Bernie Arnason

AT&T is embarking on an interesting expansion strategy by launching AT&T Gfast based broadband service to multiple dwelling units (MDUs or apartment buildings to you and me) outside of their traditional service territory. The latest example is Boston, where AT&T announced the availability of Gfast delivered broadband services to select apartment complexes. AT&T Gfast can deliver up to 500 Mbps broadband, using existing building wiring, coax wiring in this case. AT&T is also bundling satellite-based Directv service, where available.

A research note from New Street Research throws a little cold water on a potential 5G fixed wireless competitive threat to cable broadband. Verizon is expected to launch the fixed wireless service later in 2018 in 3 to 5 markets, including Sacramento (CA), a Comcast market.

The broadband industry is in the midst of figuring out the impact and implications of the next evolution of wireless, 5G. And the hype machine is in full swing. Some might argue it’s off the charts, especially in comparison to the roll out of previous generations, including 3G and 4G. At last week’s Huawei Global Mobile Broadband Forum (MBBF), held in London, 5G was put into better context, at least for me. MBBF attracts one of the best global carrier speaker contingents of any wireless event.

AT&T rural broadband expansion via Connect America Fund-supported fixed wireless service now reaches 160,000 locations across 18 states. Nine states were recently added. The expansion nearly doubles the reach since AT&T’s last update on the service in June 2017. Arkansas, California, Illinois, Indiana, Kansas, Michigan, Ohio, Texas, and Wisconsin join Alabama, Florida, Georgia, Kentucky, Louisiana Mississippi, North Carolina, South Carolina and Tennessee. AT&T has plans to reach 400,000 locations by the end of this year, and over 1.1 million locations by 2020. The Connect America Fund, the Federal Communications Commission’s program to expand rural broadband access.

In prep for the next generation optical fiber backbone necessary for the deployment of 5G, Verizon has agreed to a minimum purchase agreement with Corning worth at least $1.05 billion. The purchase includes fiber optic cabling and associated hardware. The deal calls for Corning to provide up to 20 million kilometers (12.4 million miles) of optical fiber each year from 2018 through 2020, with a minimum purchase commitment of $1.05 billion. Verizon will use those fiber assets for a fiber network architecture that supports 5G, 4G, and its Fios FTTP service. Verizon says they wanted to hedge against a possible shortage in fiber supply and thus wanted to lock-up a commitment with Corning.

A new mobile broadband experience took place in New Orleans (LA) March 8, with the unveiling of Sprint Gigabit LTE. The new service, which is seen as an evolutionary step towards 5G, delivers much faster mobile broadband, with some caveats. Sprint and its technology partners, Qualcomm and Motorola, say this is the first commercial deployment of Gigabit Class LTE in the US. Sprint is using their 2.5 MHz spectrum for the service, of which they have very deep holdings – over 204 MHz, 160 of which are concentrated in the top 100 US markets.

Growing fixed wireless momentum across the globe is leading to the concept of wireless-to-the-home (WTTH), promising fiber like speeds that are increasingly seen as lower cost alternative option for traditional wireline fixed broadband service. WTTH was on full display recently with particular emphasis on 4.5G WTTH, during Huawei’s Mobile Broadband Forum (MBBF), which took place in Tokyo. WTTH is seen as the next generation of fixed wireless, providing speeds of up to 1 Gbps, a dramatic improvement over first generation fixed wireless. Huawei likes to call it WTTH 2.0. The coming launch of 5G wireless will initially be focused on fixed wireless applications (WTTH 3.0), before providing true mobile broadband services, but a recurring theme at MBBF, is you don’t have to wait for 5G.

AT&T Fiber locations now reach 44 markets across the US, with the announcement of four new metro areas coming online with the gigabit capable fiber-to-the-premises service. AT&T eventually plans to reach 67 markets/metro areas nationwide, covering 12.5 million locations by mid-2019. The new markets include Baton Rouge (LA), Birmingham (AL), Charleston (SC), and Reno (NV). AT&T also announced expansion of AT&T Fiber in 16 existing markets. AT&T claims they now have an addressable AT&T Fiber audience of 3 million locations, of which over 500K are apartments and condo units, or MDUs. AT&T is expanding their AT&T Fiber locations, just as Google fiber retracts. They have made a point of highlighting this, gleefully so in some instances. As an incumbent provider with an extensive existing network, AT&T has distinct advantages over upstarts like Google fiber, who must overbuild markets at great expense and time.

There is considerable skepticism already about the AT&T-Time Warner tie-up. The total transaction is valued at $108.7 billion (including Time Warner debt) and some financial analysts fear AT&T will take on too much debt in the process.

Of course Time Warner is no stranger to controversial deals, They were a part of what many believe was the worst failed corporate merger in history, AoL-Time Warner, which at the time cited many of the same benefits AT&T now cites as motivation for the deal. There are also valid concerns regarding the regulatory climate for such a deal. Will regulators approve the deal at all? Or if they do, will they burden it with so many conditions that it ends up being more trouble than its worth. One area sure to receive significant scrutiny is exclusivity of Time Warner content. AT&T already allows DIRECTV programming to flow across its mobile network without counting towards a subscriber’s monthly data allowance. Regulators will surely frown upon that and will probably dictate conditions that block such behavior. Comcast has conditions on their NBC Universal deal that aim to prevent exclusivity of content. There is also a change of Federal Communications Commission leadership to come, due to the presidential election and one candidate, Trump, has already signaled he would oppose the deal if elected. Hillary Clinton had not yet commented at this post’s publishing. Regulatory approval is no slam dunk for this deal.

If AT&T is going to disrupt itself, it must first disrupt its own culture, which is a difficult and long process to say the least. It starts with its people, and AT&T has undertaken a pretty significant retraining program for its workforce.

“I give us a B+,” stated AT&T CEO Randall Stephenson, referring to a grade he would assign to their efforts to retrain their workforce. It’s a monumental task. Stephenson said 150K employees have been targeted thus far, and they’ve completed over 2 million courses to date. These courses are often self-administered and aim to help AT&T employees make the transition from the legacy TDM world of telecommunications to today’s IP and broadband focused marketplace. “It’s a tremendous change, we think that we’re going to go from last year, about 50% of our people being STEM, deep in technology, to 90% by 2020, 90% of our jobs will require STEM capability in the technology organization,” said AT&T chief strategy officer John Donovan. “We’re in the middle of this skill pivot.”