Within three to five years, fixed 5G wireless will “unequivocably” be a landline broadband replacement product, said AT&T Chairman and CEO Randall Stephenson on the company’s earnings call today. That’s a big departure from last year, when AT&T Chief Financial Officer John Stephens expressed considerable skepticism about the idea of an AT&T fixed wireless offering.
“In a general residential broadband solution, the economics for us don’t seem to work,” Stephens said at that time.
Stephenson’s comments today were substantially more optimistic.
According to Stephenson, concerns about fixed wireless traditionally have focused on a lack of capacity, but that won’t be a problem for 5G – at least not 5G in the millimeter wave band.
“As we look at 5G will you have enough capacity to have a good broadband product that serves as a streaming service for all of your DIRECTV NOW, your Netflix, et cetera?” asked Stephenson in a SeekingAlpha transcript of today’s earnings call. “I absolutely am convinced that we will have that capacity, particularly as we turn up millimeter wave spectrum. That’s where the capacity and the performance comes from and that’s where you’ll begin to see a broad – a true replacement opportunity for fixed line broadband. So I have little doubt that in the three to five year time horizon you’ll start to see substitution of wireless for fixed line broadband.”
AT&T Fixed 5G Flip Flop
The concerns that Stephens expressed last year related primarily to the cost of backhaul to support 5G fixed wireless. Stephens apparently also was envisioning fixed 5G wireless being deployed in the millimeter wave spectrum band. Millimeter wave spectrum will support the highest broadband speeds, but over relatively short distances. Hence there is a need for dense backhaul infrastructure.
It is unclear what has caused the company to have a change of heart about the prospects for an AT&T fixed 5G wireless offering. Interestingly, however, the company recently released a policy paper touting the potential of using its AirGig fixed broadband technology in combination with 5G. Although the paper doesn’t provide details, perhaps AT&T is looking at the possibility of using AirGig to provide backhaul for fixed 5G.
AirGig is a technology AT&T developed in house that is designed for deployment on powerline infrastructure but is considerably different from the broadband powerline technology that failed to find commercial success a decade or so ago. AirGig uses the power lines as a waveguide to extend the distance that signals can travel.
Also on today’s earnings call, Stephens noted that in markets where it has deployed fiber to the home, the company is seeing take rates between 33% and 40% within 18 months of deployment – a number that rises to 50% within three years.
It would be nice if there were some way to use the cellular 5G signal to get broadband-equivalent data capability to smaller towns and rural areas. Cellular is the best possible hope to at long last extend this capability to those folks, and some regional carriers are actually doing that today via their 4G LTE signal, but I doubt that it will ever come to pass. As you get farther and farther out from the dense urban areas, the less cell towers the providers have, and the more they rely on low-band spectrum to reach those areas, which exponentially reduces the data capacity of each of those cell sites.
It’s amazing to me that AT&T has come around to my way of thinking. It only took them 6 years. As for rural broadband, AT&T is currently building sites where no service existed before. As part of their contractual obligation with FirstNet, they will be building out sites in rural areas throughout the country. Also, AirGig which is broadband over power lines shows extreme promise in getting services to underserved areas. Rural homes may have to resort to an fixed modem/router with an outside antenna to enjoy perfect coverage, but it’s a small price to pay for broadband speeds of 300mb/sec.
To add to Randy's comment, everywhere AT&T installs FirstNet Infrastructure they are installing their own equipment as well. Basically, since the truck and installer are already there, it is extremely cost effective to install AT&T's latest greatest equipment at the same time. AT&T will reach farther into rural areas than it ever has in support of FirstNet. We'll see how effective the commercial side is but from what I've read the FirstNet side has very strict requirements. So there is at least the potential for surprisingly good commercial coverage. Time will tell.