- AT&T CFO Pascal Desroches views satellite as a solution for the 1% uncovered population in very rural areas
- The company is open to partnering with more satellite providers to ensure seamless connectivity in rural areas
- Fixed wireless is a good tool for reaching some locations but it’s still not as big a focus for AT&T as its rivals
Appearing at the Mizuho Technology Conference in New York this morning, AT&T CFO Pascal Desroches was asked about what some may call the “elephant in the room,” i.e., SpaceX’s increasingly aggressive moves to chip away at the broadband market.
His answer? Between fiber, cable, fixed wireless and the wireless infrastructure that exist in the U.S., that probably covers 99% of the population, but there’s 1% of the population that’s not covered today in very rural areas. “I think satellite is a great solution for that,” he told moderator Jennifer Fritzsche.
The cost to deploy traditional infrastructure in very rural areas is prohibitive, but within urban and suburban areas, the cost per bit to deliver connectivity with the infrastructure that’s in place now is lower than you’re going to get with satellite. “Those markets are competitive with well-established competitors,” he said.
While “anything’s possible,” AT&T provides great solutions at a “really attractive price” in urban and suburban areas, and “that’s where our focus is,” he said.
Currently, AT&T is invested in AST SpaceMobile, but Desroches reiterated what AT&T CEO and Chairman John Stankey has said: They plan to work with different satellite players to bridge the coverage gaps so that when people drive into a very rural area, they’ll be able to have continuous coverage.
Desroches touched on but didn’t shed a whole lot of new light on the joint venture that AT&T announced last month with Verizon and T-Mobile. Many observers view the JV as a defensive move to counteract SpaceX’s aggressive expansion into the mobile space.
The expectation is the Big 3 will agree on a set of standards and principles to deliver direct-to-device (D2D)/ The JV ideally will allow them to pool scarce spectrum resources together for more complete coverage and share the infrastructure costs of delivering satellite connectivity.
“All together, those things are making this pretty compelling for us, and importantly, I think the consumer wins here” because by coming together, “we’re able to deliver value to the consumer at an attractive price,” he said.
The spectrum bands that each of the Big 3 operators possess collectively allow them to better serve the D2D market than each of them could do separately, he noted.
AT&T’s spectrum, fiber assets
Last year, AT&T saw an opportunity to acquire attractive spectrum from EchoStar, both mid-band (3.45 GHz) and low-band (600 MHz), and in Lumen, a unique opportunity to acquire fiber assets in locations where AT&T didn’t operate. In wireless, AT&T had less share in Lumen’s territories than it had nationally, he said.
“Right now, we're focused on what we have in front of us. We have a lot of work to do to continue to execute and monetize the assets recently acquired, and plenty of room to run an organic footprint,” he said.
AT&T is the strongest of the three when it comes to convergence, a point once again hammered home during Desroches’ appearance at the Mizuho conference.
AT&T expects to end this year with about 40 million fiber passings, with the goal of selling both fiber and wireless to these subscribers. By 2030, it expects to reach more than 60 million fiber passings.
“We're going to be in a position, as a result of those relationships, to drive an outside share take in wireless,” he said.
AT&T’s fixed wireless as tool
Fiber is the lead offer for broadband, but fixed wireless access (FWA) is another tool in the toolkit and one it can use in places, for example, with legacy DSL that don’t yet have fiber, as well as locations where it’s not going to offer fiber.
“Importantly, when we are selling fixed wireless … we look to do it in conjunction with wireless. It's very clear when we're looking at returns, fixed wireless only makes sense if you are using your fallow capacity and you don't have to densify your network to provide incremental coverage and capacity,” he said.
It’s also important for AT&T to surgically use fixed wireless in places outside its traditional footprint to drive convergence and use it to increase its share of wireless in those markets.
T-Mobile and Verizon have been far more aggressive about FWA than AT&T, and the CFO indicated that’s not going to change.
“I wouldn't anticipate us to focus on those [fixed wireless] relationships to the same extent as you see some of our peers,” he said.