What Contribution Does FTTH Make to AT&T?

AT&T added a million fiber-to-home fiber-to-home accounts in 2021, the fourth consecutive year the firm has done so. AT&T says it boosted broadband revenues up 5.4 percent  with average revenue per user  growth of 4.2 percent. 

Consumer fixed network revenue climbed 1.4 percent, adding $3.2 billion in additional revenue. 

To be sure, AT&T still makes most of its revenue from mobility services. In the fourth quarter of 2021, AT&T earned $41 billion in revenue. Mobility represented $21 billion of quarterly revenue, or about 51 percent of total.  

Business fixed network revenues were $5.9 billion, or 14 percent of total. 

source: AT&T 

Consumer fixed network revenue was $3.2 billion, or about eight percent of total revenue. 

Warner Media generated $9.9 billion, or 24 percent of revenue.  Latin America contributed about $1 billion in revenue, or two percent of total. 

Direct business and consumer revenues driven by access and other fixed network services amount to about 22 percent of AT&T revenues, compared to mobility at about 51 percent of total. 

Just how much revenue contribution overall hinges on the AT&T optical fiber network is a matter of some interpretation. To the extent that the optical fiber distribution networks supports the small cell mobile network, which will grow in importance over time, the value of optical fiber investments is more than what is shown by direct business and consumer service revenue. 

Indirectly, the FTTH investments also support the Warner Media streaming content business. 

Still, to the extent the fixed network now supports the key mobile business, plus supporting the business and consumer fixed network business, the relative revenue contribution from FTTH arguably understates the strategic value of those investments. 

Perhaps consumer FTTH, by itself, does not double consumer segment revenues. But investments in consumer FTTH also support the small, medium and enterprise portions of the business market, plus underpinning the small cell mobile network that will be increasingly important going forward. 

Still, the argument can be made that the fixed network retail business hinges on home broadband. To have a business at all--simply to “keep the business”--AT&T and other telcos have to shift to FTTH. 

In its competitive battle for home broadband customers, AT&T’s fortunes depend on three key drivers: fiber to home coverage; take rates and any average revenue per account gains that could supply, with the primary variable being coverage. 

The reason is simply that AT&T cannot challenge dominant cable TV providers for installed base and market share until the company has much-greater FTTH coverage. Simply put, AT&T and most other local exchange carriers cover too few homes to go head to head with cable home broadband. 

To be sure, AT&T and other telcos are pushing FTTH deployments at an accelerated pace. AT&T expects to have 30 million home locations passed by FTTH by about 2025, up from about 15 million to 15.5 million at the moment. 

source: AT&T 

Keep in mind that AT&T passes a total of about 57 million homes. So the company’s current FTTH coverage is between 26 percent and 27 percent of its total passings. 

AT&T will not be able to go head to head with cable, across the full range of home broadband speeds, until it has FTTH available to most homes in its fixed network footprint. By 2025, when AT&T expects to  have 30 million FTTH passings, it will be able to compete head to head in about 45 percent of its footprint. 

Take rates are arguably the second most-important variable, as there is a difference between an active account and a location able to buy. Over the past year, AT&T has boosted its FTTH take rate from 34 percent of passings up to 37 percent of passings. 

The goal is to approach 50 percent take rates, which would exceed the general take rate of about 40 percent telcos have been able to garner over the past couple of decades. 

Finally, it remains to be seen how average revenue per account changes as more customers take FTTH home broadband services. At the moment, AT&T’s bottom tier FTTH home broadband service (exclusive of taxes) runs about $55 per month. The mid-range tier costs about $65 a month, while the top gigabit tier sells for $80 a month.

In addition, AT&T has added two premium tiers offering 2-Gbps symmetrical and 5-Gbps symmetrical access for $110 and $225 per month, respectively. The mix of accounts could strongly affect AT&T revenues. 

The lowest FTTH tier--offering 300 Mbps--covers more than half of the U.S. home broadband buyer base. Another 17 percent of customers buy services operating between 200 Mbps and 400 Mbps. 

source: Openvault  

Assuming lower-income households take advantage of support programs, those households reached by AT&T could have internet access at 300 Mbps for about $25 a month. 

That is why the pace of FTTH upgrades matters so much for AT&T. To reach parity with cable TV operators, which AT&T defines as market share greater than 50 percent and installed base approaching 50 percent. Without nearly-ubiquitous FTTH deployment, those goals are likely unreachable. 

To be sure, competition at the lower speed levels--up to about 100 Mbps, is an opportunity for Verizon and T-Mobile. Verizon has a limited fixed network footprint of U.S. homes while T-Mobile has had zero share of the home broadband market. 

Even if those two firms use fixed wireless to reach the lower and middle tiers of buyers, that is about 65 percent to 70 percent of today’s home broadband market. 

For AT&T and other telcos, though, the pace of FTTH deployment will be the story. 

AT&T FTTH Metrics Improve, But Deployment Pace and Take Rates Really Matter

In its competitive battle for home broadband customers, AT&T’s fortunes depend on three key drivers: fiber to home coverage; take rates and any average revenue per account gains that could supply, with the primary variable being coverage. 

The reason is simply that AT&T cannot challenge dominant cable TV providers for installed base and market share until the company has much-greater FTTH coverage. Simply put, AT&T and most other local exchange carriers cover too few homes to go head to head with cable home broadband. 

To be sure, AT&T and other telcos are pushing FTTH deployments at an accelerated pace. AT&T expects to have 30 million home locations passed by FTTH by about 2025, up from about 15 million to 15.5 million at the moment. 

source: AT&T 

Keep in mind that AT&T passes a total of about 57 million homes. So the company’s current FTTH coverage is between 26 percent and 27 percent of its total passings. 

AT&T will not be able to go head to head with cable, across the full range of home broadband speeds, until it has FTTH available to most homes in its fixed network footprint. By 2025, when AT&T expects to  have 30 million FTTH passings, it will be able to compete head to head in about 45 percent of its footprint. 

Take rates are arguably the second most-important variable, as there is a difference between an active account and a location able to buy. Over the past year, AT&T has boosted its FTTH take rate from 34 percent of passings up to 37 percent of passings. 

The goal is to approach 50 percent take rates, which would exceed the general take rate of about 40 percent telcos have been able to garner over the past couple of decades. 

Finally, it remains to be seen how average revenue per account changes as more customers take FTTH home broadband services. At the moment, AT&T’s bottom tier FTTH home broadband service (exclusive of taxes) runs about $55 per month. The mid-range tier costs about $65 a month, while the top gigabit tier sells for $80 a month.

In addition, AT&T has added two premium tiers offering 2-Gbps symmetrical and 5-Gbps symmetrical access for $110 and $225 per month, respectively. The mix of accounts could strongly affect AT&T revenues. 

The lowest FTTH tier--offering 300 Mbps--covers more than half of the U.S. home broadband buyer base. Another 17 percent of customers buy services operating between 200 Mbps and 400 Mbps. 

source: Openvault  

Assuming lower-income households take advantage of support programs, those households reached by AT&T could have internet access at 300 Mbps for about $25 a month. 

That is why the pace of FTTH upgrades matters so much for AT&T. To reach parity with cable TV operators, which AT&T defines as market share greater than 50 percent and installed base approaching 50 percent. Without nearly-ubiquitous FTTH deployment, those goals are likely unreachable. 

To be sure, competition at the lower speed levels--up to about 100 Mbps, is an opportunity for Verizon and T-Mobile. Verizon has a limited fixed network footprint of U.S. homes while T-Mobile has had zero share of the home broadband market. 

Even if those two firms use fixed wireless to reach the lower and middle tiers of buyers, that is about 65 percent to 70 percent of today’s home broadband market. 

For AT&T and other telcos, though, the pace of FTTH deployment will be the story.

U.S. FTTH Payback Model is Changing

This chart showing AT&T fixed network average revenue per user for AT&T consumer connections might surprise you. 

At the end of 2020, the chart shows, AT&T had about 14 million broadband customer accounts in service and had some five million FTTH connections. 

That might be low. AT&T itself reported it had 5.5 million FTTH accounts in service at the end of the third quarter of 2021.  

Other estimates for the same period suggest AT&T FTTH passed 15.5 million home locations in late October of 2020. “Passings” mean a customer can buy. AT&T says it had a take rate for FTTH passings of 34 percent in 2020. 

In 2021 take rates seem to have climbed, and might have reached 37 percent.  

source: Digtl Infra 

Keep in mind that AT&T had about 57 million total homes passed in its fixed network footprint in 2021. Even if AT&T spends less than $1375 per active account location, and perhaps in the $500 to $600 range for passing (but not activating) a home, the payback model almost certainly has to rely on a number of subtleties.

In some cases, AT&T may already have usable fiber-to-node facilities in place, which should reduce the cost of extending fiber to the home. It is possible that in some locations government subsidies could amount to perhaps $300 per line. 

But some of the financial value also has to be attributed to enterprise, small business and small cell deployments that can use much of the same distribution fiber. Presumably some of the payback will come from lower operating expense as well. 

Still, with overall ARPU for combined copper, FTTN and FTTH facilities at just $58 a month, once has to assume some amount of voice and video entertainment revenue is involved. 

At a high level, AT&T has been saying FTTH payback models work at $50 a month ARPU and penetration of 50 percent. 

If one assumes that the mainstay has to be home broadband, with average household broadband spending of about $40 to $50 a month, with digital subscriber line unsustainable longer term at about $40 a month, then one is almost forced to assume that a substantial portion of AT&T’s FTTH revenues (stand alone, with zero voice or video contribution) will be closer to $60 a month. 

AT&T FTTH charges for 300 Mbps service already are at $55 a month (ignoring taxes). Service at 500 Mbps costs $65 a month and 1-Gbps service retails for $80 a month.  

Even assuming every FTTH customer only buys service at 300 Mbps (more than half of all U.S. homes buy service between 100 Mbps and 200 Mbps), revenue with zero contribution from voice or video would be above $50 a month.

Does a Big Expansion of FTTH Make Sense for AT&T?

By some estimates, AT&T passes 55 percent of U.S. homes. Assume total U.S. housing units number 139 million.

Assume a rental vacancy rate of seven percent and a homeowner vacancy rate of 1.4 percent. Assume the percentage of owned housing is 64.2 percent, implying there are 89.2 million owned homes.

In that case, there also are some 35.8 million rental units. That further implies 33.3 million occupied rental units, and some 88 million occupied owned housing units.

Altogether, that implies a total universe of about 121.3 million occupied U.S. housing units. In principle, that means 121.3 milion potential locations a communications service provider might sell services to.

Assume AT&T, passing 55 percent of those locations, therefore could sell fixed service to about 66.7 million locations. That would still be on the high side, as there are some locations--boats, trailers, rented rooms, very-rural locations--that probably are not “sellable” locations. Assume such locations represent one percent of locations, or about 670,000 locations.

So round the addressable base of locations to 66 million.

In its first quarter of 2019, AT&T reported $2.8 billion of internet access revenue, representing about 25 percent of entertainment group revenue of $11.3 billion. AT&T reported 13.8 million broadband accounts in total.

That implies a penetration rate of about 21 percent (so call that the installed base).

AT&T claims 3.1 million “fiber” customers (fiber to the home), with 12.4 million locations passed by FTTH. That implies a take rate of 25 percent, where FTTH is available. Granted, sales should increase over time.

AT&T believes it can boost that take rate to 50 percent over time. Verizon has been able to get a bit more than 40 percent take rates over time, so a 40-percent share target seems reasonable enough.

The issue is what percentage of total passed homes could profitably be upgraded to FTTH.  If AT&T by the end of 2019 has 14 million FTTH homes, that leaves 52 million homes remaining for potential FTTH upgrades.

It is difficult to determine what percentage of those 52 million homes might be amenable for FTTH upgrades. For the sake of argument, assume half those homes actually are in areas dense enough that FTTH is feasible at a cost of about $1,000 per location.

So assume a potential universe of 26 million potential FTTH homes. Assume an actual customer then requires $600 additional cost to activate.

That implies capex of about $26 billion to build the network. Assume AT&T could get 25 percent take rates for the new FTTH services. Here is where it gets tricky. We must assume AT&T already has about 21 percent take rates for internet access already. So what percentage of the new FTTH accounts are incremental, and what percentage are simply upgrades by current customers?

It seems unlikely that AT&T loses many customers by upgrading to FTTH. But that also means a new FTTH network with 25 percent adoption actually represents a net gain of perhaps four percent new accounts.

Even if all the gains at 40-percent adoption are new accounts, AT&T stands to gain about 19 percent new accounts by making the FTTH upgrades. That might represent 4.9 million new accounts.

That implies an investment of nearly $5 billion for customer premises capex. Ignoring time value of money and interest expense, assume capex is at least $31 billion.

Assume “average” internet access revenue of about $130 per quarter, per account, or $43 a month. Assume FTTH boosts average revenue per customer to about $53 a month.

That implies recurring revenue, at 40 percent take rates of about $636 per year, per account. Annual incremental revenue then is about $3.2 billion.

Assume gross margin is about 40 percent. That implies incremental free cash flow of about $1.3 billion annually. So the big question is whether it makes sense to invest $31 billion to earn an additional $1.3 billion in free cash flow.

Why AT&T Should Not Invest Too Heavily in FTTH

A telco executive once told me, nearly two decades ago, that the investment in fiber to the home was not intended to boost revenues or necessarily to gain market share on other key competitors, but instead simply to allow the firm to remain in business.

In other words, the rationale for FTTH was strategic, and not necessarily motivated by classic return on investment criteria. That arguably remains the case: it is not that FTTH upgrades are unnecessary, but that the return is thin enough that deployment cases have to be looked at quite carefully.

AT&T and Verizon, for example, now are flat in terms of net additions, with nearly all the telco segment losses coming from other telcos still heavily reliant on copper connections. In other words, at current levels of investment, AT&T and Verizon are holding their subscriber bases, but not gaining on cable competitors.

The big unknown is what happens if either firm were to dramatically increase investment. Verizon is largely FTTH already, so the issue is what happens if investments to boost consumer internet access speeds were to be made.

AT&T has added perhaps four million new FTTH lines over the past few years. AT&T says it will have connected 14 million U.S. homes with fiber-to-home facilities by the end of 2019.  If AT&T passes a total of 62 million homes, that implies FTTH will be about 23 percent of total passings.

Keep in mind that the entertainment group (consumer services including all internet access services) represents about 15 percent of the company’s adjusted EBITDA. In other words, earnings from 62 million homes generates just 15 percent of AT&T total. There is limited upside, one might argue.

At a high level, and for immediate purposes, AT&T has passed less than a quarter of consumer locations with FTTH. Still, while not growing its internet access market share, it is holding steady, overall. A rational executive might conclude that scarce capital is best deployed elsewhere, to reduce debt and build the 5G network.

Still, you might wonder why AT&T apparently has been so slow to upgrade, given recent evidence that, where it chooses to build optical fiber access facilities, it can get 50-percent take rates, as well as higher dual-play revenues (video entertainment plus internet access). The key is that those areas tend to be the areas of highest household income. So spot builds make more sense than full-town or full-city upgrades, given other demands for investment or debt repayment.

And AT&T has to prioritize mobility. Recall that mobility represents half of AT&T's revenue.

WarnerMedia represents about 17 percent of the company’s revenue and adjusted EBITDA. That’s more revenue and profit than AT&T makes from consumer fixed network operations.

And recall that WarnerMedia earns money from lots of customers and content and service providers not on AT&T’s network. It is an “app,” not a network service confined just to AT&T.

Business wireline represents about 17 percent of the company’s adjusted EBITDA.

In terms of revenues, mobility represents 40 percent, entertainment group 26 percent and business wireline about 15 percent of total quarterly revenue of $45.7 billion.

The business issue is whether any massive expansion of FTTH would produce revenue gains great enough to justify the move, and what the opportunity costs might be.

In fact, opportunity cost probably is the bigger issue. With capital limited, does it make more sense to invest in 5G and the mobile platform, or put lots more capital into the fixed networks business that drives a minority of revenue for both AT&T and Verizon.

Verizon earns 87 percent of its profits from its mobile network.  

But it is not clear how much upside exists for AT&T, in terms of fixed network internet access revenue. You might argue that the best case for AT&T, for a massive upgrade of its consumer access network, is about 10 percent upside in terms of consumer market share.

That is by no means insignificant, depending on the assumptions one makes about the cost of the upgrades. Still, given that as important as it is, fixed network internet access now is a mature business, there are limits to how much capital a telco “ought” to invest, compared to deploying capital elsewhere.

Realistically, a major telco has to expect it will, under the best of circumstances, and in a two-provider market, split share with a competent and motivated cable TV provider. If cable now has about 60 percent share, and AT&T about 40 percent share, that implies a sort of share ceiling of 50 percent. That is one driver of revenue. The other is revenue per account.

But typical account revenues have not risen as much as one might expect, given consumer shifts to higher-speed services that tend to cost more.

Basically, internet access prices in the developed world have tended to move roughly in line with growth in gross domestic product, and are flat to declining in terms of spending as a percentage of gross national income per person, according to the International Telecommunications Union.  

So there are important reasons why scarce capital has to be put places other than massive consumer FTTH upgrades. Consumer fixed network operations produce relatively little revenue or profit for AT&T.

So a rational executive would invest just enough to hang on to most of the revenue, as long as possible, while investing for revenue growth elsewhere. Just saying.

The Counter-Intuitive Take on Wisdom of DirecTV Purchase

With the spin-off of AT&T’s linear video assets into a separate entity called DirecTV, owned 30 percent by TPG, there will be much commentary about the mistake AT&T made in buying DirecTV in the first place.  

That is a legitimate observation. An asset that depreciates from about $67 billion enterprise value (equity and debt) to perhaps $16 billion, in about five years, is hard to justify with the word “success.” 

In fact, you'd be hard pressed to find a single commentator arguing that the acquisition had any value at all.

But free cash flow is really important to AT&T, and the firm could not--for antitrust reasons--have done something more "sensible," such as buying additional mobile and fixed network assets. Facing a number of not-so-good alternatives, AT&T made a choice that almost certainly boosted free cash flow more than any other investment or acquisition antitrust authorities would have permitted.

On the other hand, nobody ever is able to demonstrate there was any other investment of $67 billion that AT&T could have made, in 2015, that would have generated $4.5 billion in annual free cash flow, immediately. The only possible alternative that would have done possibly done so, and passed antitrust review, was a series of smaller purchases of video content assets, had they been available. 

Content assets (studios or networks) tend to sell for enterprise value ratios ranging from 13 times to 23 times revenue. 

In other words, to buy $1 billion in free cash flow (using EBITDA) might require buying an asset costing somewhere between $13 billion and $23 billion. To acquire an asset generating $4.5 billion might have required purchasing assets costing between $58.5 billion and $103.5 billion.

The point is that generating an incremental $4.5 billion in free cash flow is an expensive proposition, even ignoring the time it can take to create and build a free cash flow stream of such size. 

Free cash flow matters for AT&T because it requires huge amounts of free cash flow to support its dividend and fund capital investments. 

To be sure, perhaps nobody actually expected free cash flow to be so threatened by attrition of the gross revenue stream. Some might argue that AT&T “should have” invested that same amount in its mobile or fixed networks businesses. 

Precisely what a mobile investment might have entailed is not so clear, as AT&T could not simply have purchased another mobile company, for antitrust reasons. The same argument holds for purchase of additional fixed network companies. Antitrust concerns made either of those choices impossible. 

If acquisitions were off the table, what about investments in the core networks? To be sure, AT&T might have invested in smaller cells, or more cells, to boost coverage or capacity. The problem is that I have seen no analysis that suggests how such investments--though increasing customer satisfaction or reducing churn--would generate $4.5 billion in additional free cash flow.

It might be argued that AT&T could have put all that cash ($67 billion) into fiber-to-home upgrades, for example. Even a cursory analysis would show that this could not have generated $4.5 billion immediately. It is doubtful if even at the end of five years, free cash flow would be significantly close to $4.5 billion. 

AT&T passes perhaps 62 million housing units. In 2015, it was able to deliver video to perhaps 33 million of those locations, mostly using a fiber to neighborhood approach. 

Upgrading just those 33 million locations to FTTH would take many years. A general rule of thumb is that a complete rebuild of a metro network takes at least three years, assuming capital is available to do so. 

Even if AT&T was to attempt a rebuild of those 33 million locations, and assuming it could build three million units every year, it would still take a decade to finish the nationwide upgrade. The point is that incremental free cash flow would not approach anything like $4.5 billion after a decade. 

Of those 33 million locations, perhaps 20 percent were already customers. Since AT&T competes against a cable operator at virtually all those locations, the issue is how much video market share AT&T could wrest away from the incumbent cable operator, which typically has about 60 percent share (a telco might get 20 percent, while satellite gets about 20 percent). 

So the realistic upside from new video subscribers is between a few percent to possibly 10 percent. Assume AT&T could build FTTH for a cost of about $2000 per location, and can build three million locations a year. At the end of one year, AT&T would have spent $6 billion. Assume subscription lift was 10 percent. That would add 300,000 video subscribers.

Assume annual revenue per account is about $80. That generates about $24 million in new revenue. Assume free cash flow is about 20 percent of gross revenue. That suggests incremental free cash flow of perhaps $4.8 million. 

Of course, FTTH also would allow At&T to compete with cable for internet access accounts more effectively. Assume the local cable operator has 70 percent share, while AT&T has 30 percent or less. 

Assume average annual revenue is $540 per account. Assume AT&T could gain five percent market share within a year. The FTTH upgrade then adds 150,000 additional internet access accounts, or about $81 million in incremental gross revenue. Assume margins are about 40 percent, and that all that is free cash flow (generous, but this is an exercise). 

Incremental broadband cash flow grows $32 million or so in incremental free cash flow. Add that to the video uplife and AT&T gains $37 million in incremental free cash flow from the FTTH upgrades. 

Assume the results are consistent across the homes AT&T could continue to upgrade (33 million total). After five years, AT&T might be able to grow free cash flow by $185 million annually, after investing $30 billion. Hopefully I have done the math correctly. 

In buying DirecTV, AT&T spent $67 billion. But it began earning $4.5 billion in free cash flow immediately. 

In other words, diverting $30 billion of capital to FTTH upgrades produces a fraction of the free cash flow that DirecTV did. True, the asset declined much faster than expected. But if the point is free cash flow generation, avoiding the DirecTV purchase and investing in FTTH would have produced far-worse returns. 

Sure, losing so much equity valuation is painful and unwanted. But investing in FTTH as an alternative might have been far worse, as a generator of free cash flow, even if asset values would arguably have been higher. 

Sometimes a firm has no good choices. This might have been one of those instances. Keep in mind that DirecTV is still spinning off $4 billion in annual free cash flow.

Could AT&T FTTH Footprint Reach 44 Percent by End of 2019?

What does it mean that AT&T will have 14 million fiber to the home passings by about the end of 2019? In a broad sense, FTTH means a chance for AT&T to retake market share from cable TV operators, which have about 65 percent of the installed base of total U.S. consumer internet access connections.

“Whenever we go into a neighborhood and turn up fiber, 25 percent (take rate) comes fast and 50 percent is eminently achievable,” said Randall Stephenson, AT&T CEO. “And we actually think we can hopefully get beyond 50 percent as we continue to get this build completed.”

AT&T’s fixed network could represent--on the high side--perhaps 62 million consumer locations passed. That figure has to be interpreted. It could mean physical locations passed. It could mean dwelling units reached.

My own understanding is that this figure refers to dwelling units, not buildings. Here’s the difference: the U.S. housing stock is divided between detached houses and multiple dwelling units and other types of housing.

In 2000, detached housing represented about 60 percent of all U.S. housing units, according to the U.S. Census Bureau. In 2017, detached homes represented nearly 62 percent of housing.

So if AT&T’s fixed network is the same as the national average, AT&T’s network might pass 37.2 million single family homes. The rest of the housing units are apartments, condominiums, other forms of attached housing, mobile homes, boats and trailers.

So assume there are 24.6 million attached dwelling units in AT&T’s fixed network footprint. One has to estimate “locations” to be served from the dwelling unit counts. We will exclude boats, trailers or mobile homes as feasible FTTH locations. Assume that “locations” (buildings) represent about 28 percent of dwellings (by definition, an MDU is one location with multiple dwellings).

In that case, there might be some 6.9 million MDU locations in the AT&T fixed network service territory. That blends MDUs of all sizes into a composite average of 3.5 units per building. So make the universe of residential locations 31.5 million.

AT&T says it will have 14 million FTTH locations in service by the end of 2019. Assuming 100 percent of those locations are single-family homes, AT&T FTTH locations would be about 44 percent, with most of the rest served by fiber to the neighborhood. It is unclear how many all-copper lines remain in service, but it is possible there are as few as a million.

Still, AT&T’s interest in high-capacity access that costs less than FTTH remains. For even if it were able to boost its market share (installed base) of consumer internet access to as much as 50 percent, half the assets would still be stranded, producing no revenue.

For AT&T no less than Comcast, lower-cost infrastructure provides two benefits: fewer stranded assets and a lower-cost base, which provides more room to either lower retail prices or boost profit margins.

Keep in mind that 25 percent take rates also imply 75 percent stranded assets. Fixed wireless built on the 5G mobile network has clear potential advantages, including lower incremental cost to supply the equivalent of fixed access and lower total capex, with lower stranded asset risk.