David Christopher, president of AT&T Mobility and Entertainment, painted a rosy picture of the state of AT&T’s wireless unit at an investor event in London, from the three things AT&T is doing at each of its sites as it builds out the FirstNet network for first responders to maintaining neutrality on the proposed Sprint/T-Mobile US merger.
“Our mobile business is humming,” Christopher said at the Bank of America/Merrill Lynch Telecom and Media Conference, citing first quarter results that included the carrier’s best performance on postpaid net customer additions in five years, as well as improved network performance amid low churn.
Christopher addressed low smartphone upgrade rates in AT&T’s customer base — a stat which has produced record-low rates in a number of recent quarters, with a new record low in the first quarter of this year.
“Upgrades are low-ish, for sure,” he said. “We think that will continue. The price of handsets has gone up. People are aware of what handsets cost. The installment plans that are in the market today are such that people are thinking about, ‘when do I upgrade?’ And the functionality of those handsets, the new releases are more … evolutionary than revolutionary. Those are all factors of why we see the upgrade rates being low.”
Asked about whether a Sprint/T-Mobile US merger is good or bad for AT&T, Christopher maintained neutrality.
“We have been silent on a point of view here,” Christopher said. “My perspective and the seat I sit in is, we’re going to compete not matter what happens, and we’re going to use the assets that we have and play our game, whether or not the merger goes through or whether some other scenario plays out — we’re going to play our game. ”
He had a similar response to the possibility of a new fourth player competing with AT&T, either due to a spin-out of assets from the Sprint/T-Mo merger or an existing company getting into the market via the sale of such assets.
“At the end of the day, we have the assets that we have, we’re very, very pleased with what they are and we’ve got to execute for customer experience, cost, et cetera,” Christopher said. “Matter whether it’s Sprint/T-Mobile or some other hybrid, we’re going to play our game.
“Whoever it is, they’re going to have an execution challenge in front of them, and so that’s going to play out, too — meanwhile, we’re off and running with what we’re doing,” he added.
Christopher said that AT&T’s win of the build-out of the First Responders Network Authority contract for a nationwide public safety LTE network was a seminal moment for the carrier. He said that AT&T has about 55% of its committed coverage built out at this point and will be at the 60% mark in the third quarter — running about six months ahead of schedule, he said.
When AT&T touches its towers for the FirstNet build-out, he said, it does three things: deploy all of its fallow spectrum, 60 megahertz across AWS, WCS and the Band 14 700 MHz that it gained access to with the FirstNet deal; upgrade the electronics and software capabilities to include LTE Advanced Pro features such as 256 QAM modulation, 4×4 MIMO and four component-carrier carrier aggregation (which he said will eventually be upgraded to six-component CA); and hang new hardware that is software-upgradeable to 5G, so that when AT&T is ready to deploy the technology in an area, it is prepared.
“It’s a very simple, very efficient, capital-intensive way to fulfill the FirstNet contract and create a much better experience” for current users, Christopher said. Over the course of 2017, 2018 and 2019, he added, AT&T will increase its capacity by 50% via that deploy-and-upgrade process. That has also played into its marketing.
5G, he said, is “enterprise-led” today, citing examples of AT&T working to provide 5G to a Samsung semiconductor factory, a healthcare facility, AT&T Stadium in Dallas, Texas and corporate campuses.
“Those use cases are where 5G is going to start, and consumers will follow,” he said. He added that AT&T will be “opportunistic” about providing 5G fixed wireless access, utilizing small cells that it plans to leverage for 5G mobility use cases.
Asked about the benefits of AT&T’s controversial “5G Evolution” marketing, Christopher said that the operator is pleased with its approach.
“It’s the road to 5G — that’s what 5G Evolution is,” Christopher said. “We want customers hearing about it, wanting to find out more, doing speed tests on their phones and experiencing the fastest network in America — and that is exactly what has happened. We’ve been really pleased with that strategy.”
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