Although major wireless carriers AT&T and Verizon have largely completed the build-out of their LTE networks, both companies expect to continue to invest in other aspects of their wireless networks such as distributed antenna systems and voice over LTE, said executives of the two companies at the Citi 2015 Global Internet, Media & Telecommunications Conference in Las Vegas yesterday. The event also was webcast.
Spectrum and distributed antennas systems will be key wireless investment areas for Verizon, said Verizon CEO Lowell McAdam.
AT&T was represented by John Donovan, who is senior executive director of technology and operations, and his commentary about AT&T wireless investment areas reflected his technology focus. Characteristically, Donovan focused on changing network dynamics and how the company plans to respond to those dynamics. AT&T’s ability to do that, he said, is “world class.”
AT&T/Verizon Wireless Investment Plans
Two key network dynamics impacting AT&T’s plans are growth in video traffic and growth in Internet of Things traffic, Donovan said, also noting that “the Internet of Things is the polar opposite of video” in terms of network impact.”
While video requires substantial bandwidth on a prolonged basis but only a single set-up process, Internet of Things traffic is “chatty,” said Donovan. IoT traffic requires repeated “back and forth” communications – and repeated set-up processes, he said.
Contrasting video and IoT, Donovan said “one is control plane-intensive and one is data plane-intensive.” Those are references to a topic dear to Donovan’s heart – software defined networking.
But while IoT is just gaining traction, video already has had a major impact on communications networks. Video now represents more than 50% of the traffic on AT&T’s network and as a result, AT&T now is designing its network largely around video, Donovan said.
Voice over LTE (VoLTE) also is impacting AT&T’s network investment plans. For VoLTE “you need cell density,” said Donovan. With data sessions, customers generally won’t notice if connections drop and re-connects as the customers move from one cell to another. But he said “you can’t do that with VoLTE.”
As a result, he said, AT&T has determined that it has to “re-configure and re-optimize” its wireless network for VoLTE.
Asked about 5G wireless, Donovan said the biggest challenge won’t be determining what technology to use but when to begin major work on it. If a company starts too early it risks overspending. But if it waits too long, it could put itself at a competitive disadvantage, he noted.
The “Science” of a Capital-Intensive Business
Questions for McAdam at the Citi event focused more heavily on financial and operational issues – but some of these questions led back to the topic of wireless investment.
For example, McAdam sees the need for ongoing wireless network investment by all network operators as the ultimate solution to aggressive promotions launched by competitors. Wireless market stability, he said, will be driven by the “science of a heavily capital-intensive business.”
McAdam argued that the market will stabilize as all wireless network operators are required to invest in their networks and in spectrum to address climbing traffic levels. As that occurs, he said competitors will be forced to cut back on price promotions to maintain profitability.
