During AT&T’s (NYSE: T) Q1 earnings call, CEO John Stankey made it clear the company is not backing off its cost cutting goals, despite rising prices and a higher cost of debt.
“We remain on track to achieve our $6 billion plus cost savings run rate target by the end of the year, if not sooner,” Stankey said. He said the company based its plans for 2023 on the assumption the economy might be difficult. “We started the year with the expectation that we’d be operating against a less-predictable macro backdrop. This belief has proven true thus far,” he said.
When Stankey talked about specific cost saving measures, he focused more on the fiber side of the business than the wireless side. “We’re already seeing that fiber uses less energy, costs less to maintain and requires fewer service dispatches,” compared to copper, he told investors. “Think about a cost structure that’s no longer anchored to legacy network technologies and software stacks.”
Stankey did not talk about taking legacy network technologies out of AT&T’s wireless business, but recent commentary from the company about RAN technology suggests this may be coming. Some of the operator’s partners are already seeing lower levels of network spending from AT&T, and the next step could be a shift in the nature of wireless network spend if AT&T starts to deploy Open RAN as a cost cutting measure.
Chris Boyer, VP Global Security and Technology Policy at AT&T, currently chairs the Open RAN Policy Coalition. He spoke about the technology in a video produced recently by AT&T. “There’s always challenges with integrating new technology into a large legacy network like ours and you have to consider the performance impacts, but at the end of the day, ultimately it’s a question of when, not if,” he said. “We started seeing the migration to open interfaces in our core network several years ago,” he said. “So I think it’s just a natural extension of that to take it out to the RAN.”
In theory, Open RAN can take costs out of a radio access network. Open interfaces mean carriers can mix and match equipment, so a vendor that does not offer an end-to-end RAN kit can still compete for carrier business. More vendors in the mix should put downward pressure on prices, but could also lead to higher integration costs.
Open RAN can also facilitate RAN sharing, as demonstrated recently by Vodafone and Orange. This year, the two carriers announced plans to share an Open RAN network in rural parts of Europe, starting in Romania. Orange CTO Michael Trabbia said the Open RAN architecture will mean each carrier can tune its network independently, even though the network hardware will be shared. Vodafone Chief Network Officer Alberto Ripepi said the sharing scheme will reduce hardware costs and energy consumption.
RAN sharing hasn’t come to the United States yet, but analysts have noted that it could be a cost cutting strategy for AT&T and DISH. The carriers both hold spectrum in the 3.45 GHz band, and the DISH 5G network uses AT&T for fallback to LTE and to supplement coverage.
Any attempts to share network infrastructure would likely be complicated by the fact that AT&T and DISH use different radio vendors. AT&T works with Ericsson and Nokia, while DISH has tapped several Open RAN vendors, including Fujitsu, Samsung and Mavenir.
Fujitsu is one open RAN vendor that might end up working for both AT&T and DISH. AT&T and Northrup Grumann have been testing Fujitsu’s Open RAN on a private 5G network in San Diego, while DISH has been deploying Fujitsu’s Open RAN solution in its greenfield 5G network.
Veteran telecom industry editor and journalist Martha DeGrasse is an Inside Towers Contributing Analyst with features appearing monthly. DeGrasse owns Network Builder Reports and contributes regularly to several publications. She was formerly a writer and editor with RCR Wireless and a TV business news producer.
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