem, Fuetsch said.

AT&T’s experiences here and elsewhere gives him confidence that “the camera is still and will be the killer app” for the foreseeable future. However, the use of cameras is undergoing dramatic changes, he said.

“We carry about 400 petabytes a day across our network. About 50% of that traffic we carry is video traffic. Most of that is going out in a sort of downstream way. The future is going to be about upstream,” Fuetsch said.

Use of Video Cameras:

Fuetsch envisions new applications that “can help better manage our lives through a simple video camera” with the aid of video analytics and sensing. These advancements are occurring not just despite the scourge of COVID-19, but rather because of it in some ways as well, he said.

“This pandemic has really created some new norms here. I think the good news for operators is connectivity is so important and so relevant for everything we do. As we go into 2021, certainly with hopefully a light at the end of the tunnel here in terms of the pandemic with the latest news we’re hearing about vaccines, I’m actually very optimistic.”

“As we go into 2021, certainly with hopefully a light at the end of the tunnel here in terms of the pandemic with the latest news we’re hearing about vaccines, I’m actually very optimistic,” Fuetsch added.

References:

https://about.att.com/story/2020/john_stephens_update.html

https://www.sdxcentral.com/articles/news/att-cto-claims-covid-19-blurred-consumer-enterprise-divide/2020/11/

 

 

U.S. Wireless Carrier’s Aggressive Promotions for iPhone 12 explained

Business Insider:

  • The launch of the iPhone 12 has sparked a battle for U.S. carriers to entice devices upgrades.
  • AT&T, T-Mobile, and Verizon’s aggressive promotional pricing reflects the higher perceived lifetime value of attracting and retaining 5G wireless consumers.

The U.S. wireless carriers are betting that steep iPhone 12 promotions will more than pay off over time.  Here’s why:

  • U.S. wireless carriers are turning to promotions now in hopes that they will be able to secure new or retain customers throughout the 5G era. The most common time for wireless carriers to lose or gain subscribers is when customers switch smartphones, per The Wall Street Journal.
  • The unusually aggressive device promotions also likely reflect the higher lifetime value of 5G customers. By 2025, 5G subscribers are expected to generate 2.5x more revenue per connection for carriers than the average cellular connection, according to Juniper Research forecasts cited by Light Reading.
  • Wireless carriers are also likely attempting to meet US customers halfway, since so many people are cutting back on spending amid the economic slowdown. In Q2 2020, the average sale price of smartphones in the US sank to $503, representing a 10% year-over-year decline, according to Canalys.

Analyst colleague Craig Moffett generated this iPhone 12 Q & A in a blog post for his clients:

1.  Why was Verizon featured so prominently in Apple’s iPhone launch?

Answer: Their millimeter wave broadband, sparsely available though it may be, is the only credible showcase for what 5G can do.

2. Why do Apple’s new iPhone’s sold outside of the U.S. not support millimeter wave signals?

Answer: Millimeter wave drains battery life incredibly quickly, and generates unwanted heat in the handset.

3.  Why do Apple’s new phones in the U.S. default to turning off the very feature that is supposedly the reason to buy them?

Answer: To reduce heat and extend battery life.

4.  What are the use cases that make 5G worth having?

Answer: We don’t know yet.

5.  Why did AT&T decide to offer such a rich promotion – a free iPhone with almost any trade-in – for their existing subscribers?

Answer: Again, we don’t know.

6.  Will 5G produce a high ROI for wireless carriers?

Answer: Most expect that 5G will mean higher capital intensity (capex), and therefore lower ROI.

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References:

https://www.businessinsider.com/att-tmobile-verizon-usher-aggressive-promos-for-iphone-12-lineup-2020-10

https://www.moffettnathanson.com/?Section=Media%20/Telecom

Analysis of AT&T’s Q3-2020 Earnings

AT&T today reported a drop in third-quarter revenues and profit, due mainly to the impact of the coronavirus pandemic on its entertainment business. Subscriber numbers showed some signs of recovery, with over 1 million postpaid net adds in the mobile market and broadband growth thanks to subsidised offers during the pandemic. AT&T said it now expects to generate free cash flow of at least USD 26 billion this year and pay out just over 50 percent of that in dividends.

Quarterly revenues fell to $42.3 billion from $44.6 billion in the year-ago quarter. WarnerMedia (-10%) was affected by the pandemic measures, while mobile service revenues (-0.3%) suffered from lower roaming. Legacy wireline services also continued to erode, and Latin America revenues were hurt by forex pressure. These declines were partly offset by higher mobile equipment sales (+6.4%) and higher advertising revenues as sports broadcasts resumed.

While operating costs were somewhat lower due to the slowdown in media production, operating profit still declined to $6.1 billion from USD 7.9 billion a year ago due to COVID-related incremental costs. In total, AT&T estimates the coronavirus crisis reduced EPS by 21 cents, including 2 cents in extra costs and 19 cents from lower revenue. The operator’s reported net earnings fell to $2.8 billion or 39 cents per share from  $3.7 billion or 50 cents a share in Q3 2019.

After capital expenditure (capex) was reduced to $3.9 billion and operating cash flow increased to $12.1 billion, AT&T was left with free cash flow of $8.3 billion in Q3. The company reduced net debt by $2.9 billion compared to the end of June, leaving it with leverage of 2.66x adjusted EBITDA at the end of September. Over the full year, capex is still expected at around $20 billion.

AT&T mobile revenues were up 1% to $17.9 billion thanks to higher equipment sales, while EBITDA was slightly lower at $7.7 billion. Subscriber growth rebounded from the slower second quarter, with a total 5.5 million net additions. That included 1.1 million postpaid net adds, with 645,000 new phones, and postpaid ARPU was up slightly from Q2 to $49.94. The operator also added 245,000 new prepaid lines, while the remaining growth was new connected devices, which rose to nearly 76 million in total on the mobile network.

Mobility is AT&T’s largest and most important business, accounting for 42% of consolidated revenues.  Analyst Craig Moffett wrote: “The subscriber results in Mobility were better than just “good.” They were a genuine positive. But can AT&T’s success be sustained in the face of a 5G investment cycle that favors T-Mobile today, and that will require big spending (to buy mid-band spectrum. e.g. C-band) tomorrow?”

AT&T managed to slow the decline of TV subscribers to losses of 627,000, half the number of the year-earlier period. That left the company with just under 17.8 million pay-TV subscribers at the end of the period (including 683,000 OTT customers), down 17.5 percent year-on-year. Pay-TV ARPU improved to $130.55 (excluding OTT).

For the first time in six quarters, AT&T’s IP broadband subscribers – FTTH and U-verse broadband subs, not including legacy DSL – posted growth. Broadband subscribers benefitted from relaxed terms to help people work and learn from home during the pandemic. AT&T added a net 158,000 subscribers, its first growth in six quarters, for a total base of 14.1 million at the end of September. The growth was entirely in AT&T Fiber, which grew by 357,000 subscribers to 4.7 million. Fiber connections finally grew fast enough to keep up with U-verse declines.  Growth of 2.4% YoY in premium broadband ARPU only (AT&T doesn’t report DSL ARPU) was probably enough to offset the aforementioned 1.4% YoY decline in total subscribers; total broadband revenue growth very likely turned positive in the quarter.

Total Business Wireline revenue was $6.3B, down 2.5% YoY. That’s a deceleration in the rate of decline from last quarter’s 3.5% (although excluding IP sales in the second quarter a year ago, the decline last quarter would have been a gentler 1.7%, so Q3 may be better seen as a small acceleration in the rate of decline). Still, the result was better than the expectation of $6.25B by 1.4%.

HBO also showed growth, reaching over 38 million paying subscribers in the US for the linear channel HBO and SVOD service HBO Max combined. That beat AT&T’s year-end target of 36 million subscribers. The total includes 28.7 million subscribers for HBO Max, up from 26.6 million at the end of June.

With respect to AT&T’s competition in the telco space, Moffitt wrote:  “AT&T’s positioning vis-à-vis the newly merged T-Mobile/Sprint demands attention. New T-Mobile will be competing on the basis of not only lower prices, but also a best in-class 5G network. T-Mobile has a much better mid-band spectrum position than either AT&T or Verizon. Both will need to spend money to keep up. Verizon is in a position to do so. AT&T is not. With the C-Band auction coming in December, AT&T doesn’t have much time to free up some balance sheet headroom.”

AT&T said in a slide presentation that the company is focused on market-based priorities:
• 5G wireless and fiber-based connectivity
• Expanding reach of software-based entertainment platforms
• Relentless commitment to customer experience

AT&T CFO John Stephens, speaking on the company’s Q3 earnings call, said AT&T is on track to grow its fiber base by 25% this year and add 1 million total new FTTP subscribers for all of 2020.  That’s very impressive!

“My intent is to exit next year (2021) … gaining subscribers, gaining share and growing the broadband business,” said AT&T CEO John Stankey on the earnings call . “We still have a lot of fallow fiber that we can sell into. You saw that this quarter.”   AT&T will look to expand its fiber footprint, but didn’t elaborate on how much more FTTP (AT&T Fiber) or how the associated capex it would spend to increase its fiber footprint.

“We think policy in the country, where it stands right now, is attractive for investment in infrastructure and attractive for investment in fiber. I don’t think we need policy to get better. We just need to ensure that the policy doesn’t whipsaw back to some place that is inconsistent with incenting infrastructure investment,” Stankey said.

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References:

https://about.att.com/story/2020/q3_earnings_2020.html

https://investors.att.com/financial-reports/quarterly-earnings/2020

https://investors.att.com/~/media/Files/A/ATT-IR/financial-reports/quarterly-earnings/2020/q3-2020/ATT_3Q2020_Earnings_Deck.pdf

https://seekingalpha.com/article/4380658-t-inc-t-ceo-john-stankey-on-q3-2020-results-earnings-call-transcript?part=single

AT&T ends DSL sales while CWA criticizes AT&T’s broadband deployments

AT&T: DSL is Dead:

According to a message board post on DSL Reports, AT&T notified customers on billing statements in August that effective Oct. 1 it would no longer accept new orders for its copper-based DSL service.  The notice also said that existing DSL subs will no longer be able to make speed changes to their respective DSL service.

The message board author wrote:

“On my August AT&T statement, traditional DSL is officially grandfathered effective October 1st. No new orders (moves, installs, speed change, etc.). Hopefully they will still allow promos….”

That’s no surprise to this author.  AT&T’s DSL subscriber base has been eroding steadily – losing almost 350,000 subs over the past couple of years. In Q2 2020, AT&T shed 23,000 DSL subs, ending the period with just 463,000.

“We are focused on enhancing our network with more advanced, higher speed technologies like fiber and wireless, which consumers are demanding,” AT&T said in a statement. “We’re beginning to phase out outdated services like DSL and new orders for the service will no longer be supported after October 1. Current DSL customers will be able to continue their existing service or where possible upgrade to our 100% fiber network.”

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AT&T Fiber Update:

AT&T also announced three new price points for its AT&T Fiber tiers and said that all new and existing AT&T Fiber Internet 100, Internet 300 and Internet 1000 subscribers would enjoy unlimited data without additional charges. AT&T Fiber started offering the new deals as a standalone product with no annual contracts for new customers on Sunday.

As of Q2-2020, AT&T had 4.3 million AT&T Fiber customers with nearly two million of them on 1-gigabit speeds. Overall, AT&T has about 15.3 million broadband subscribers while Charter has 28 million and Comcast has over 29 million.

AT&T’s fiber tier announcement comes after AT&T CEO John Stankey told a Goldman Sachs investor conference in September that “priority number one” is investing in fiber for 5G and FTTP services.

The new prices are also an indication that AT&T intends to ramp up its drive on FTTP sales in the wake of a recent study showing that many of AT&T’s new subs were coming from existing customers upgrading to fiber rather than from gaining market share from cable Internet operators (MSOs).

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CWA Calls Out AT&T’s broadband efforts:

Coincidently today, the Communications Workers of America (CWA) criticized AT&T’s lack of fiber deployments.  The report, co-authored with the National Inclusion Alliance (NDIA) stated:

AT&T is making the digital divide worse and failing its customers and workers by not investing in crucial buildout of fiber-optic infrastructure that is the standard for broadband networks worldwide. The company’s recent job cuts — more than 40,000 since 2018 — are devastating communities and hobbling the company’s ability to meet the critical need for broadband infrastructure.

An in-depth analysis of AT&T’s network shows the company has made fiber available to fewer than a third of households in its footprint, halting most residential deployment after mid-2019. The analysis also shows that 28% of households in AT&T’s footprint do not have access to service that meets the FCC’s standard for high-speed internet, and in rural counties 72% of households lack this access. In some places, AT&T is decommissioning its outdated DSL networks and leaving customers with no option but wireless service, which is not a substitute for wireline service.

In all, AT&T has made fiber-to-the-home available for fewer than one-third of the households in its network. AT&T’s employees — many of whom are Communications Workers of America (CWA) members — know that the company could be doing much more to connect its customers to high-speed Internet if it invested in upgrading its wireline network with fiber. They know the company’s recent job cuts — more than 40,000 since 2018 — are devastating communities and hobbling the company’s ability to meet the critical need for broadband infrastructure.

CWA recommends that AT&T dedicate a substantial share of its free cash flow to investment in next-generation networks across rural and urban communities, make its low-income product offerings available widely, and stop laying off its skilled, unionized workers and outsourcing work to low-wage, irresponsible subcontractors.

Editor’s Note:

According to CWA, AT&T has deployed fiber-to-the-home (FTTH) to only 28% of the households in its fiber coverage area as of the end of June 30, 2019.

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The CWA/NDIA report said AT&T has targeted more affluent, non-rural areas for its fiber upgrades. Houses with fiber have a median income that’s 34% higher than those with DSL only. Across the rural counties in AT&T’s 21-state footprint, only a miniscule 5% have access to fiber, according to the report.

According to the report, 14.93 million—out of almost 53 million households—have access to AT&T’s fiber service. Among states, AT&T’s FTTH build out is the lowest in Michigan with 14% have access followed by Mississippi (15%) and Arkansas (16%).

“AT&T is also failing to make fiber available to the majority of its customer base in cities,” according to the report.  “While most of AT&T’s fiber build has focused on urban areas—96 percent of households with access to fiber in AT&T’s footprint are in predominantly urban counties—the company hasn’t built enough fiber to reach the majority of urban residents. Seventy percent of households in urban counties still lack access to fiber from AT&T because the company has made fiber available to only 14.7 million households out of 48.4 million total households in these counties.”

The report also said there were many areas in AT&T’s footprint where it doesn’t offer the Federal Communications Commission’s “broadband” definition of 25 Mbps downstream and 3 Mbps upstream.

“For 28% of the households in its network footprint, AT&T’s internet service does not meet the FCC’s 25/3 Mbps benchmark to be considered broadband,” the report said.  A key recommendation is that “AT&T must upgrade its network in rural communities to meet the FCC’s broadband definition, at least, and renew its efforts to deploy next-generation fiber.”

The report noted that in some areas where AT&T doesn’t provide faster speeds, cable operators, such as Comcast and Charter do.

“Even where that access is available from another provider­—typically a cable provider—consumers are deprived of the benefits of competition in price, choice and service quality,” the report said.

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AT&T is counting on fiber for both residential and commercial services, including AT&T TV. In order to win over customers from cable operators, AT&T has paired its 1-Gig service with AT&T TV.

Regarding DSL, the report states: “AT&T’s poor maintenance of its DSL networks, with limited capacity for new connections, results in would-be new customers in some areas being denied service entirely or told they can only subscribe to fixed wireless service (a 4G wireless connection for home use, designed for rural areas).”

As expected, AT&T refuted the claims made in the CWA/NDIA report in a statement to FierceTelecom and Broadband World News on Monday afternoon.

“Our investment decisions are based on the capacity needs of our network and demand for our services. We do not ‘redline’ internet access and any suggestion that we do is wrong.  We have invested more in the United States over the past 5 years (2015-2019) than any other public company. We have spent more than $125 billion in our U.S. wireless and wireline networks, including capital investments and acquisition of wireless spectrum and operations. Our 5G network provides high-speed internet access nationwide, our fiber network serves more 18 million customer locations and we continue to invest to expand both networks.”

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New Fiber Optics Market Report:

Finally, a new report by Technavio forecasts that the global fiber optics market size will grow by USD 2.44 billion during 2020-2024, progressing at a CAGR of almost 5% throughout the forecast period.

Technavio has announced its latest market research report titled Global Fiber Optics Market 2020-2024 (Graphic: Business Wire)

Image Credit:  Technavio

The increase in the number of FTTH homes and subscribers is the key factor driving the market growth. A higher number of customers are opting for fiber optic connections to leverage broadband services. This reduces the requirements for customer premises equipment (CPE) and distribution point unit (DPU).

References:

https://www.dslreports.com/forum/r32848850-DSL-is-officially-grandfathered-Get-orders-in-BEFORE-October

https://cwa-union.org/news/releases/new-reports-detail-how-telecoms-companies-att-are-failing-provide-broadband-and-good

https://cwa-union.org/sites/default/files/20201005attdigitalredlining.pdf

https://www.fiercetelecom.com/telecom/cwa-calls-out-at-t-s-lack-fiber-its-dsl-footprint

http://www.broadbandworldnews.com/document.asp?doc_id=764417

AT&T CEO: Fiber, Stories and (Video) Content to drive future revenues and growth

https://www.businesswire.com/news/home/20201005005444/en/

 

 

AT&T Deploys Dis-Aggregated Core Router White Box with DriveNets Network Cloud software

AT&T today announced that Israeli start-up DriveNets is providing its software-based, disaggregated core routing solution for the carrier’s IP-MPLS backbone network.   AT&T also said it had deployed its “next gen long haul 400G optical transport platform, giving AT&T the network infrastructure needed to transport the tsunami of demand that will be generated by 5G, fiber-based broadband and entertainment content services in the years ahead.”  [Long haul is  for distances >= 600km. AT&T did not name its 40G optical tranport vendor]

DriveNets says their Network Cloud solution perfectly fits the vision of AT&T and other leading service providers and cloud hyperscalers for the evolution of the network to be open, agile, cost effective and software based.  DriveNets Network Cloud is cloud-native software (not open source software).  It’s a software solution which runs over a cluster of low-cost white box routers and compute servers.  It has its own Network Operating System (NOS) and turns the physical network into a shared resource supporting multiple network services in the most efficient way.

Indeed, Network Cloud runs on standard white boxes built by ODM partners like UfiSpace who provided the white boxes to AT&T, based on the Jericho2 chipset from Broadcom. This approach creates a new economic model for the networking industry, lowering cost per bit and improving network profitability.

“We’re thrilled about this opportunity to work with AT&T on their next gen core network, and proud of our engineers for meeting AT&T’s rigorous certification process that field-prove the quality of our solution,” said Ido Susan, CEO of DriveNets. “This announcement demonstrates to those who questioned the disaggregated network model that our Network Cloud is more scalable and cost-efficient than traditional hardware-centric routers. DriveNets is transforming the network in the same way that VMware transformed the compute and storage industry” he added.

“I’m proud to announce today that we have now deployed a next gen IP/MPLS core routing platform into our production network based on the open hardware designs we submitted to OCP last fall,” said Andre Fuetsch, AT&T’s CTO of Network Services, in his keynote speech at the Open Networking and Edge Summit (ONES). “We chose DriveNets, a disruptive supplier, to provide the Network Operating System (NOS) software for this core use case.”

One year ago, AT&T contributed an open source specification for a distributed disaggregated chassis (DDC)to the Open Compute Project (OCP).  The DDC was intended to define a standard set of configurable building blocks to construct service provider-class routers, ranging from single line card systems, a.k.a. “pizza boxes,” to large, disaggregated chassis clusters.  It is a a white box design based on Broadcom’s Jericho2 silicon.  AT&T said the Jericho2 chip set provide the density, scale and features needed to support the requirements of a service provider.

The white box hardware was designed and manufactured by Taiwan based UfiSpace. It consists of three components: a 40x100G line card system, 10x400G line card system, and a 48x400G fabric system. These building blocks can be deployed in various configurations to build routers with capacity anywhere between 4 Tbps to 192 Tbps.

DriveNets Network Cloud solution and its innovative Network Operating System (NOS) software is NOT open source/open networking. It provides the management and control of the white box hardware. It supports a sophisticated set of traffic engineering features that enable highly reliable and efficient MPLS transport for our global, multi-service core backbone. The software then connects into AT&T’s centralized SDN controller that optimizes the routing of traffic across the core.

DriveNets Network Cloud offers extreme capacity and scale for networking service providers and cloud hyperscalers, supporting small to largest core, aggregation and peering network services. DriveNets Network Cloud runs over scalable physical clusters ranging from 4 Tbps (single box) to 768 Tbps (large cluster of 192 boxes), acting as a single router entity. This model is designed to offer both network scaling flexibility, similar to cloud architectures, as well as the ability to add new service offerings and scale them efficiently across the entire network.

 

AT&T DEPLOYS DRIVENETS NETWORK CLOUD SOFTWARE
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“We are pleased to see the broad adoption of Jericho2 products across the networking industry combined with the innovative DriveNets Network Cloud software,” said Ram Velaga, senior vice president and general manager, Core Switching Group, Broadcom. “AT&T’s submission of the Distributed Disaggregation Chassis white box architecture based on Jericho2 is making a big impact on driving the networking industry forward,” he added.

UfiSpace has been among the first who committed to opening the networking model, starting with our disaggregated cell site gateway routers which we have already demonstrated with AT&T at the Open Networking Summit (ONS) last April.” said Vincent Ho, CEO UfiSpace. “We are proud that AT&T’s core routing platform will utilize our white box solution where we can take part in the largest live Dis-Aggregated network in the world.”

In an email to Light Reading,  Drivenets’ Mr. Susan wrote: “This is the largest backbone network in the U.S. and DriveNets Network Cloud is deployed across the entire network, running over multiple large white box clusters in many core and aggregation locations of the AT&T network. Each one of these large clusters contains 192 white boxes from UfiSpace. The DriveNets Network Cloud Network Operating System (NOS) turn these large clusters of 192 white boxes into a single router entity. These large router entities are deployed in many locations at the AT&T network.”

Performing as the best in class router when it comes to stability, reliability and availability, DriveNets Network Cloud is the largest router in the market today. DriveNets is engaged with 18 service providers and hyperscalers and is already on the path to becoming one of the leading networking vendors in the market. Last week, DriveNets announced lab testing of a 192Tbps distributed router by a European operator.

DriveNets Network Cloud created a new SaaS-based network economic model that detaches network growth from network cost, lowering cost per bit and improving network profitability.  This disruptive business model assists service providers and cloud hyperscalers in reducing both network CapEx and OpEx.

“AT&T has a rigorous certification process that challenged my engineers to their limits, and we are delighted to take the project to the next level with deployment into the production network,” said Drivenets’ Susan.

Today’s white box with core routing software announcement is just the first of many from AT&T we may see in the near future. AT&T’s Fuetsch wrote in the press release, “In the coming weeks, we’ll announce additional software suppliers for other use cases operating on the same hardware, demonstrating the maturity of the eco-system and power of openness.”

Expect forthcoming AT&T white box related announcements to be on Provider Edge routers for which the carrier alluded to when releasing its DDC spec to the OCP.

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References:

https://drivenets.com/news-and-events/press-release/att-deploys-drivenets-network-cloud-in-their-next-gen-core/

https://about.att.com/story/2020/open_disaggregated_core_router.html

https://about.att.com/story/2019/open_compute_project.html

https://www.lightreading.com/opticalip/routing/drivenets-confirmed-by-atandt-for-cloud-native-core-routing-project/d/d-id/764263

https://searchnetworking.techtarget.com/feature/DriveNets-disaggregated-router-tech-wins-innovation-award

DriveNets Network Cloud: Fully disaggregated software solution that runs on white boxes

 

 

AT&T CEO: Fiber, Stories and (Video) Content to drive future revenues and growth

At Goldman Sachs Communacopia conference, AT&T CEO John T. Stankey said that broadband connectivity was a key focus area for the company. “Anything that we can do to put more fiber out into the network, serve both our consumer and business segments and use that to power what over time is going to become a much more dense and distributed wireless network. And that’s, first of all, one of our key focus areas and something that we see as being very important to us,” he said.

What Stankey said next was somewhat of a surprise, “We think we’re great storytellers, and that we have a unique ability to produce (video) content that’s special and different. And we’d like to continue doing that and telling those great stories and then using the combination of that connectivity in those stories to wrap it in software.”

When asked where should AT&T allocate capital, the CEO said:

  1.  Invest in its core business, which is fiber and broadband connectivity on 5G
  2.  Software driven entertainment products with HBO Max at the forefront of that, but it is a multi-year effort.
  3.  Ensuring that AT&T operations are set up to be successful and effective in the market that they’re serving customers. Also, that AT&T has data  properly positioned for advertising monetization and  to gain “great insights on customers.”

“When you have a great 5G network, you’re deploying a lot of fiber, and that’s something that we think are married well,” Stankey said, as per this transcript. “And we think we’re in a very unique position because the fiber that we deploy not only powers our wireless business, but it helps our consumer business and fixed broadband. It helps our enterprise customers and how we deal with them as well, and so we strategically want to make sure we’re doing that.”

When asked if there was a business case for adding more fiber, Stankey answered in the affirmative. Stankey said AT&T’s confidence level for deploying more fiber is even higher now due to increased traffic on its network as a result of the  Covid-19 lockdowns.

“There is clearly an easy path for us to think about a substantially larger fiber footprint than what we have today with returns that are as good as the great returns we’ve gotten from the first tranche that we’ve built,” Stankey said.

“If you go in and look at the rest of our business on the core connectivity, we thought robust scale and connectivity networks were always going
to be important. And what we’ve seen is what was important in the urban areas is now distributed. And while we’ve had good infrastructure in
place in many areas, we have an opportunity to go do more. We have an opportunity to think about more varied forms of access that are more
flexible. And I think that, that plays right into our strength, and we’re looking at redoubling our efforts on those product development opportunities
that allow for true flexibility of bandwidth as somebody moves through a city center out to suburban areas. Our play in 5G, a more dense fiber
network all play really well into those thing.”

Stanky added that he was pleased with the investments the company has made in infrastructure and in its network over the last several years. Also, some of the new initiatives round FirstNet and focus on the development of 5G are really starting to to “bear fruit” in terms of AT&T’s  performance in the industry.

In closing, Goldman moderator John E. Waldron asked the AT&T CEO, “If we were to have this conversation 5 to 10 years from now, how do you think AT&T will have changed from the company you are today?”

Stankey talked up AT&T’s broadband services and entertainment products:

“If I were to think about 5 years out and what I’d like to be able to come and tell you is, to my point earlier, that we are focused in a set .of products; that we’re really proud of in the market that were — that customers love and think are really strong; that our broadband connectivity products (these are actually services, not products), whether you’re a business with a complicated distributed network or you’re at home, using one of our fixed broadband connections or a subscriber of our wireless service, you view them as being the best-in-class that are there; that our entertainment products are unique and that you can’t live without the stories that we’re telling; and that our employees who bring those products and services to our customers have a lot of pride in those, and they see them as being best-in-class and unique and special in the market. And that’s kind of universally held across our business. And as a result of that, employees want to come, not only continue to work here, we’re able to go out the market and recruit because people say, “Those are great products. It’s a great company that offers those things, and I feel compelled to want to go and participate in that.” So a high degree of employee loyalty around the products and services that we bring in that manifest itself in great employee engagement and great customer receptivity of those products. And 5 years from now that we’re known in that regard.”

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References:

https://event.webcasts.com/viewer/event.jsp?ei=1365838&tp_key=1587a26f6b

https://investors.att.com/~/media/Files/A/ATT-IR/events-and-presentations/jts-at-goldman-transript-sept-15.pdf

AT&T Announces 5G Roaming in Japan when 5G roam-capable devices are available

AT&T 5G customers will be the first U.S. mobile customers to have the ability to access 5G in Japan through an international roaming agreement with NTT DOCOMO, Inc. and by using a 5G roam-capable device – the first of which will become available on the AT&T network this week.

The agreement delivers on AT&T’s commitment to keeping its customers connected and providing them with access to 5G – at home and around the globe – as capable devices become available.  However, this agreement is only for 5G NSA which uses an LTE anchor/core for all non-RAN related functions.

“As a longtime industry leader providing global connectivity, we’re evolving the breadth and depth of our global coverage with 5G,” said Susan A. Johnson, executive vice president – Global Connections & Supply Chain, AT&T. “This marks a significant milestone for AT&T and our customers.”

AT&T customers on a wireless plan that includes access to 5G in the U.S. will be able to access 5G in Japan through NTT DOCOMO, Inc., when they use a 5G roam-capable device.

But what are those 5G roam-capable devices and when will they be available?  They will surely be based on 3GPP Release 15 5GNR for the data plane, and 4G LTE for everything else, e.g. signaling, network management, security, 4G core/EPC, etc.  Hence, this arrangement might be called “5G NSA roaming with a LTE core network/EPC.”  5G SA roaming will be much more complicated as there is no standard for 5G core network and all the “cloud native” functions (like network slicing and virtualization) it will support.

“We’re excited to launch 5G roaming in Japan on NTT DOCOMO, Inc.’s network because of what it means for our customers,” said JR Wilson, vice president – Tower Strategy & Roaming, AT&T. “Our teams never stop innovating, developing and deploying the latest technology to provide our customers with access to a next-generation network – at home and abroad.”

AT&T claims they have historically been a leader in global roaming. So, while the company continues innovating to enable customers with compatible devices to access 5G internationally, those with LTE devices can still expect the same great roaming coverage they’re used to while traveling.

NTT DOCOMO is the first mobile operator in Japan to offer an inbound 5G roaming service.  Going forward, DOCOMO plans to expand its inbound 5G roaming service with mobile operators around the globe.  Again, that will surely be for 5G NSA service.

References:

https://www.nttdocomo.co.jp/english/info/media_center/pr/2020/0914_00.html

Addendum:  5G SA roaming will be much more difficult

Roaming with a 5G SA endpoint device (smartphone, tablet, notebook PC, robot/industrial equipment, etc. won’t be achieved anytime soon. Why? There is no standard for 5G core network which have to interoperate with one another for roaming.

The 3GPP core network specs are architecture documents that do NOT specify implementation details.  Therefore, every 5G network provider will have its own 5G core spec which is implemented in the core network routers/compute servers and endpoints.  So each 5G endpoint (e.g. smartphone or tablet/notebook PC) will have to download a 5G SA software update from the 5G network provider.  That means that unless there are bilateral 5G carrier roaming agreements, a 5G end point can only work on the 5G core network it’s subscribed to, e.g. no portability or interoperability!

For example, there are many software choices for implementing a “cloud native” 5G Core: containers, virtualized network functions, kubernetes, micro-services. Each Network Function (NF) offers one or more services to other NFs via Application Programming Interfaces (APIs).  And there is no standard for the APIs associated with a given Network Function!

3GPP Rel 16 5G Core/Architecture specs: 

  • TS 23.501 5G Systems Architecture, with annexes which describe 5G core deployment scenarios:
  • TS 23.502 [3] contains the stage 2 procedures and flows for 5G System
  • TS 23.503 [45] contains the stage 2 Policy Control and Charging architecture for 5G System

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AT&T Loses Subscribers, Revenues and Earnings drop due to COVID-19 Pandemic

AT&T suffered subscriber and revenue losses across the board in the spring quarter as the novel coronavirus infected every aspect of its business. Overall revenues sank to $41 billion, down 9% from $45 billion a year earlier, with the COVID-19 pandemic accounting for about $2.8 billion of that $4 billion hit.

On the wireless side of the business, which makes up more than half of revenues, AT&T shed 151,000 postpaid customers in Q2-2020, much worse than Wall Street’s consensus estimates of a 4,000-subscriber gain. That loss included 338,000 customers who stopped paying their bills but the company kept on the network to comply with the FCC’s Keep America Connected program. AT&T added 72,000 wireless postpaid subscribers in the year-ago period.

As a result, wireless revenues slipped to $17.1 billion in the quarter, down from $17.3 billion a year ago. But the company’s earnings before interest, taxes, depreciation and amortization (EBITDA) margin did edge up to 45.6% from 44.9% the year before.

AT&T’s shrinking traditional-TV business showed why the company needs its new online service to succeed. The division holding its DirecTV satellite unit lost 886,000 U.S. premium-TV subscribers and another 68,000 online-only channel bundles. That figure included 91,000 past-due accounts kept connected under the Keep Americans Connected pledge.

The U.S. TV unit ended June with 18.4 million accounts, down from more than 25 million two years ago. AT&T reported its traditional pay TV services, including DIRECTV and its newer streaming option AT&T TV, saw a combined net loss of 897,000 subscribers in the quarter. Meanwhile, its over-the-top streaming service, AT&T TV Now, also lost 138,000 subscribers, following a number of price hikes.  In addition, AT&T lost 68,000 streaming video subscribers. Due to that loss, its AT&T Now “skinny” bundle service closed the quarter with 720,000 subs, down 46% from a year earlier.

The company’s newer pay TV service, AT&T TV, only just became available nationwide in March. But despite its “streaming” nature — it ships with an Android TV-powered box to deliver TV over the internet — consumers may now have the opinion that it’s the worst of pay TV wrapped up in a new delivery mechanism. The streaming service is expensive compared with today’s over-the-top and video-on-demand options. It’s also laden with fees for things like activation, early termination and additional set-top boxes. And its bundle with AT&T Internet offers each service for $39.99/month for the first 12 months, but ties subscribers into two-year contracts where prices climb in the second year.

AT&T’s Q1 TV subscriber numbers indicate how quickly the pay TV market is imploding. And perhaps it will decline even more rapidly now that people no longer want to risk coronavirus exposure by having service techs install equipment in their homes. While AT&T TV’s DIY installation may help in that area, it’s unclear if the new service will ever broadly appeal to consumers in the streaming era.  AT&T ended the quarter with 18.6 million pay TV subscribers, down from 19.5 million in Q4 when it lost 945,000 subscribers. As a result, AT&T has now lost 3.9 million premium TV subs over the past 12 months, shrinking its customer base by 18%.

logo att share

Speaking on their earnings call Thursday morning, AT&T executives said they expect those numbers to improve in the third quarter as their retail stores gradually reopen throughout the U.S.  However, they also said some stores may not reopen or may close as they consolidate and streamline their retail outlets.

CapEx was $4.5 billion, with gross capital investment at around $5 billion, a difference primarily attributable to the timing of underpayments. AT&T invested an additional $1 billion in new 5G spectrum in the quarter, and invested nearly $400 million in HBO Max, in line with our full year estimate of $2 billion.

Even with the launch of HBO Max this spring, AT&T took its biggest financial hit on the media side of its business. Revenues at its WarnerMedia unit fell to $6.8 billion, down 23% from $8.8 billion last year, because of the absence of theatrical releases, lower TV ad sales and the lack of live sports. Company officials estimated that COVID-19 accounted for $1.5 billion of that decline.

Following what new AT&T CEO John Stankey termed “a flawless launch” of HBO Max, the supersized streaming video service that the company rolled out nationally in late May, the company reported that it closed out June with 36.3 million U.S. subscribers to HBO Max and HBO, up from 34.6 million subs at the end of last year. Citing “strong customer engagement” with HBO Max, Stankey said about 4.1 million customers have signed up so far, including about 1 million wholesale subscribers to AT&T.

AT&T reported an overall loss of 102,000 home broadband subscribers in the quarter, which included about 159,000 past-due accounts. The unit ended the quarter with 13.9 million connections, including DSL.   That broadband customer shrinkage came despite 225,000 AT&T Fiber net adds.   The latest AT&T broadband decrease marks the company’s fourth consecutive quarterly net loss of advanced broadband subscribers as it continues to fall further behind such big cable rivals as Comcast and Charter in the U.S. broadband market.

The telecom giant posted the overall broadband sub losses because it dropped 304,000 U-verse and other “advanced” broadband subscribers, according to the company’s latest earnings report. It also shed another 23,000 DSL subscribers as that business continues to wind down.

CFO John Stevens said on the earnings call:

Broadband customers continue to look for faster speeds. We added more than 220,000 AT&T Fiber subscribers, and a number of customers opting for gigabit speeds increased by more than 750,000 in the quarter. We now have 4.3 million AT&T Fiber customers, with nearly 2 million of them on 1 gigabit speeds.

On the broadband side, look, I have an appetite to get back to building footprint on fiber, and I think I’ve indicated that before. And I wouldn’t quite pigeon hole it in the way you asked the question relative to households. I have an appetite to build fiber that serves a combination of our needs in the consumer space, what we need to do to deploy 5G and what can help our business segment.

And really, the unique position we’re in as a business is we have lines of business in all those areas, and that should give us leverage in fiber deployment that I think others that are either only a fixed line provider and reselling wireless services or those that are only wireless providers and trying to deploy more fiber-intensive 5G networks don’t enjoy. And my investment thesis and my point of view on our company is that if we do our engineering correctly, and we think about our planning properly, we should be getting yields off of every millennial foot of fiber we put in that nobody else can achieve. And so as I think about this, and as we’re working them through from a planning perspective right now, it’s how we get the leverage across all 3 segments, not just the homes that we pass. Although, ideally, the net effect of that will be there will be communities that we build. I personally do not believe that 5G is a replacement in the near term for suburban, residential, single-family living units. It is an optimal strategy. I think it’s going to be a tough one to beat when there’s embedded gigabit-capable fixed line networks in place. And so I think there’s clearly going to be stuff on the margin that makes sense around that. But I don’t believe in the near term that 5G is the right fixed line replacement strategy in what I would call a typical single-family home infrastructure. And look, if it ultimately moves that way, and we start to see the technology stabilizing, we’re as well positioned as anybody to pivot to that. We certainly got the spectrum and the assets to make that happen; but I’m just not of the mindset right now that, that’s the optimal place to win in the market.

AT&T’s total broadband subscriber base is now shrinking by 3.3% on a year-over-year basis, according to the latest calculations by Craig Moffett, principal analyst at MoffettNathanson. In a report to investors today, he noted that this pace represents “another marked acceleration from the 2.8% decline” the company was experiencing just one quarter ago.Due to these accelerating subscriber losses, AT&T’s broadband financial metrics are clearly trending down as well.

“As with video, they had been pushing ARPU steadily higher, reflecting both mix as well as a clear intention to extract more cash from the business,” Moffett wrote in his report. But, he added: “Growth of just 1.6% YoY in premium broadband ARPU only (they don’t report DSL ARPU) wasn’t enough to offset the 2.5% YoY decline in subscribers; as with video, IP broadband revenue growth is now negative YoY.”

“HBO Max has gotten off to a rather inauspicious start,” Moffett added.

The company said it will continue investing in strategic growth areas like fiber, 5G, FirstNet, HBO Max.  Here are the company’s 2020 priorities:

Executing our plan with a market focus on:

• Wireless – Nationwide 5G and FirstNet
• Fiber-based connectivity – for wireless, consumer and business
• Software-based entertainment – HBO Max and AT&T TV
• Increased customer engagement – insights across all platforms’

AT&T withdrew its financial guidance due to the “lack of visibility related to COVID-19 pandemic and recovery,” the company said in a press release, which also stated:

“Our solid execution and focus in a challenging environment delivered significant progress in the quarter, most notably the successful launch of HBO Max, resilient free cash flow and a strengthened balance sheet,” said John Stankey, AT&T chief executive officer. “Our resilient cash from operations continues to support investments in growth areas, dividend payments and debt retirement. We are aggressively working opportunities to sharpen our focus, transform our operations and continue investing in growth areas, with the customer at the center of everything we do.”

“Our resilient cash from operations continues to support investments in growth areas, dividend payments and debt retirement. We are aggressively working opportunities to sharpen our focus, transform our operations and continue investing in growth areas, with the customer at the center of everything we do………I expect we’re going to be dealing with some of these economic challenges in a Covid environment” through the current quarter, Mr. Stankey said. “We’re operating accordingly,” he added.

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References:

https://investors.att.com/~/media/Files/A/ATT-IR/financial-reports/quarterly-earnings/2020/q2-2020/ATT%202Q20%20earnings%20release%20V2.pdf

https://investors.att.com/~/media/Files/A/ATT-IR/financial-reports/quarterly-earnings/2020/q2-2020/att-2q2020-earnings.pdf

https://www.lightreading.com/5g/covid-19-stings-atandt-despite-5g-hbo-max-rollouts/d/d-id/762618?

http://www.broadbandworldnews.com/author.asp?section_id=472&doc_id=762628&

AT&T Execs Talk up “Broadband Resiliency” and 5G with mixed impact from COVID-19

AT&T loses 897K more pay TV subscribers in Q1 2020, adding pressure to HBO Max launch

AT&T Execs Talk up “Broadband Resiliency” and 5G with mixed impact from COVID-19

John Stankey, president and chief operating officer, and incoming CEO of AT&T Inc. talked up broadband, HBO Max, and 5G today at the J.P. Morgan Global Technology, Media and Communications Conference.  Stankey said the company’s market focus is on providing customers with broadband through its fiber and mobile networks and software-based entertainment offerings such as HBO MAX and AT&T TV.  More importantly, he reaffirmed AT&T’s plan to have a nationwide 5G network in place by this summer (that’s long before 3GPP Release 16 can be implemented or ITU IMT 2020 standard completed).

In the midst of the COVID-19 pandemic, Stankey said the resiliency of AT&T’s wireless, broadband and enterprise businesses provides the company with confidence in its ability to continue to generate strong cash flows to invest in key capital areas including fiber, 5G and HBO Max, comfortably cover its dividend and pay down debt. Additionally, he noted that it continues to be challenging to predict the length or depth of the pandemic’s overall economic impact or its effect on the company’s overall business.

Here are a few highlight telecom related quotes from Stankey:

“Wireless business at its core remains very strong, but the activity environment is a bit suppressed primarily because of distribution. Roaming dynamics have put some pressure on revenues but the core is looking very good.”

“On the SMB side, its a little early to tell if they’ll be a bounceback,” referring to the uncertainty of when many SMBs will re-open.  “I think we’ll be in a fairly slow climb back out of the low end of the market.  I don’t expect this to be a quick snap-back this year.”

“We want customers to start thinking about connectivity (and content) so we can grow our advertising business over time  HBO Max is  the front end of our entertainment distribution platform.”  He noted that both HBO Max and AT&T TV are software based (OTT TV packages) that are independent of the underlying transmission/ delivery network.

“Any discretionary consumer spending will be under review” in light of the economic hardships and distress imposed by COVID-19 stay at homes.  That will likely result in more cord cutting and reduced spending on traditional pay TV bundles.

Nationwide 5G coverage by mid-year:

“It’s going well. We’re starting from a very strong position. Our embedded (cellular) network is performing as well or better than any network out there.  We’ve added over 70% capacity since the end of 2017 and are broad spectrum holding (mmW, midband and lowband) for which we have the flexibility to allocate traffic to all of those, puts us in excellent position for deploying 5G.”

“In the summer we’ll have nationwide coverage of 5G.  Our customer base over- indexes (?) on Apple products, but Apple hasn’t announced a 5G product yet…. I feel great on how things are lining up.”

What 5G enables when widely deployed:

” A highly managed WAN with incredible levels of security that supports the kind of environments we’re in today.  It plays very well into the enterprise.  New business models will emerge, including manufacturing floor, medical communities and establishments.”

AJW Comment:  This reiterates that AT&T continues to focus its 5G strategy on enterprise customers vs consumers and we think that is where the growth will be, especially if ultra low latency and ultra high reliability are added to the 5G specs (those two capabilities are not nearly complete in 3GPP Release 16 and non-existent in the ITU-R IMT 2020 RIT/SRITs being progressed.

Future of 5G Technology - The Promise of a Faster Network | AT&T 5G

………………………………………………………………………………………………………………………………………………

Yesterday, AT&T CFO John Stevens told a Moffet-Nathanson virtual conference that the businesses that come out of the COVID-19 crisis in good financial shape may want to take advantage of 5G-related cost efficiencies.

“Businesses that are going through this who do have solid balance sheets, solid capabilities, good technology – they may want to move quicker to 5G to ring out the cost savings and efficiencies,” he said, adding the situation remains “wait and see.”

Stephens acknowledged that COVID-19 damage may also cause AT&T to lose business customers. “Certainly some opportunities will go away” from companies facing financial pressures and restrictions to credit amid the coronavirus-related economic downturn.

The timeline for monetizing consumer 5G hasn’t been impacted since AT&T didn’t expect to generate significant consumer service revenues from 5G any time soon, instead anticipating 5G applications to be targeted at business users.

“Those [business] applications will be turned into consumer applications over time, so we feel really good about getting the network out there before significant growing demand for 5G on the consumer side,” Stephens said.

At the start of the year, AT&T had expected a major handset upgrade cycle, coinciding with its expanded 5G network deployment and HBO Max launch.  With a significant portion of its retail stores closed, alongside high unemployment rates and possible tightened consumer spending, AT&T anticipates reduced activity – as was seen in March, when device sales dropped 25%.

Consumers may put off purchasing devices as they conserve financial resources, but a weak upgrade cycle won’t affect AT&T’s profitability, according to Stephens.

“The way we’re building toward 5G on an evolutionary basis, we are dramatically improving our LTE coverage and speeds along the way, so the customers we have get the benefit of what we’ve done with the equipment that’s in their hands today,” he said. “They don’t need to buy a new device,” although they do expect 5G to provide the opportunity to do that if they opt to.

In terms of mid-band spectrum compared to competitors, with T-Mobile’s new 2.5 GHz holdings and Verizon expected to participate in the C-Band auction later this year, Stephens said that AT&T’s work getting about 150 MHz of new spectrum into service has put the company in a favorable position for low-and mid-band spectrum.

Stephens couldn’t comment on the upcoming CBRS auction, but said C-band would be interesting to participate in and is confident in AT&T’s ability to fund spectrum acquisitions. Still, AT&T feels very good with its current spectrum holdings, which he stressed are already in service for customers.

References:

https://about.att.com/story/2020/stankey_jp_morgan.html

https://jpmorgan.metameetings.net/events/tmc20/sessions/31317-keynote-at-t-inc/webcast?gpu_only=true&kiosk=true

https://www.fiercewireless.com/operators/at-t-staying-steady-strategy-cfo

AT&T Execs Talk up “Broadband Resiliency” and 5G with mixed impact from COVID-19

John Stankey, president and chief operating officer, and incoming CEO of AT&T Inc. talked up broadband, HBO Max, and 5G today at the J.P. Morgan Global Technology, Media and Communications Conference.  Stankey said the company’s market focus is on providing customers with broadband through its fiber and mobile networks and software-based entertainment offerings such as HBO MAX and AT&T TV.  More importantly, he reaffirmed AT&T’s plan to have a nationwide 5G network in place by this summer (that’s long before 3GPP Release 16 can be implemented or ITU IMT 2020 standard completed).

In the midst of the COVID-19 pandemic, Stankey said the resiliency of AT&T’s wireless, broadband and enterprise businesses provides the company with confidence in its ability to continue to generate strong cash flows to invest in key capital areas including fiber, 5G and HBO Max, comfortably cover its dividend and pay down debt. Additionally, he noted that it continues to be challenging to predict the length or depth of the pandemic’s overall economic impact or its effect on the company’s overall business.

Here are a few highlight telecom related quotes from Stankey:

“Wireless business at its core remains very strong, but the activity environment is a bit suppressed primarily because of distribution. Roaming dynamics have put some pressure on revenues but the core is looking very good.”

“On the SMB side, its a little early to tell if they’ll be a bounceback,” referring to the uncertainty of when many SMBs will re-open.  “I think we’ll be in a fairly slow climb back out of the low end of the market.  I don’t expect this to be a quick snap-back this year.”

“We want customers to start thinking about connectivity (and content) so we can grow our advertising business over time  HBO Max is  the front end of our entertainment distribution platform.”  He noted that both HBO Max and AT&T TV are software based (OTT TV packages) that are independent of the underlying transmission/ delivery network.

“Any discretionary consumer spending will be under review” in light of the economic hardships and distress imposed by COVID-19 stay at homes.  That will likely result in more cord cutting and reduced spending on traditional pay TV bundles.

Nationwide 5G coverage by mid-year:

“It’s going well. We’re starting from a very strong position. Our embedded (cellular) network is performing as well or better than any network out there.  We’ve added over 70% capacity since the end of 2017 and are broad spectrum holding (mmW, midband and lowband) for which we have the flexibility to allocate traffic to all of those, puts us in excellent position for deploying 5G.”

“In the summer we’ll have nationwide coverage of 5G.  Our customer base over- indexes (?) on Apple products, but Apple hasn’t announced a 5G product yet…. I feel great on how things are lining up.”

What 5G enables when widely deployed:

” A highly managed WAN with incredible levels of security that supports the kind of environments we’re in today.  It plays very well into the enterprise.  New business models will emerge, including manufacturing floor, medical communities and establishments.”

AJW Comment:  This reiterates that AT&T continues to focus its 5G strategy on enterprise customers vs consumers and we think that is where the growth will be, especially if ultra low latency and ultra high reliability are added to the 5G specs (those two capabilities are not nearly complete in 3GPP Release 16 and non-existent in the ITU-R IMT 2020 RIT/SRITs being progressed.

Future of 5G Technology - The Promise of a Faster Network | AT&T 5G

………………………………………………………………………………………………………………………………………………

Yesterday, AT&T CFO John Stevens told a Moffet-Nathanson virtual conference that the businesses that come out of the COVID-19 crisis in good financial shape may want to take advantage of 5G-related cost efficiencies.

“Businesses that are going through this who do have solid balance sheets, solid capabilities, good technology – they may want to move quicker to 5G to ring out the cost savings and efficiencies,” he said, adding the situation remains “wait and see.”

Stephens acknowledged that COVID-19 damage may also cause AT&T to lose business customers. “Certainly some opportunities will go away” from companies facing financial pressures and restrictions to credit amid the coronavirus-related economic downturn.

The timeline for monetizing consumer 5G hasn’t been impacted since AT&T didn’t expect to generate significant consumer service revenues from 5G any time soon, instead anticipating 5G applications to be targeted at business users.

“Those [business] applications will be turned into consumer applications over time, so we feel really good about getting the network out there before significant growing demand for 5G on the consumer side,” Stephens said.

At the start of the year, AT&T had expected a major handset upgrade cycle, coinciding with its expanded 5G network deployment and HBO Max launch.  With a significant portion of its retail stores closed, alongside high unemployment rates and possible tightened consumer spending, AT&T anticipates reduced activity – as was seen in March, when device sales dropped 25%.

Consumers may put off purchasing devices as they conserve financial resources, but a weak upgrade cycle won’t affect AT&T’s profitability, according to Stephens.

“The way we’re building toward 5G on an evolutionary basis, we are dramatically improving our LTE coverage and speeds along the way, so the customers we have get the benefit of what we’ve done with the equipment that’s in their hands today,” he said. “They don’t need to buy a new device,” although they do expect 5G to provide the opportunity to do that if they opt to.

In terms of mid-band spectrum compared to competitors, with T-Mobile’s new 2.5 GHz holdings and Verizon expected to participate in the C-Band auction later this year, Stephens said that AT&T’s work getting about 150 MHz of new spectrum into service has put the company in a favorable position for low-and mid-band spectrum.

Stephens couldn’t comment on the upcoming CBRS auction, but said C-band would be interesting to participate in and is confident in AT&T’s ability to fund spectrum acquisitions. Still, AT&T feels very good with its current spectrum holdings, which he stressed are already in service for customers.

References:

https://about.att.com/story/2020/stankey_jp_morgan.html

https://jpmorgan.metameetings.net/events/tmc20/sessions/31317-keynote-at-t-inc/webcast?gpu_only=true&kiosk=true

https://www.fiercewireless.com/operators/at-t-staying-steady-strategy-cfo