“Our main purpose is … we create connection,” states John Stankey, AT&T CEO.
In its 2021 Analyst Day conference on Friday, the company outlined three market focus areas for growth: broadband connectivity, software-based entertainment, and “fantastic storytelling.”
Broadband connectivity leverages both fiber and wireless infrastructure. Fiber underpins the connectivity in both wired and wireless networks. Combined with recent mid-band spectrum acquisition, Stankey believes a hybrid fixed and mobile approach will differentiate AT&T and provide additional customer growth opportunities as bandwidth demand escalates.
Software-based entertainment, through HBO Max, gives AT&T “a next-generation entertainment distribution platform built for growth in direct-to-consumer subscription and advertising-based customer relationships.”
The company expects 120-150 million worldwide HBO Max/HBO subscribers by the end of 2025 with HBO Max expansion into 60 markets outside the United States in 2021. In June, the company will launch in the U.S. market an advertising-supported video on demand version of HBO Max.
AT&T’s fantastic storytelling is coming from its Warner Media arm that creates and curates premium entertainment. The company suggests that this content will help grow profitable customer relationships beyond traditional connectivity-based services.
Jeff McElfresh, CEO of AT&T Communications, the company’s network operator, points out that broadband connectivity is being driven by: demand for uplink capacity for user-generated content like video conferencing, and greater dependence on the fixed network for speed and capacity to support work from home/learn from home activity that is likely to continue.
Increasing bandwidth consumption and uplink demand comes from more connected devices in a home, greater mobile data consumption, shifts in video content format to 4K, increasing streaming services, video conferencing and other high bandwidth applications including AR/VR and gaming.
AT&T is meeting growing bandwidth demands with a robust fiber network irrespective of the last mile serving technology. McElfresh comments, “It’s the foundation that fuels our mobile network, providing the capacity and performance to unlock the full potential of the spectrum we deployed. And that very same fiber network lights up neighborhoods, small businesses and enterprise locations along the route.”
In 2021, AT&T plans to increase its fiber footprint by passing additional three million customer locations across more than 90 metro areas. It will raise that figure to four million by year-end 2022. Estimated capital expenditures are $3-4 billion for the overall expansion.
With these deployments adjacent to AT&T’s current market footprint, the company can realize lower costs and faster cycle times from build to revenue. Fiber offers gigabit speeds, low latency, and symmetrical downlink/uplink performance. Fiber is easily upgradable to multi-gig speeds with minimal investment to meet bandwidth demand.
The company offers nationwide 5G using dynamic spectrum sharing on its 4G network.
AT&T acquired 80 MHz mainly in B- and C-blocks of C-band spectrum nationwide in FCC Auction 107. It has interim access to A4- and A5-blocks for Phase I deployments in the top 46 markets. This buy strengthens AT&T’s connectivity objective with access to 30 percent more low- and mid-band spectrum.
The company projects a capex of $6-8 billion to deploy its C-band licenses, with most of the spend occurring from 2022 to 2024. With FirstNet investment declining, AT&T has already factored C-band deployment costs into the company’s earlier 2021 capex guidance of $18 billion.
Its total C-band investment comprises spectrum payments of $23.4 billion in 2021 and an additional $4 billion for satellite incentive and clearing costs through 2024.
The company said that it will deploy C-band in Phase I when the spectrum first becomes available in the A-block licenses on December 5, 2021. (see, Rockin’ the C-Band).
AT&T will use its 1050 MHz of millimeter wave spectrum as part of a broader wireless strategy in high-density areas such as stadiums, airports and Enterprise facilities like hospitals and manufacturing. The company believes mmW works best with the dense fiber infrastructure that it is installing.
With strong Enterprise relationships, AT&T brings a broad services portfolio and recognized brand. It plans to introduce fixed 5G wireless solutions as part of its Enterprise offerings. Furthermore, the company is expanding its 5G edge solutions in 2021, developing customer-led applications with technology partners like Microsoft, IBM, Accenture, Google, and Deloitte.
By John Celentano, Inside Towers Business Editor