‘We’re equipped with a solid spectrum position,” says AT&T Communications CEO Jeff McElfresh
Editor’s note: This is the third in a series of three stories laying out the national mobile network operators’ plans for midband spectrum. The first, on Verizon’s position, can be read here; the second, on T-Mobile US, is here.
When AT&T showcased its go-forward network strategy at it 2021 investor day, midband spectrum was a minor player, in sharp contrast to Verizon’s strategy of making C-Band center-stage. AT&T executives instead emphasized the hybrid nature of AT&T’s network – both wireless and fiber – and how the combined network will meet future customer demands.
That’s not to say that AT&T hasn’t invested substantially in midband. While the carrier did walk away from the CBRS Priority Access License auction with no licenses, it was the second-largest spender in the C-Band auction: 1,621 licenses for $27.4 billion, including clearing costs. The carrier says this is an average of 80 megahertz of spectrum and a 29% share of the available licenses. The C-Band, the company said in laying out its strategy, “will complement our nationwide 5G network on low band and allow us to deliver faster average speeds across the country.”
Jeff McElfresh, CEO of AT&T Communications, said during AT&T’s investor day that the C-Band airwaves are now the largest band of contiguous spectrum in AT&T’s mid- and low-band spectrum portfolio, and that it will start deploying the first phase of C Band (40 megahertz) towards the latter part of 2021. He said that AT&T is “already hard at work readying the network.” However, the majority of the $6-8 billion that AT&T plans to spend on C-Band deployment will come significantly later in the game, in the 2022-2024 timeframe: C-Band coverage for about 70-75 million potential customers by the end of 2022 and 100 million POPs early in 2023. That’s a smaller and later deployment of midband than either Verizon or T-Mobile US has laid out.
In the big picture of deployment, though, AT&T has been adding a substantial amount of LTE capacity in the last few years as it has taken a one-touch, deploy-and-upgrade approach as part of the FirstNet build-out – and it still has room to grow in its existing holdings. According to McElfresh, as of the end of last year, AT&T had 70% of its low- and mid-band spectrum activated, having more than doubled the spectrum “in production” as it built out the FirstNet network over the past four years. That means the carrier still has more capacity to add, which McElfresh said would be done to “drive performance” in the top 50 urban markets and support its customer growth. As AT&T’s initial FirstNet build comes to a close, the carrier will shift more toward densification and C Band deployment as an “allocation shift within our current portfolio” rather than a lot of additional capex spending, he said.
In analysis published in June 2021, Tutela described AT&T’s deployments thus far as a “a measured approach to rolling out 5G. The only new spectrum that has been solely dedicated to the new technology has been millimeter-wave, only available in limited portions of certain cities. Nationwide 5G, meanwhile, uses a small portion of AT&T’s 850 MHz spectrum, with similar capacity and coverage characteristics as other low-band spectrum that has been used for LTE for years.”
Meanwhile, AT&T executives have sketched out a vision of a network that yes, has 5G, but in which fiber is just as important. McElfresh said that this year, AT&T will increase its fiber footprint in more than 90 metro areas and expand to an additional 3 million new customer locations that are adjacent to its current footprint; that number has since been revised down to about 2.5 million due to supply chain issues, according to AT&T CFO Pascal Desroches. AT&T also plans to expand fiber footprint by an additional 4 million locations next year. McElfresh said that over the long term, AT&T has plans to pass 30 million homes with fiber. In terms of the potential for FWA, he noted that AT&T has thus far not opted to launch wide-scale fixed wireless internet service, but that it has the option to, and that in places where it doesn’t make economic sense to extend fiber, AT&T will “leverage the 5G existing network that we’ve got with our sub-six spectrum strength.”
“Fiber underpins the connectivity we deliver, serving both wired and wireless. We believe our hybrid fixed and mobile approach will differentiate AT&T and provide us with additional growth opportunities in the future as bandwidth demands continue to grow,” said John Stankey, AT&T’s president and CEO, at the company investor day.
McElfresh highlighted two additional trends, based on what AT&T sees happening across its fiber and wireless networks: Demand for uplink capacity is growing at a faster pace than downlink capacity, because user-generated content is on a faster pace of growth due to applications such as video conferencing; and while both mobile and fixed broadband use is growing, AT&T sees increased dependence on the fixed network because it provides the performance and capacity that such applications require.
“The large consumption that we are anticipating over the next five years will be hard to meet with a wireless-only solution,” McElfresh said. “To be honest with you, that’s not our point of view. And that’s why our hybrid fixed and mobile approach … is the appropriate strategy with our network architecture.” He continued, “There will be portions of the footprint that will not be economical to serve with fiber. And we would intend to put at the edge of our fiber network this wireless C-Band asset, along with our other mid-band spectrum to serve some of the limited use cases that we think are available for a fixed wireless solution.” But, he added quickly, FWA is not the primary focus for the C-Band or for AT&T’s overall strategy to serve broadband demand.
Still, the midband is on AT&T’s mind. Earlier this month, the carrier filed a request for rulemaking with the Federal Communications Commission, asking the agency to set a “spectrum screen” that would trigger closer scrutiny of midband spectrum purchases, both in auctions and in the secondary spectrum market, so that no single player could aggregate more than about one-third of the midband in a given geography – though the carrier was quick to say that it was not asking for a hard-and-fast spectrum cap. “Every provider now needs access to wide but scarce mid-band channels to compete successfully in the 5G era,” AT&T argued. “Ten years ago, providers such as MetroPCS and Leap could provide competitive, high-performing mainstream wireless services with 20 megahertz of paired spectrum in just a few markets. Today … providers will need 80-100 megahertz of contiguous mid-band spectrum to provide the full benefits of 5G to their customers. And demand for more such spectrum will only escalate as the new 5G ecosystem generates more bandwidth-intensive applications.” T-Mobile US, AT&T pointed out, in some areas will hold as much as 224 megahertz of the available 564 megahertz once it gets its full C-Band allotment. “Further acquisitions that bestow an even greater mid-band advantage on T-Mobile—or that carry any other provider beyond one-third of available mid-band spectrum—should be carefully reviewed for their competitive implications,” AT&T said, although it acknowledged that such rules would come too late for the 3.45-3.55 auction.
Speaking of that auction, it does offer the opportunity for AT&T to add to its midband holdings, albeit in a limited fashion. While the FCC is technically offering 100 megahertz of spectrum, the agency has set the rules so that no single bidder can get more than 40 megahertz of the band in a given geographic area – and unlike the CBRS auction, which had similar limitations but county-sized licenses, the license sizes for the 3.45 GHz auction are large, which tends to favor big bidders with large, national networks.
However that auction ends up playing out, McElfresh struck a defiant tone in regards to AT&T’s spectrum position. “If you have concerns about our spectrum position with regard to the competition, I stand with conviction and full confidence in our position,” he said – although he also acknowledged that AT&T is now the third-place player in wireless, post-T-Mobile US/Sprint merger. “The environment is dynamic with new spectrum coming to market. The secondary spectrum market is opening up, and technology advances … have proven time and again to level the network playing fields in the wireless industry. Our network has never been stronger, and we remain committed to investing in our wireless network and are confident we’re equipped with a solid spectrum position.”
Looking for more insights on the midband spectrum landscape? Check out the RCR Wireless News webinar featuring Aurora Insight, Analog Devices and LitePoint, and download our editorial report: Minding the Midband: Trends, momentum and deployment in the U.S.
