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.
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.
As expected, AT&T reported first quarter (Q1) 2020 revenues down 4.6 percent to $42.8 billion. The mega telco/media company continued to lose pay-TV subscribers while its WarnerMedia division suffered from the Covid-19 outbreak’s impact on the film and TV industry.
AT&T estimates the coronavirus pandemic reduced EPS 5 cents in the first quarter, which otherwise would have been in line with analyst expectations. Adjusted EPS fell to $0.84 from $0.86 a year ago, but would have increased to $0.89 without the extraordinary virus effect. The adjusted operating profit margin reached 21.2 percent in Q1, down slightly from 21.4 percent a year ago.
- Telecom business revenues were down 2.6 percent to $34.2 billion, while adjusted EBITDA rose 2.1 percent to $12.8 billion.
- AT&T Wireless grew service revenues 2.5 percent.
- Revenues continued lower at the Entertainment group as AT&T lost another 1.035 million pay-TV subscribers in the quarter.
- Mobile subscriber growth slowed to 27,000 postpaid net adds (+163,000 with phones), and the broadband base fell by another 73,000 customers in the three months.
Highlights from today’s AT&T earnings call transcript:
In Mobility, service revenue grew by 2.5% in the quarter. EBITDA of $7.8 billion grew by more than $500 million or 7%, and EBITDA margins expanded by 280 basis points. COVID did impact our top line revenue numbers in the quarter by about $200 million due to lower equipment and roaming revenues. Our subscriber counts for wireless, video and broadband this quarter exclude customers who we agreed not to terminate service for non-payment. For reporting purposes, we are treating those subscribers has disconnects. Even with that, our industry-leading network and FirstNet drove postpaid phone net adds of 163,000. Postpaid phone churn was down 6 basis points to 0.86% and our 5G deployment continues. We now cover more than 120 million people in 190 markets, and we expect we’ll be nationwide this summer.
In our Entertainment Group, cash generation remains a focus. We added 209,000 AT&T Fiber subscribers and now serve more than 4 million. We continue to drive ARPU growth in both video and IP broadband. In fact, premium video ARPU was up about 10% as we continue to focus on long-term value customers. We launched AT&T TV nationally late in the quarter and subscriber growth was in line with our expectations even with COVID impacts. Premium video net losses again improved sequentially.
Business Wireline performance was solid, with EBITDA and EBITDA margins remaining stable. Revenues were consistent with recent trends as declines in legacy products were partially offset by growth in strategic and managed services. Business Wireline continued to be an effective channel for our Mobility sales. Including wireless, total business revenues grew 1.7%.
The negative coronavirus financial impact was palpable at WarnerMedia, which lost around $1 billion in revenue year-on-year and over $500 million in adjusted EBITDA. The unit suffered from the suspension of key events such as the NCAA basketball tournament and new cinema releases, a slowdown in advertising due to the reduced economic activity and a halt to most production activities.
Operating cash flow totaled $8.9 billion in the quarter, and capital expenditure (CAPEX) reached $5.8 billion, leaving free cash flow of USD 3.9 billion. Net debt was at about 2.6x EBITDA at the end of the quarter.
AT&T said its liquidity position and balance sheet remained strong and it had already adjusted capital spending plans and suspended its share buybacks. It will continue investing in critical growth areas like 5G, fiber broadband and HBO Max, while maintaining its dividend commitment and paying down debt,
AT&T President & COO John Stankey said during AT&T’s earnings call:
Our 5G deployment continues, although we continue to navigate workforce and permitting delays. We expect nationwide coverage this summer. We also continue to be opportunistic with our fiber build beyond the 14 million household locations we reach today.
Stankey said the operator would encourage customers to install their own equipment and would shift customers to its fiber network. He also said the operator would use artificial intelligence (AI) and other capabilities to reduce initial “truck rolls” (technician visits to customer locations) and to eliminate the need for a second visit.
“These efficiencies will enhance our ability to continue to invest in our key growth initiatives,” including HBO Max and 5G, Stankey said of AT&T’s cost-cutting program.
Regarding CAPEX, before the coronavirus pandemic, AT&T said it would spend around $20 billion on CAPEX throughout 2020, which is significantly lower than the $23 billion it spent in 2019 and the $22 billion that most Wall Street analysts had expected AT&T to spend in 2020. AT&T CEO Randall Stephenson gave mixed messages on CAPEX plans for the remainder of the year on today’s earnings call:
“It’s not just writing checks for CAPEX. There’s people out doing things,” he said, explaining that some technicians may not be able to visit cell sites due to the spread of COVID-19, while some local officials may not be able to issue cell site construction permits.
“While we have no intention of slowing down on 5G and fiber deployment, the reality is that a lot of it is not in our control,” Stephenson said. “So there’s probably going to be – relative to the targets we gave you in CAPEX – some downward proclivity on that number, just because of the logistical issues we’re running into.”
AT&T declined to provide any financial guidance for the remainder of 2020 due to the pandemic. The operator/media giant spent roughly $5 billion on CAPEX during its most recent quarter, slightly above some Wall Street estimates.
AT&T’s management said the company had begun a cost-cutting program that the operator hopes will trim $6 billion from its budget by 2023. The huge cost cutting effort may include layoffs. Stankey didn’t specifically mention that word, but instead said the operator would enact a “headcount rationalization,” a term that could include layoffs as well as reductions by not hiring replacements for workers who retire or leave. That program, he said, would reduce the operator’s labor expenses by 4%, or roughly $1.5 billion, by the end of 2020. He added that the reduction would target employees in AT&T’s call centers, management structures and distribution strategy. AT&T employed roughly 252,000 people at the end of September.
CEO Stephenson made the following illuminating comments during the call:
In Mobility, the most immediate impacts are the reduction of roaming revenues as well as a reduction in late fees. The waiving of late fees is a commitment to our customers during these difficult economic times and roaming should gradually increase as people start to travel more. The first quarter impact of these items was approximately $50 million, with virtually all of it in the second half of March. We’re augmenting our digital sales team to mitigate the impact of store closures on equipment and service revenues, but we’re still forecasting lower wireless gross adds and upgrades. In fact, equipment revenues were down nearly 25% year-over-year in March. As a result of COVID, we anticipate an increase in bad debt expense across the various businesses, and accordingly, have recorded a $250 million incremental reserve in anticipation of that.
In our Entertainment Group, we anticipate increases in premium TV subscriber cord-cutting as well as lower revenues from commercial locations such as hotels, bars, and restaurants. Labor unit costs will increase temporarily from the 20% boost in pay we’re providing our frontline employees.
At WarnerMedia, content production has been placed on hiatus. Theatrical releases have been postponed and we’re seeing lower advertising revenues and lower costs from sports rights. This crisis has shown the value of premium streaming entertainment and we anticipate strong demand for HBO Max when it launches next month.
Fiber and broadband are more important than ever and we saw a pickup in demand for both in the quarter. We’re also seeing higher demand for VPN bandwidth and security. We do expect a negative impact on small business, which makes up about 15% of our total business wireline revenues. A detailed schedule of the COVID impacts is included in our investor briefing.
One Wall Street analyst wondered if AT&T is moving its 5G goal posts slightly for 2020. Jennifer Fritzsche at Wells Fargo pointed out that AT&T executives now promise nationwide low band 5G by “summer” 2020. In contrast, during previous calls they had said the operator would reach that target by the “middle” of 2020.
AT&T’s low band 5G offering works on its 850MHz spectrum and doesn’t provide speeds that are much faster than its 4G LTE network. The operator also operates faster 5G services in millimeter wave (mmWave) spectrum in parts of roughly 30 cities, but AT&T executives have remained conspicuously silent on that effort.
Verizon, in contrast, has promised to expand its own mmWave 5G network to an additional 30 cities this year.
AT&T’s 2020 CAPEX warning, on its network in general and on 5G specifically, has been echoed by some other players in the industry.
“COVID-19 and actions taken by governments to slow down the spread are making our service delivery and supply harder due to lockdowns and travel restrictions in many countries,” Ericsson CEO Börje Ekholm said earlier on Wednesday. Ericsson sells 4G and 5G equipment to a wide range of global operators, including AT&T. “In addition, while we have seen no material effects on our demand situation, it is prudent to believe that the slowdown in the general economy may lead some operators to delay investment programs.”
Ekholm said some operators are accelerating their investments in 5G and 4G capacity, pointing to providers in China specifically. Those comments dovetail with concerns of a 5G slowdown in Europe, largely due to decisions by some officials there to delay 5G spectrum auctions.
“We’re having to understand better what will happen as we exit the COVID pandemic in terms of [5G] investment,” noted EXFO CEO Philippe Morin in response to a question about how the pandemic might affect US operators’ 5G spending, according to a transcript of his remarks. He made his comments during his company’s recent quarterly conference call with investors. EXFO sells network testing equipment, including for 5G, to mobile network operators globally.
“In certain other countries in Europe, we’ve seen actually some of the [5G] spectrum auctions to be delayed as the countries have to deal with the virus,” Morin continued. “So, we’re going to – this is part of the discussions we’re having and dialogs we are having with our customers to better understand how – once we emerge out of the crisis, how the investments and where are the priorities are going to be.”
Stephenson acknowledged that it’s “pretty difficult” to predict what’s going to happen next as Americans and the rest of the world fight COVID-19. He said the world’s smartest economists disagree about what’s going to happen in the next quarter, much less the rest of the year.
AT&T’s CFO John Stephens said that mobile service remains an essential expense to most people. “The last thing that people don’t want to pay is probably their cellphone bill,” he said.
Indeed, in its most recent quarter – which suffered from the initial effects of widespread stay-at-home orders – AT&T reported postpaid phone net customer additions of 163,000, ahead of most Wall Street expectations. AT&T executives said the operator’s mobility business would help bolster its troubled media operation.
“The bottom line here is that Mobility performed its role admirably in Q1,” wrote the analysts at Wall Street research firm MoffettNathanson of AT&T’s financial performance, in a note to investors Wednesday.
However, AT&T executives warned that if an economic recession deepens wireless users may look to reduce their spending by paying less for their service or holding onto an existing phone longer rather than upgrading to a new phone.
April 24 (Reuters) – AT&T Inc said Friday that Chief Operating Officer John Stankey will take over as chief executive officer, effective July 1. The announcement was made during AT&T’s annual meeting.
DISH Network is loaning AT&T 20 MHz of spectrum in the AWS-4 band, as well as its entire supply of 700 MHz airwaves, for two months. This is the third spectrum-sharing arrangement that the satellite provider has made since Sunday as telecom network providers prepare for extra data traffic from people working at home.
“DISH is proud to join forces with AT&T to achieve a common, critical goal: supporting the connectivity needs of Americans during this challenging time,” said Jeff Blum, DISH SVP of public policy and government affairs, in a statement.
This follows last week’s news that DISH would lend its complete 600 MHz portfolio of spectrum to T-Mobile. In addition to loaning spectrum to T-Mobile and AT&T, DISH was given permission yesterday by the FCC to also loan spectrum to Verizon.
According to analyst Jonathan Chaplin at New Street Research, AT&T will be able to deploy the AWS-4 spectrum quickly and easily using its AWS-1 and AWS-3 equipment. In addition, AT&T can use Dish’s 700 MHz E-Block in conjunction with the D-Block that AT&T has started deploying in some markets. Analysts are speculating that these loans during the COVID-19 crisis might later be turned into ongoing leases.
Chaplin wrote: “All told, DISH has now loaned out spectrum that could be leased at an annual run rate of $940 million. They still have the PCS H-Block and another 20 MHz of AWS-4, which would be worth another $580 million.”
Chaplin of New Street says: “All we know at this stage is that DISH is helping in a crisis; we don’t know that either side would be willing to convert the loan to a lease.”
DISH’s generosity in lending its spectrum during the coronavirus scare is highlighting how helpful the spectrum is to other operators in order to increase their capacity.
Wells Fargo analyst Jennifer Fritzsche wrote, “Once this crisis passes, we believe the heavy demand on wireless and wired networks will shine the light on the need for additional spectrum allocation and continued programs to support push-out of broadband into rural areas to lessen the digital divide.”
PC Magazine has a breakdown of how Dish is distributing its unused spectrum over the next 60 days. Each provider is getting spectrum that can temporarily help bolster its 4G LTE data network and increase speeds. In AT&T’s case, Segan estimates that wireless customers could notice up to a 20Mbps uptick in data performance while the spectrum loan is in effect.
DISH has often been criticized for hoarding spectrum and not putting it to any actual use. The company even risked fines from the FCC for failing to build an actual wireless network with the spectrum it owns. But that was before the company was brought into the T-Mobile and Sprint deal and positioned as the replacement fourth “major” carrier once the merger is finalized.
Earlier today, T-Mobile issued a news release stating that the company remains prepared to close the merger with Sprint even as financial markets are in turmoil due to the coronavirus pandemic. All necessary US regulators have already approved it and the two providers emerged victorious over a challenge from several US states.
AT&T has enhanced its fiber-to-the-home (FTTH) “last mile” network by deploying XGS-PON [1.] technology which will be live in 40 markets. AT&T will start out providing 1 gigabit download speeds before eventually boosting them to 10 gigabits per second in both directions as it upgrades from GPON networks. The company said it has deployed XGS-PON in “a few thousand locations” noted that it has employed multiple vendors in the process. It’s part of AT&T’s road map to virtualize network access functions within its last mile network.
NOTE 1. XGS-PON is a fixed wavelength symmetrical 10 Gbps passive optical network technology.
The “X” in XGS represents the number 10, and the letter “S” stands for symmetrical, XGS-PON = 10 Gigabit Symmetrical PON. An earlier, non-symmetrical 10 Gigabit PON version (XG-PON) was limited to 2.5 Gbps in the upstream direction.
PON technology originated in the 1990’s and has continued to develop through multiple iterations with differing wavelengths, speeds and components emerging as the technology has improved. The common denominator of all fiber optic PON networks remains the unpowered or passive state of the fiber and its splitting or combining components, i.e. no active elements such as optical amplifiers, which would require power, are present in the network. With streaming, high definition, 5G and other emerging technologies continually pushing bandwidth demands, the development of XGS-PON and other standards has proven to be essential.
Simultaneous upstream and downstream transmission over the same fiber is made possible through wavelength division multiplexing (WDM). This technology allows one XGS-PON wavelength or color of light transmission for upstream and another for downstream.
Two years ago, AT&T completed trials of 10 Gbps XGS-PON by using Open Source Access Manager Hardware Abstraction (OSAM-HA) software in Atlanta and Dallas. OSAM-HA was released into the Open Networking Foundation (ONF) in 2017 as VOLTHA.
- OSAM, which used the Open Networking Automation Platform (ONAP) platform that AT&T helped develop, is a vendor-agnostic operational suite for managing consumer and business broadband access network elements and capabilities. ONAP has undergone several major releases over the past few years.
- ONF’s Virtual OLT Hardware Abstraction (VOLTHA) open source software project, which is a component of ONF’s SDN Enabled Broadband Access (SEBA) platform, abstracts a PON network to make it manageable as if it were a standard OpenFlow switch.
- SEBA describes how to assemble a collection of open source components to build a virtualized PON network to deliver residential broadband and mobile backhaul. SEBA uses a disaggregated white-box approach for building next generation access networks by using open source.
“AT&T continues to work with open communities such as ONF, ONAP, and OCP (Open Compute Project) to drive innovation, time-to-market, and cost improvements as we build next generation networks,” the company said in a March 4th statement in regard to a request for more information on the deployments in the 40-plus cities.
Conventional wisdom in the fiber broadband industry suggests NG-PON2 is the platform most providers will eventually adopt, with XGS-PON as an interim step to get there.
Verizon seems to be leapfrogging that approach. For what it’s worth regarding conventional wisdom, the AT&T spokesperson tells Telecompetitor, that “AT&T is not currently planning to use NG-PON2 at this time.”
Here’s what AT&T, Sprint, T-Mobile, and Verizon said about their 5G network rollouts, soon-to-be available devices, and Smart City plans at CES 2020:
AT&T on 5G Devices, Network Plans:
Carrier and media goliath AT&T talked about 5G devices at this year’s CES event in Las Vegas, NV. Currently, AT&T only sells one 5G-capable phone, the Samsung Galaxy Note 10 Plus 5G, but AT&T plans to have 15 5G phones available for use on its low-band 5G spectrum during 2020 (see Comment in the box below this article). The Dallas-based service provider said that other mobile devices, such as laptops, tablets, and hotspots will also be available this year, but no exact number of products were provided.
AT&T’s low-band 5G network went live in December 2019 and is currently available in parts of 19 cities. The carrier’s other 5G network that is built on millimeter-wave and is referred to as 5G Plus is live in parts of 35 cities. AT&T said that it plans to cover 200 million people with its 5G network by this summer.
Sprint IoT, Smart City Updates:
Wireless provider Sprint could merge with T-Mobile any day now, but the Overland Park, Kansas-based carrier hasn’t slowed down in the meantime. Sprint took to CES to launch several new offerings and update the market on its IoT plans.
Sprint unveiled its Certainty network design model, which unites its entire business wireline portfolio, including its wireless, IoT, and security solutions. The carrier also launched IoT Factory 2.0, a dedicated platform that solution providers and businesses can use to build custom IoT solutions for small-to-mid sized businesses in the food service, healthcare and agriculture space.
Chris Brydon, Regional Vice President Sales, Sprint Business Northwest Region via LinkedIn:
We believe hashtagIoT has the power to improve people’s lives. Here’s a story illustrating how an IoT application can be so much more than just a cold, lifeless piece of tech. Watch the very human difference it makes in the lives of a man and his family. https://lnkd.in/gdyeT9N hashtagWorksForBusiness
Sprint updated the market on its Smart City initiative on Tuesday. Specifically in Georgia, the provider said that in 2020 “micropositioning” technology, which combines next-generation wireless technologies and small cells will be installed within city infrastructure in areas to enable real-world navigation for autonomous machines, more connected sensors and IoT solution testing in its innovation Center for solutions such as refrigeration and monitoring, and security robots in Peachtree Corners’ Town Hall. Sprint also has plans to integrate additional Smart City technology in Greenville, South Carolina, and Arizona State University.
T-Mobile Talks 5G, Avoids Sprint Mega-Merger Talk:
T-Mobile didn’t address the main topic on everyone’s mind when thinking about the Magenta-colored carrier: its in-progress $26 billion mega-merger with wireless competitor Sprint. Instead, the “Un-Carrier” took to the show to highlight its 5G connectivity.
In a surprising move last month, the Bellevue, Wash.-based provider launched its nationwide 5G network using 600 MHz spectrum acquired in the recent incentive auction, as well as two 5G phones capable of using its 600 MHz spectrum. T-Mobile originally planned to launch the network in 2020.
Verizon 5G Devices and Ultra Wideband Availability:
AT&T’s biggest competitor, Verizon, also came to CES armed with 5G updates. Compared to AT&T’s 15 devices, Basking Ridge, N.J.-based Verizon vowed to have 20 5G-capable devices in 2020 and said these devices would be competitively priced anywhere between $600-$800. Currently, Verizon has four 5G-capable smartphones. Subscribers interested in 5G will have to pay an additional $10 on top of their current unlimited data plan, Verizon said, but the company didn’t name any specific device manufacturers.
Verizon’s ultra wideband 5G network is available in parts of 30 cities today, including Chicago, Los Angeles, and New York City, as well as Hoboken, N.J. Des Moines, Iowa; and Providence, RI. Please see Comment in the box below this article.
Mike Dano of Lightreading wrote that AT&T and Verizon made “vague (uncertain?) promises” for their 5G mmWave networks:
in a New Year-themed post, AT&T’s Scott Mair wrote that “you’re in for an exhilarating ride on the AT&T 5G network in 2020 and beyond,” but he did not offer any specifics about what the carrier will do with its “5G+” network. Then, during a subsequent appearance at an investor event this week, AT&T CFO John Stephens said only that the operator’s 5G network would “continue to improve and grow.”
Similarly, Verizon touted its “vision” for its network in 2020 in a release issued this week, but said only that customers should “expect more great innovations and technology advancements from us in 2020 including a more aggressive build out of our 5G network.” At that same investor event, Verizon’s Ronan Dunne said “we will be continuing to drive hard” in 5G, but didn’t offer any specifics.
The bottom line here is that neither operator is offering any concrete information on the number of cities, cell sites or customers it plans to touch with mmWave 5G in 2020. As Heavy Reading analyst Gabriel Brown writes, it’s time for these operators to show their hands.
From a marketwatch.com article titled: The long-promised ‘Year of 5G’ arrives with more promises and little 5G
For years, telecommunications companies and gadget makers have invaded CES to talk about how big 5G was going to be in 2020.
At CES 2020 though the promise was still unfulfilled as the faster wireless service is still spotty and not entirely what was envisioned.
Without the premier connections that were promised, it is questionable how many consumers will buy the more expensive 5G-enabled devices that were introduced at the giant trade show this year, even though the same glowing predictions of a new future were readily available throughout Las Vegas.
5G promises faster data speeds, a reduction in lag time, and greater density for smart devices, all things that could eventually be catalysts for futuristic applications like autonomous driving and connected cities. More immediately, carriers are focused on exposing businesses and customers to those faster data speeds, where and when they can.
Verizon Communications Inc. expects to launch 20 devices with access to 5G by the end of the year, up from the seven that currently exist, according to Tami Erwin, who heads the company’s business group. AT&T Inc. mobility executive Kevin Petersen told MarketWatch at CES that accessibility will also be a key theme in the year ahead.
T-Mobile US claimed that it conducted a nationwide 5G rollout at the end of last year, providing access over a greater area but at slower data speeds than competitors. Verizon and AT&T both plan to add new cities to their coverage later this year, with AT&T still expecting to have nationwide coverage this year also.
Bob O’Donnell, president of TECHnalysis Research, cautions that these upgrades won’t happen right away due to some technical aspects of the 5G rollout. The more exciting type of 5G, millimeter-wave spectrum, primarily works outdoors and on campuses where it’s been specifically deployed. Sub-6 5G service works indoors and offers some benefits in speed and latency, but it’s a less dramatic step up from the 4G service consumers have come to know.
“The pieces are coming together but the forward-looking benefits are still a few years off,” O’Donnell said. Part of the issue is that 5G currently runs on top of 4G, rather than in a stand alone manner. Moving to stand alone 5G requires that carriers “refarm” spectrum frequencies from 4G to 5G, but they’re hesitant to make that big leap right away while most customers are still using 4G connections and while few phones support 5G.
“That’s like opening a 10-lane highway only for people with electric cars,” he said, since only a small minority of drivers would have access.
Making 5G a reality is a bit of a “chicken and egg” scenario, according to O’Donnell, given that carriers thinking about moving away from 4G want there to be enough devices in the market to take advantage of the new wireless standard, and consumers want to make sure 5G networks are broad enough before investing in a mobile device that works on the network.
The device part of the equation showed signs of progress at CES, with connected PCs being one notable category. Lenovo Group Ltd. announced it will launch in the spring the Yoga 5G two-in-one device, which it says is the first 5G PC. Always-connected PCs let customers rely on cellular connectivity rather than hunt for WiFi networks, and the 5G products shown by Lenovo, HP Inc. HPQ, and others offer faster speeds than 4G ones currently on the market.
Those devices are more expensive than competitive gadgets without access to the technology, though, and that will most likely continue to be the case. Samsung Electronics Co. Ltd. will be holding a smartphone launch in early February, where the company is expected to introduce a family of 5G Galaxy devices, and Apple is thought to be planning a 5G iPhone rollout later this year, with analysts expecting the 5G versions of those popular smartphones to carry a higher price tag.
Instinet analyst Jeffrey Kvaal expects “a large increase” in 5G unit sales for 2020, up from a small base of sales last year, but he thinks most of these sales will come at the expense of 4G devices, rather than a rush of upgrades. He estimates that 5G could boost a phone’s retail price by at least $75.
Today’s devices tend to be in the $1,000-plus range, but consumers should “start to see prices coming down, which ultimately helps the adoption curve,” as more mid-tier devices come to market this year equipped with 5G capabilities. Verizon’s consumer chief executive Ronan Dunne said at a Citi investor conference earlier this week that there could be 5G devices priced below $600 by the end of the year.
AT&T Chief Financial Officer John Stephens told investors at the Citi conference that trying to predict 5G unit sales is missing the point a bit, since handset sales are “not a profitable enterprise for a business like ours.” The company sees various new service revenue opportunities from being able to compete “in the geographies where our service has gotten much better.”
The promise of 5G goes well beyond smartphones, and executives pointed out that the services that have developed in the past decade likely wouldn’t have existed without the move to 4G.
“If someone was watching a streaming video on a connection 10 years ago, you would’ve swatted the phone out of their hand and said they were going to use up the whole monthly data plan in 13 seconds,” Qualcomm’s vice president of engineering John Smee told MarketWatch. Now, streaming over wireless is commonplace. Verizon’s Erwin noted that the proliferation of ride hailing also wouldn’t have been possible without the upgrade in data speeds.
AT&T’s Petersen thinks it’s too soon to know what the killer use case for 5G will be, but he’s upbeat about its ability to provide upgraded experiences in gaming, translation and medicine. A reduction in latency, or lag time, could create better responsiveness for gamers and reduce awkward pauses when people are using mobile devices to translate from one language to another in real time. Doctors could more easily monitor patients remotely after procedures by using connected devices.
Over time, the expected benefits of 5G and the growth of accessible smart devices could change the way consumers and workers think about doing data-heavy tasks. Smee even suggested that it could replace the need for Wi-Fi for most users.
“If you think of your cable modem or your DSL and you look at the rates you get compared to the 5G data rate, all of a sudden wireless is the preferred medium and that’s a big game changer versus the idea that you have to have wired connectivity to have high data rates,” he said.
AT&T’s fiber-to-the-home (FTTH) technology could provide 50% of the connections in areas where it’s available within the next three years, the company says. 3.1 million people were subscribing to AT&T’s FTTH service as of June 2019, a 57% rate of growth from year to year.
“We have proof of how we do this historically,” Jeffrey McElfresh, CEO AT&T Communications, said at the Barclays Global Technology, Media and Telecommunications Broker Conference. “As you look at the fiber that we built out in the ground in 2016, at the three-year mark, we roughly approach about a 50% share gain in that territory. And so for 2020, with the bulk of our investments behind us in this fiber plan, our tactics are to drive penetration with the fiber that we’ve built.”
McElfresh said “the economic performance of our broadband business is very strong, setting aside subscriber losses in the lower speed DSL segment in the copper network.”
In markets where AT&T faces off against Comcast, Charter Communications and other cable broadband providers, “where we have fiber, we win and win handily,” he added. In a June 4 note to investors, MoffettNathanson analyst Craig Moffett said that AT&T had gained 1.1 million FTTH customers in the previous year, bringing its base at the time to 3.1 million subscribers, an impressive 57% annual growth rate.
“But from whom are these market share gains coming?” Moffett asked. “The short answer appears to be …. from AT&T itself.”
Indeed, rather than poaching customers from cable operators, AT&T has largely been upgrading existing DSL and U-verse users.
In any event, the No. 2 U.S. wireless operator appears to be charging forward with the strategy. It plans to bundle its new premium virtual pay TV service, AT&T TV, to drive FTTH growth.
At the Barclays conference, McElfresh said AT&T TV — which has been soft-launched in New York and a dozen other markets — will roll out nationally in February. That livestreamed service, which comes with a two-year contract, requires no truck rolls or satellite launches and requires half the capital spending of DirecTV satellite TV.
“Our growth agenda is on fiber and our entertainment group, and on the AT&T TV product that will be offered nationwide,” McElfresh said.
Separately, a new report notes the tremendous progres fiber broadband has made in the U.S. recently. More than 20 million U.S. homes (20.5 million) are now connected to fiber broadband service, according to new research conducted by RVA for the Fiber Broadband Association. That’s a substantial increase since last year, when a similar FBA report found 18.4 million U.S. fiber broadband homes.
Fiber broadband has been making gains against DSL and fiber-to-the-neighborhood (FTTN). According to the researchers, 2019 was the first year when more U.S. homes received broadband service via fiber than via DSL or FTTN. That milestone makes fiber broadband the second most popular choice after cable modem service.
AT&T sketched out its plans to start testing Integrated Access and Backhaul (IAB) technology during 2020, saying it can prove a reliable backhaul alternative to fiber in certain cases, such as expanding millimeter-wave locations to reach more isolated areas. Verizon also confirmed, without adding any details, that it plans to use IAB, which is an architecture for the 5G cellular networks in which the same infrastructure and spectral resources will be used for both access and backhaul. IAB will be described in 3GPP Release 16 (see 3GPP section below for more details).
“Fiber is still required in close proximity to serve the capacity coming from the nodes, so if it can be extended to each of the nodes, it will be the first choice,” said Gordon Mansfield, VP of Converged Access and Device Technology at AT&T. in an statement emailed to FierceWireless.
“From there, IAB can be used to extend to hard to reach and temporary locations that are in close proximity. As far as timing, we will do some testing in 2020 but 2021 is when we expect it to be used more widely,” he said.
Verizon also told Fierce that it has plans to incorporate IAB as a tool. It doesn’t have any details to share at this time, but “it’s certainly on the roadmap,” an unknown Verizon representative said.
Earlier this year, Mike Dano of Lightreading reported:
Verizon’s Glenn Wellbrock said he expects to add “Integrated Access Backhaul” technology to the operator’s network-deployment toolkit next year, which would allow Verizon to deploy 5G more easily and cheaply into locations where it can’t get fiber.
“It’s a really powerful tool,” Glenn Wellbrock, director of architecture, design and planning for Verizon’s optical transport network, explained during a keynote presentation here Thursday at Light Reading’s 5G Transport & the Edge event.
Wellbrock said IAB will be part of the 3GPP’s “Release 16” set of 5G specifications, which is expected to be completed by July 2020. However, Wellbrock said it will likely take equipment vendors some time to implement the technology in actual, physical products. That means 2020 would be the earliest that Verizon could begin deploying the technology, he added.
Wellbrock said IAB would allow Verizon to install 5G antennas into locations where routing a fiber cable could be difficult or expensive, such as across a set of train tracks.
However, Wellbrock said that IAB will be but one tool in Verizon’s network-deployment toolbox, and that Verizon will continue to use fiber for the bulk of its backhaul needs. Indeed, he pointed out that Verizon is now deploying roughly 1,400 miles of new fiber lines per month in dozens of cities around the country.
He said Verizon could ultimately use IAB in up to 10-20% of its 5G sites, once the technology is widely available. He said that would represent an increase from Verizon’s current use of wireless backhaul technologies running in the E-band; he said less than 10% of the operator’s sites currently use wireless backhaul. He said IAB is better than current wireless backhaul technologies like those that use the E-band because it won’t require a separate antenna for the backhaul link. As indicated by the “integrated” portion of the “integrated access backhaul” moniker, IAB supports wireless connections both for regular 5G users and for backhaul links using the same antenna.
According to 5G Americas, the larger bandwidths associated with 5G New Radio (NR), such as those found in mmWave spectrum, as well as the native support of massive MIMO and multi-beams, are expected to facilitate and/or optimize the design and performance of IAB.
5G Americas maintains that the primary goals of IAB are to:
- Improve capacity by supporting networks with a higher density of access points in areas with only sparse fiber availability.
- Improve coverage by extending the range of the wireless network, and by providing coverage for isolated coverage gaps. For example, if the user equipment (UE) is behind a building, an access point can provide coverage to that UE with the access point being connected wirelessly to the donor cell.
- Provide indoor coverage, such as with an IAB access point on top of a building that serves users within the building.
5G Americas also said that in practice, IAB is more relevant for mmWave because lower frequency spectrum may be seen as too valuable (and also too slow) to use for backhaul. The backhaul link, where both endpoints of the link are stationary, is especially suitable for the massive beam-forming possible at the higher frequencies.
3GPP Release 16 status of work items related to IAB:
(Note: Study is 100% complete, but others are 0% or 50% complete):
|750047||FS_NR_IAB||… Study onNR_IAB||100%|
|820170||NR_IAB-Core||… Core part: NR_IAB||0%|
|820270||NR_IAB-Performance||850002||–||… CT aspects of NR_IAB||0%|
|830021||FS_NR_IAB_Sec||… Study on Security for NR_IAB||50%|
|850020||–||… Security for NR_IAB||0%|
|850002||–||… CT aspects of NR_IAB||0%|
AT&T earned $3.7 billion on $44.6 billion in revenue for the July-September 2019 (3Q19) period, when Wall Street had expected about $6.8 billion in adjusted profit, $5.3 billion in net earnings and $45 billion in sales. The company added 255,000 wireless customers and now has more than 79 million total phone customers. AT&T suffered a steep drop at its DirecTV business, losing more than 1.1 million customers, which cut into profits.
In recent years, AT&T has transformed itself from a telecom/network operator into a major media player, selling satellite TV service to millions of people (via its DirecTV acquisition) and owning a large chunk of Hollywood (via its Time Warner acquisition). That business strategy hasn’t gone over well with investors as AT&T shares have declined over the past several years, despite this year’s gains in a bull market where the S&P 500 is up 21% year to date.
In September 2019, hedge fund Elliott Management asked the company to stop striking new acquisitions, to increase dividends and share buybacks and to improve its efficiency by cutting workers and selling off under-performing divisions like DirecTV. The fund also said it was seeking seats on AT&T’s board. The two sides have been in talks over the last few weeks to broker an agreement.
Yesterday, a truce was reached as AT&T announced changes to its corporate governance and pledged to increase revenue and profit each year for the next three years.
AT&T CEO Randall Stephenson on the earnings call:
We expect total company revenues over the 3-year period to grow by 1% to 2% per year. This will be driven by strength in Mobility, increased fiber penetration and WarnerMedia.
As mentioned earlier, our wireless business is now enjoying operating leverage from investments made over the last 5 years. Our WarnerMedia cost synergies are on target and EBITDA at AT&T Mexico is ramping, and we’re identifying significant opportunities for margin improvement through ongoing cost evaluation and operational review.
Improving margins 200 basis points will give us an EBITDA margin of 35% in 2022. And applying a 35% margin to a revenue base that’s growing 1% to 2% per year produces an EBITDA lift in the neighborhood of $6 billion in 2022, and that includes our investment in HBO Max.
AT&T’s strategy to bolster profits also includes potential job cuts, which was strongly opposed by a union that represents over 100,000 AT&T workers. The company also said it expected to pay off the debt associated with last year’s $80 billion purchase of Time Warner. It will review its sprawling set of businesses to see what could be sold or split off into a partnership with other companies.
“We commend AT&T for the positive steps announced today, which will create substantial and enduring shareholder value at one of America’s greatest companies,” Elliott Management said in a statement.
The graph below, on the left, clearly shows how postpaid net adds have been struggling for the past five quarters, while churn has risen to new levels.
Although the telecom carrier space is known for being highly competitive, peers Verizon and certainly T-Mobile US have done a much better job than AT&T at growing their mobility user base and keeping churn under control. Postpaid ARPU (a measure of per-unit revenue, see the chart on the right above) continues to improve YOY, which helps to explain better margins, but at a decelerating pace that reached a mere 1% in 3Q19 vs. 4% in 1Q19.
Premium TV net user loss reached an astonishing 1.2 million in the quarter, representing roughly 5% of total video connections being dropped in only three months. Over-the-top, once considered a glimmer of hope in user base growth, lost nearly 200,000 subscribers. Cord-cutting and increased competition in streaming probably best explain the deterioration.
Analysts say it is hard to be overly excited or optimistic about AT&T’s mobility and entertainment businesses (representing about two-thirds of its revenues). The company seems to be falling behind its peers, losing market share to competitors in both wireless (T-Mobile US and Verizon) and premium TV (cable TV/MSO companies).
Update on HBO Max:
AT&T’s WarnerMedia said on Tuesday that its HBO Max streaming service will launch in the U.S. in May of 2020, and cost $14.99 a month. At a company event in Burbank, California, WarnerMedia CEO John Stankey said that content, technology platform and marketing and distribution are the “three pillars” for a successful streaming service. He said AT&T is best positioned for all three. The company said it will spend $4 billion over the next three years building HBO Max. It expects annual incremental revenue, from subscriptions, content and ads, to hit $5 billion by 2025, which is the year it should start to positively impact earnings.
HBO Max will start with about 10,000 hours of content, including movies, original content and classic TV shows. That’s “less than some of our competitors,” said Bob Greenblatt, chairman of WarnerMedia Entertainment, at the event. HBO will launch an advertisement-based HBO Max offering in 2021, less than a year after the ad-free version hits the market. The goal is to reach 75 to 90 million subscribers by 2025, Stankey said.
AT&T said the service would be free for existing HBO customers and the company said it expects to convert the majority of them to HBO Max subscribers over time.
WarnerMedia executives announced that the new streaming service will use “human-powered discovery” in addition to smart analytics to help curate a more ideal user experience for subscribers. One of the most interesting ways HBO Max is going to differentiate itself from its competitors is by what they’re calling “co-viewing.” Basically, each member of a subscriber’s family will be able to set up their own individual profile, but when they want to watch content together, they can log in simultaneously to a new, separate profile that won’t affect the recommendations for the individual profiles. They can also create shared watch lists.
John Stankey, CEO of WarnerMedia, speaks Tuesday in Burbank, CA during Warner Media Day
HBO Max is one of the newest additions to an extremely crowded streaming market that will soon include Disney+ and Comcast’s Peacock. They’re all taking aim at Netflix, Amazon, Hulu and Apple, which have a variety of subscription and ad-based offerings. AT&T has said HBO Max will become the “workhorse” for its video business as cord-cutting of traditional TV expands.
Drew FitzGerald of the Wall Street Journal had this assessment (excerpts):
HBO Max will have to overcome several hurdles from the start. Netflix is already in 60 million homes in the U.S. and an additional 97.7 million abroad. Also, Apple Inc. and Walt Disney Co. will both launch their video services in November, giving them a head start over AT&T. What’s more, those services will cost less than HBO Max.
There is little room for error for AT&T. The company is already the country’s biggest pay-TV company with more than 21 million DirecTV and fiber-optic subscribers watching its channel bundles. But cord-cutting has ravaged that industry as viewers seek cheaper and more user-friendly entertainment. AT&T has taken the brunt of the damage, with nearly three million customers lost so far this year.
HBO Max is an expensive rescue effort. The company expects to spend $2 billion next year to launch the service and stock it with new entertainment. It will spend $1 billion for each of the following two years until costs begin to subside. That comes on top of more than $1 billion already spent on reruns like “Friends” and “The Big Bang Theory.” The five-year deal for “South Park” streaming rights, which were sought by incumbent rights holder Hulu and Comcast Corp. ’s Peacock, was around $600 million, a person familiar with the matter said.
HBO Max’s debut was delayed by an antitrust fight over AT&T’s takeover of Time Warner. The $80 billion-plus acquisition was AT&T’s biggest-ever deal, making the Dallas company the world’s second-biggest media company practically overnight. But it had to fight a federal lawsuit launched in 2017, delaying its plans by more than a year.
HBO Max won’t replace HBO Now, which will remain a stand-alone service for the foreseeable future. The company isn’t able to do away with traditional HBO packaged with cable subscriptions, either. Adding to the confusion are AT&T TV, AT&T TV Now and AT&T Watch TV, three brands the telephone company uses to market its live channel packages.
“Our future video product set will focus on two platforms: HBO Max, our subscription video on-demand service…and AT&T TV, our live-TV offering,” Mr. Stephens said Monday. He didn’t mention DirecTV, the name most AT&T customers still use today. “We’ll convert as many as we can as quickly as we can,” Mr. Stephens said, and with all the new content being added, “why wouldn’t they?”
As an illustration of how competitive streaming TVservices have become, Sony today announced it plans to shut down its PlayStation Vue streaming service early next year due to intensifying competition, as technology and media companies inundate consumers with video options.
The service, which launched in 2015 and lets users stream and record live programming through PlayStation 4 consoles and devices from Roku Inc., Apple Inc. and others, will be discontinued in late January, the company said Tuesday. Going forward, Sony said it would focus on its core gaming business.
“Unfortunately, the highly competitive Pay TV industry, with expensive content and network deals, has been slower to change than we expected,” the company said in a statement.
When PlayStation Vue made its debut, Sony faced minimal competition in providing consumers an opportunity to view live television and cable channels without having a subscription to a cable or satellite TV provider. Sling TV, now part of Dish Network Corp., in January 2015 became the first streaming service with major live networks.
But today there are more than a dozen television-streaming services on the market such as Hulu, YouTube TV, FuboTV and others. More streaming services are also slated to run out in the months to come from the likes of Apple, Walt Disney Co. and AT&T Inc. ’s WarnerMedia. Not all offer live television, but the wider array of services has meant that consumers are faced with more options for online video entertainment than ever before.
https://www.wsj.com/articles/at-t-steps-into-streaming-wars-with-hbo-max-11572368721 (on line subscription required)
Speaking at the Goldman Sachs Communacopia conference in New York, AT&T CEO Randall Stephenson said that the company has increased the capacity of its wireless network by 50% such that it is now the fastest and highest quality (presumably in the U.S.)
“Over the course of about 3 years, we are increasing (or have increased?) the entire nationwide capacity of the AT&T wireless network by 50%……What’s the by-product of that? AT&T, end of last year and first half of this year, has just surpassed the competition in terms of wireless network performance. It is unequivocally the fastest wireless network, best quality network. We’ve exceeded the competition and the gap is widening. It’s not getting closer. That’s a beautiful place to be for a company like ours, having a high-quality network claim. And it’s really important when you’re entering a world of distributing premium video to our consumers over wireless networks.”
Stephenson credits AT&T’s FirstNet build for helping with much of the company’s work on 5G:
“You have to go out and you have to climb every cell tower where you’re deploying this (FirstNet) network nationwide. Why is that such a big deal? We have also, over my tenure as CEO, invested well over $40 billion in aggregating a big portfolio of wireless spectrum. And this is really important because we believe when the world of video came, and you’re distributing video over wireless networks, you’re going to need an amazing amount of capacity. So we’ve been accumulating this wireless spectrum, $40 billion plus worth of this. To put that spectrum to work, what do you have to do? You have to go climb every cell tower and put it to work. This is expensive stuff to do across an entire country.”
And “what do you have to do to deploy 5G? You have to go climb every cell tower in the country and put up 5G antennas and the hardware associated with it.” he said. More specifically, Stephenson stated:
“We will, as a result of all this work that I just talked about, we will have a nationwide 5G footprint by midyear next year, nationwide 5G by midyear next year in the really premium spectrum areas of our network. And so we’re feeling really good about wireless.”
AT&T presently has 21 pre-standard 5G markets up in the U.S. using high band millimeter wave (mmWave) spectrum. Stephenson said that T-Mobile, AT&T and Verizon are all going “aggressively” for 5G markets in the U.S. In fact he considers the US the global leader in 5G.
This author strongly disagrees and believes that almost all of the currently deployed pre-standard 5G networks will have to be replaced in 2021-2023 after IMT 2020 is standardized by the ITU (not 3GPP!).
Stephenson said, “In China, I’m not aware of any 5G systems up and running…In Europe I’m not aware of an RFP [request for proposal] out.” While it’s true that China is currently in the build-out phase of 5G, it’s a top priority of China’s government to be the world leader as per this recent IEEE Techblog post.
Stephenson also talked up the benefits of 5G (as if there wasn’t enough hype already?). For instance, he says that 5G can handle “millions” of devices on a cell and locate objects to within “centimeters” rather than meters. The networks, he added, will also be “real time” and help with the “virtualization” of functions — an initiative that AT&T has already been pursuing aggressively through various open source projects in the OCP, ONF and Linux Foundation.
“You have to have powerful compute capability for 5G. All of a sudden, when you have networks this fast, you can begin to push a lot of these requirements, storage into the edge of the network. And so you’re getting cloud distributed (computing) down to the edge of the network. This brings a whole different level of speed, but it also brings a whole different level of imagination in terms of what do form factors start to look like? Millions of devices per square mile literally being located within centimeters of each other with a whole different form factor in terms of power, storage and compute requirements. I mean, truly, the Google vision of a few years ago that everybody laughed about, that this becomes the screen, that’s feasible. That is truly feasible. Sensors that are microscopic because the power requirements are so much lower. And where this allows you to go as a society? I mean traffic management capability because of sensors that are this cheap and broadly distributed, millions per square mile, pipeline management, utility — I can go on and on, autonomous cars.” Ughhhhh!
Continuing with his 5G cheer leading, Stephenson added:
“When you go to 5G, millions of simultaneous connections are now feasible within a given square mile area on this technology (unlike 4G-LTE). That’s a different business proposition for everybody who sits in this room and all the companies you invest in. So the connectivity goes to a different level. The security, this is the part we love, goes to a different level as well,” he added.
Note — AT&T’s mmWave Spectrum holdings:
AT&T currently uses mmWave spectrum for its 5G+ service. The company’s 5G spectrum holdings in the millimeter wave band are now more than 630 MHz (as of July 2019 as per this press release). All of the licenses won in FCC Auction 102 were in the more valuable upper 500 MHz portion of the 24 GHz band, AT&T said. “We’re leading the nation in mobile 5G deployment and the large, contiguous block of spectrum we won in Auction 102 will be critical to maintaining that leadership,” said Scott Mair, president of AT&T Operations. For more information, please see this IEEE Techblog post.
Regarding virtualization of 75% of AT&Ts network (a claim we think is highly exaggerated as per this comment), the AT&T CEO said:
“This virtualization, which we now have 75% of our network virtualized, cloud-based types of architecture, we are now 17 — roughly 17 quarters where the cost of this has been going down year-over-year 7% to 8%, year-over-year for about 17 straight quarters. That’s a stunning development. For a company like ours, to get yourself in a cost position like that to address pricing pressure, competition from the Chinese and so forth, it’s a really powerful thing.”
As for AT&T’s wireless network operator competition, Stephenson said:
“Everybody is in an aggressive build cycle for 5G, so a lot of capital being deployed as well. But do have a new player in the market in the form of DISH with a prepaid business and a lot of fallow spectrum? Does that come into the market? And the AGs have a successful lawsuit and block it? I honestly don’t know how predict it. I do think the next 2 or 3 years doesn’t get radically different. If the Sprint/T-Mobile deal gets done, everybody’s — Sprint, T-Mobile, we know what that play looks like to run integrations of large-scale networks. They have a lot of great opportunity. They’ll have a lot of spectrum to put to work, but it’s a 2- or 3-year integration exercise. DISH will have a rather significant period of time to build out networks. So next 2 or 3 years may be as predicable as they’ve been. As soon as you say that, something will change, but it’s kind of my assessment of it right now.”
“You have T-Mobile, AT&T and Verizon all going aggressively, accumulating the spectrum required to deploy this, getting the spectrum cleared and the right bands to deploy this and working the standards of the technology. And so we have been aggressive. AT&T was hyper-aggressive at working the global standards for 5G so that our network equipment providers can manufacture equipment and get us in the market.”
Question to Ponder?
In conclusion, we ask readers to think if Stephenson’s remarks are truly accurate, especially his claims (echoed by many AT&T executives) that the company has virtualized 75% of its network functions. That would mean replacing that percentage of network equipment (hardware with embedded proprietary software/firmware) with open source virtualization software and orchestration running in commodity compute servers with white box switches and transport network elements. Is that true or is it “lies and more lies?”
By Sara Castellanos of the Wall Street Journal
Samsung Electronics Co. is testing how 5G wireless networks can speed up connections at its chip-making factory in Austin, Texas, a pilot that aims to prove 5G is more than a buzzword. The company is experimenting with the new technology to show what ultra-fast speeds can do at its Austin chip factory
The company has teamed up with AT&T Inc. ’s communications division to develop a customized 5G network to experiment with how it could be used in chip manufacturing.
The fifth generation of cellular networking, 5G is designed to replace current 4G technology, also known as LTE. The ultrafast speeds and reduced lag that will come with 5G will buttress new applications such as augmented reality and self-driving cars. Peak download speeds using 5G are expected to be about 100 times as fast as with 4G.
The transformation that will come from widespread commercial 5G deployments in manufacturing, logistics, transportation and energy is still about a decade away, experts have said. That’s partly because it will take time to roll out the infrastructure to achieve full 5G coverage.
In the meantime, Samsung and other companies are testing 5G’s potential in limited pilots to show what the technology can do.
“We’re still in the experimentation phase, but we’re hopeful there’s value,” said Alok Shah, vice president of networks strategy, business development and marketing at Samsung Electronics America, the company’s U.S. unit.
Factories will be a big beneficiary of 5G connections, said Andre Fuetsch, chief technology officer for AT&T Communications, AT&T’s biggest division.
“We see 5G being a great solution for solving a lot of the Wi-Fi issues that typical factories have today,” he said. The technology, for example, could be used on manufacturing floors to power more reliable connections for computer-vision-scanning equipment that checks product quality.
AT&T has also rolled out consumer 5G networks in about 20 U.S. cities.
Samsung Electronics America and AT&T have invested millions of dollars in 5G innovation at Samsung’s chip-manufacturing facility in Austin. Thousands of employees work at the chip factory, which is the size of about 10 football fields, Mr. Shah said.
Chip-making uses a lot of water and toxic chemicals; 5G could help chip factories cut waste and alert workers to safety hazards.
For example, 5G would allow more sensors to be installed to detect air quality, Mr. Shah said. Streaming real-time data from the sensors over 5G networks would mean that a control center can immediately detect serious air-quality hazards and move people out of harm’s way. Sensors in factories today can’t rely on existing wireless networks to pass along warnings to a control center, Mr. Shah said.
“Being able to put thousands of sensors within a relatively small space is hard for other [networking] technologies to support,” Mr. Shah said. Certain networks can only support a finite number of devices. Fifth-generation wireless networks could support 1 million devices per square kilometer, up from about 100,000 devices per square kilometer with 4G LTE, he said.
Sensors on pumps and valves could also stream data about water usage over 5G networks so the facility can improve the efficiency of its water usage in real time and reduce waste.
Using 5G connections, workers could also learn how to repair equipment on the factory floor through augmented and virtual-reality headsets without any buffering or lags.
Other companies including New York Times Co. and German engineering firm Robert Bosch GmbH are testing 5G in pilots. The market for 5G, including related network infrastructure, is forecast to grow to $26 billion in 2022 from $528 million in 2018, according to research firm International Data Corp.
The tests are often “showcase demonstration pieces,” useful for proving that 5G could generate revenue through new services or make processes more efficient, said Jason Leigh, research manager for mobility and 5G at IDC.
“The sooner you can get something tangible, it makes it easier to have that discussion at a C-suite and board level about what 5G really is, and it’s not just this fad,” Mr. Leigh said.
Write to Sara Castellanos at email@example.com
Last September, AT&T and Samsung created the US’s first manufacturing-focused 5G “Innovation Zone” in Austin, TX. The zone, designed to test 5th generation wireless broadband technology, will be on Samsung Austin Semiconductor’s 160-acre campus in north Austin. The site will feature AT&T’s 5G wireless technology along with Samsung’s 5G network equipment, according to an announcement Wednesday from the two companies.
Technology experts say 5G — which is essentially ultra high-speed wireless connections — will not only power future waves of mobile devices, but also will evolve technology in other industries like automotive and health care. Companies expect 5G to be up to 100 times faster than the current 4G networks.
“This collaboration with Samsung Electronics America and AT&T will help us test how a 5G network can improve mobility, performance and efficiencies within our plant,” Sang-Pil Sim, president of Samsung Austin Semiconductor, said in a statement.
South Korea-based Samsung has operated in Austin since 1997. About 3,000 employees work in the 2.45 million-square-foot Austin chip making plant. Samsung has invested $17 billion in its Austin campus through the years.