When AT&T said it saw 5G initially as an enterprise play, that left some of us scratching our heads, as that was not what occurred with 3G or 4G. But AT&T Communications CEO John Donovan offered some additional insight about the AT&T 5G enterprise strategy at an investor conference today and one comment really illuminated the company’s thinking.
AT&T opted to deploy 5G initially in the millimeter wave band, which supports the highest speeds but over relatively short distances, and as Donovan noted, this is a “rifle shot” kind of approach where a blanketed approach achievable in a lower-frequency band, might have seemed more logical. He noted, however that “That’s the way the standards were done.”
In developing its launch strategy, he said, AT&T “felt confident enough that with millimeter wave and the enterprise marketplace, we had all we needed to get an effective deployment done.”
He added that the company plans to deploy 5G in sub-6 GHz spectrum bands to gain nationwide coverage by the first half of 2020.
AT&T 5G Enterprise Strategy
In the meantime, he noted that the 5G cities AT&T has announced to date have been closely aligned with the 5G-related enterprise deals that the company has also announced. He cited the examples of Chicago, where AT&T has a major 5G deal with Rush Hospital and Austin, where the carrier has a major 5G deal involving Samsung and robotic manufacturing.
AT&T’s approach was “not to scattershot a city,” explained Donovan. Instead, he said, “it’s been designed around an enterprise play.”
The carrier didn’t want consumers buying 5G devices and hunting around for coverage, he said. Instead, the company wanted to put the devices in the hands of enterprise customer employees, who will be able to spend 70% of their cellular time on a 5G network at their workplace.
Donovan sees 5G as a “disruptive technology,” noting that it “could be a Wi-Fi killer” and “the next-generation local area network.”
He also noted that AT&T has a strong enterprise business, which plays well into the company’s 5G enterprise strategy. “We’ve been committed and invested in the enterprise business, especially channels and the sales force,” he said.
By emphasizing the enterprise market for its early 5G deployments, which will include parts of 29 markets this year, Donovan said AT&T will gain valuable knowledge about enterprise use cases. Possibly then, the business case could be determined based on the value of the use cases, rather than on network coverage.
If compelling applications arise, AT&T will consider premium pricing for its 5G network, Donovan said. He declined to say what that premium pricing might be but noted that it “ultimately will be a function of value to the consumers and your competition.”
He also noted that “certain applications” could be “worth a lot” and noted that the premium pricing might be embedded in “an application that carries with it a different economic model.”
This might involve more of a “three-sided business model,” rather than a traditional “two-sided business model,” Donovan said.
Donovan made his comments at the Credit Suisse Communications Conference in New York City, which was also webcast.