The multi-terabyte hunger of American homes for 4K video can’t be fulfilled by wireless home broadband plans, AT&T executives said at their annual analyst day today. So the company is focusing on fiber: a slower buildout, to be sure, but one with much more bandwidth per person.
“Fiber is a durable solution and a superior technology to address the demands for broadband,” said AT&T Communications CEO Jeff McElfresh.
The consumption numbers are breathtaking. Three hours of 4K video per day means 630GB of home usage a month, McElfresh said. Video conferencing, online schooling, and dozens of connected devices will drive the top 10% of homes to use 4.6 terabytes per month each by 2025, he said. The median home will use 1.5 terabytes per month at that point, he said.
“The large consumption that we are anticipating over the next five years will be hard to meet with a wireless-only solution,” McElfresh said.
But fiber buildouts are also slow. AT&T promises to cover 3 million more homes in nine metro areas with fiber this year, while Verizon wants to offer wireless broadband to 15 million homes in 2021. T-Mobile says it covers 125 million people (not homes) with its “ultra capacity” network.
The fiber build isn’t as tough as a new entrant would experience, AT&T CFO John Stevens pointed out, because AT&T pulled fiber to neighborhoods for its old (slow, and much-maligned) VDSL network. So rather than pulling fiber all the way to many neighborhoods, it now just has to go the last mile to homes.
AT&T will serve some “limited cases” at the edges of its fiber network with C-band, wireless internet connected to its fiber, but isn’t going to make that a primary play, McElfresh said.
AT&T was the second-biggest bidder on C-band spectrum, after Verizon. It spent more than $20 billion for, initially, a 40MHz nationwide swathe that will become available at the end of this year. The company secured another 40MHz that will become available at the end of 2023.
But it’s putting less of it to work, to listen to the AT&T execs. McElfresh made no promises for coverage this year. He said the company would cover 70-75 million people with C-band by the end of 2022, and it will surpass 100 million by early 2023. Verizon, on the other hand, says it will cover 100 million people with C-band by next March. (T-Mobile’s C-band spectrum does not become usable until 2024.)
Currently, the iPhone 12 series, Samsung Galaxy S21 series, Pixel 5, and LG Wing support C-band. Verizon said it would require C-band on new phones going forward, but AT&T didn’t make such a pledge at this meeting.
McElfresh played down the usefulness of the spectrum, suggesting that at best it could be a “premium mobility product.” He waded into a debate between T-Mobile and Verizon by saying that neither T-Mobile’s 2.5GHz or Verizon’s new C-band is a home broadband solution.
“If you step back, mid-band spectrum is never going to propagate like low-band spectrum,” he said. “Nominally speaking, is 2.5 somewhat better than the C-band? Yeah, it’s nominally better…but we have better ideas to deal with what is going on behind most of the walls of society.”
Where’s 5G?
AT&T saved some of its 5G announcements for a series of press releases after the event, rather than discussing them in the event itself. McElfresh said that the company is only using 70% of its current low- and mid-band spectrum, giving it room to grow, and that it will deploy millimeter-wave in “stadiums, airports, and enterprise facilities like hospitals and manufacturing.”
Millimeter wave rollouts will come to venues, the company later said in a press release. It will light up 17 sports stadiums or arenas with millimeter-wave in 2021, along with seven airports, and 30 retail stores. AT&T 5G will also come to “numerous university campuses” this year, the company said, although it didn’t specify whether that would be the fast millimeter-wave or C-band networks, or the slower low-band 5G network which is essentially 4G. All in all, AT&T has millimeter-wave in parts of 38 US cities – although unlike Verizon, it still won’t provide a map of where.
The company also said it will add 5G to previous-generation unlimited plans back to the original AT&T Unlimited. While it didn’t make any specific statements about whether C-band would be included, the fine print says it’s adding “5G (sub-6 spectrum),” which suggests that C-band may be part of the package.
Content + Connectivity Is Key
Unlike Verizon and T-Mobile, AT&T has significant non-connectivity businesses. While its mobile service is still by far the largest component of its business, its entertainment businesses play a major role.
AT&T’s integrated content offerings will help drive subscribers, execs said. They spent quite a lot of time talking about HBO Max, with its library of content including HBO, Warner Brothers, and DC brands.
“Adding HBO Max to our best plans reduces churn and lifts satisfaction by 20 points,” McElfresh said. Combining all three AT&T products—wireless, fiber, and HBO Max—increases satisfaction by 35%, he said. Analyst Avi Greengart brought the company’s strategy home in a tweet.
