Both AT&T and Verizon at one point cited fixed 5G wireless as a path they would both pursue. But AT&T is increasingly getting cold feet and now appears to be backing away, citing, in their view, an unfavorable business case for fixed 5G.
In addition to the potential business generated by fixed 5G, offering it also gives carriers a coveted claim. It will probably allow them to say they are first to offer 5G, something it seems most national carriers are in a press release war to claim. AT&T is still making the ‘first’ claims, but apparently, it won’t be with fixed 5G. On the other hand, it’s full speed ahead for Verizon fixed 5G.
AT&T’s position was reiterated this morning by AT&T Senior EVP and CFO John Stephens at the Cowen and Company Technology, Media, and Telecom conference. Speaking about why fixed 5G isn’t as attractive to AT&T, Stephens pointed to doubts around the business case.
“Challenges for us, it’s not the network and the team can build it or they have the knowledge, they can,” Stephens said. “It’s the cost efficiency.”
Stephens said, it’s not the last mile that troubles AT&T, it’s the backhaul, particularly in urban environments. High bandwidth fixed 5G service, where gigabit speeds typically are being promised will need fiber backhaul to the core network to meet those promises. Getting fiber to all of those small cells and 5G access points is expensive. Apparently too expensive for AT&T.
“In a general residential broadband solution, the economics for us don’t seem to work,” he said.
Verizon, on the other hand, says the opportunity for residential broadband via 5G fixed wireless looks quite bright. They’re on record, saying they see an opportunity with 30 million locations across the country, which are outside of their Fios FTTP markets.
Verizon has admitted, this will require a tremendous investment in fiber, enough to string fiber to Mars and back. Verizon CEO Lowell McAdam says the fiber required for Verizon’s 5G plans will have them construct the largest fiber network in the country.
It would be interesting to compare Verizon and AT&T spreadsheets. Perhaps that fiber investment doesn’t add up for AT&T. In fact, Stephens suggested a better path for AT&T would be to upgrade the 30 million locations where the formerly known as U-verse FTTN service is currently available to FTTP.
Verizon says they would be deploying all of this fiber anyway for their mobile 5G service, so why not layer fixed 5G on it first. It’s the same network they argue. But to AT&T’s defense, not everyone is convinced that fixed 5G makes sense.
In a recent research report, New Street Research said Verizon would have to spend $35 billion in capex for a fixed 5G network to gain 8 million subscribers, suggesting it was a modest competitive threat for residential broadband, at best.
So is Verizon bluffing? Do they really see something AT&T does not? There’s been a lot of ‘slideware’ devoted to fixed 5G at this scale, but until we see fixed 5G markets go live at the pace Verizon suggests, the debate will continue.
