AT&T CEO sees shift to bundled connectivity

AT&T CEO John Stankey believes the industry is evolving toward integrated connectivity options, and the carrier is in a good position to sell unified bundled products across fixed and mobile uses.

During a Citi investor conference Wednesday, Stankey talked about a reordering of industry structure in general, where customers aren’t thrilled by the idea of having to buy different forms of connectivity from different providers. Most, he said, just want to be able to connect to the internet to do the work they need to. And AT&T wants to be the broadband provider regardless of if that’s at home or on the go.

“My gut is that customer desires are ultimately going to drive how product and industry performs,” Stankey said. “I expect we’re going to see more consolidated offers going out to customers, where people are selling a bundle of connectivity, and it doesn’t matter where you are or where you need to use it.”

He pointed to AT&T’s extensive fiber infrastructure and deep experience in building integrated networks as underpinning a strong position to address that shift over the next several years.

“We can handle infrastructure on owners’ economics, on product innovation across the broad cross section of fixed or wireless and truly bring the unified connectivity approach to the customer, which is in my view is how they want to play,” Stankey said.

Verizon executives have also recently touted the message that it wants to become the nationwide broadband provider of choice, both through mobile connections as well as home and business internet with fixed wireless offerings.

Stankey’s comments come as AT&T released early subscriber metrics for the fourth quarter, with strong wireless postpaid gains and less robust additions for its fiber business.

AT&T recorded around 880,000 postpaid phone additions in Q4, for a total of 1.3 million postpaid net adds. 2021 saw AT&T nab 3.2 million postpaid net phone adds for the year. Throughout last year AT&T posted high quarterly wireless subscriber figures (adding 928,000 postpaid phones in Q3 for example) as it continued to execute on a customer retention and growth strategy. AT&T reports full Q4 results on January 26.

Mid-band rollouts will be more deliberate

From a competitive standpoint Stankey said AT&T’s best days are yet to come as it prepares to roll out mid-band spectrum for 5G.

He believes the network will be put in a position where it can compete as well as T-Mobile, which got a head start on mid-band with 2.5 GHz spectrum from Sprint. Where AT&T is combining wireless offerings with broadband, he cited positive lifetime value for those users as well as incredibly low churn, resulting in better profitability alongside improved customer satisfaction.

The chief executive also addressed discussions with the Federal Aviation Administration (FAA) and downplayed a new two-week delay on C-band activations for 5G that AT&T, as well as Verizon, agreed to this week at the request of the U.S. Transportation Secretary and the FAA.

“When you deploy an air interface like 5G, it’s with you a very long time,” Stankey said. “So a couple weeks here and a couple weeks there at the front end of this isn’t, in the context of the grand scheme of what’s going to happen and how you build networks and how you support a customer base, in my opinion isn’t going to be a big shift one way or another.”

As for AT&T’s network deployment approach, it comes back to putting capacity where customers need it and taking advantage of fiber assets for both fixed services and 5G.

“We’re evolving the product in a way where we can have a relationship with the customer that says ‘it doesn’t matter where you go, we will handle your bandwidth needs’,” he said. “And we may choose to do that on 5G or we may choose to do that on fiber.”

On the wireless side, positive customer feedback on network performance is on the rise, according to Stankey, who attributed the climb both to dense spectrum assets and the design of infrastructure deployments.

With mid-band spectrum rollout plans, AT&T expects to be a bit more deliberate, he said, based on timing of when different swaths become available. The first tranche of C-band, of which AT&T has 40 MHz, is ready now while the later swaths won’t be cleared and ready for use until the 2023 timeframe.

There’s also mid-band spectrum that could be ready for deployment in between the different batches of C-band, he added.

Just yesterday the FCC’s auction for mid-band spectrum at 3.45 GHz officially closed after the assignment phase. Auction 110 offered 100-megahertz of spectrum and gross proceeds totaled over $22.5 billion. Winners have yet to be announced but AT&T was one of the qualified bidders and was expected to vie for 40 MHz (the maximum allowed for any single winner) of new spectrum nationwide.

As mid-band spectrum becomes available at different times over the next few years, Stankey emphasized that in thinking about network deployments the carrier wants to ensure it has the right timing and gear, so towers only need to be touched once instead of multiple times.

AT&T previously followed a “one-touch” strategy as it deployed new Band 14 spectrum for FirstNet and simultaneously made 4G LTE-Advanced technology and 5G-ready upgrades at cell sites.

“As we move through the middle of this year, I think you’ll see us hit our stride on how we get the right kind of pervasive coverage using the collection of mid-band spectrum assets to make sure that that occurs,” Stankey said, adding AT&T will be in a nice position near-term to evolve the 5G network from where it is today.