Why AT&T Changed its Thinking about 5G Fixed Wireless

Over the last couple of years, AT&T has seemingly waned and waxed about commercial upside for 5G fixed wireless. For most of 2018, AT&T officials had expressed skepticism about the business model.

That thinking might have been based in large part on use of millimeter wave frequencies (28 GHz, 39 GHz) AT&T owns.

But the ability to use spectrum in the 3.6-GHz region (Citizens Broadband Radio Service) should require less-dense cells and backhaul, perhaps four to 16 times less dense.

Also, some of us would argue the business case for 5G increasingly looks like an enterprise play. Sure, consumers eventually will upgrade to 5G. But that is mostly substitution of one source for another, and does not necessarily increase total revenue much.

On the other hand, there long has been thinking that the latest generations of optical fiber for communications (NG-PON 2, for example) mostly are useful for business applications and mobile backhaul, not consumer mobility.

Combine that with the need for optical fiber densification and the logic is that 5G produces incremental new revenues in the business customer segment and provides internal value for 5G backhaul. Consumer revenues are mostly an afterthought.

All that might have brought a change of views about use of fixed wireless.

“I will say over time three to five year time horizon unequivocally 5G will serve as a broadband, a fixed broadband replacement product,” says AT&T CEO Randall Stephenson. “I am very convinced that that will be the case.”

“You know, we back in the 90s everybody was saying wireless would never serve as a substitute for fixed line voice because there wasn't sufficient capacity,” Stephenson said. “Well it is a substitute for voice.”

Right now, AT&T says it has 11 million fiber to home locations and eight million business locations. AT&T also expects to reach 14 million consumer fiber-to-home locations soon. It probably is worth noting that AT&T’s fixed network passes--is able to sell services to--as many as 62 million U.S. homes.

In other words, AT&T might soon pass 22.5 percent of its consumer locations with optical fiber drops.

Even without quantifying the matter, if AT&T has managed to build optical fiber to less than a quarter of its U.S. homes, and also believes 5G will provide a workable substitute within three to five years, it is hard to see the logic of continuing to build consumer optical fiber connections, at a time when consumer fixed line accounts are shrinking overall.