COVID-19 Uncertainty Remains, AT&T CFO Says; Pandemic Expected to Spur Small-Cell Growth

Uncertainty remains about what COVID-19 will mean for AT&T and the wireless industry, Chief Financial Officer John Stephens said at a MoffettNathanson conference Tuesday. Speakers on a small-cells webinar said COVID-19 is adding to data growth and to the demand on carriers to densify their networks.

AT&T is reopening company stores shuttered due to the pandemic, Stephens said. But businesses are “being careful, being slow to open” even when allowed to do so, he said. Questions remain whether reopening will mean more store traffic and sales, he said. People aren't “rushing back” as states reopen, he said.

The still-slumping economy means consumers may consider delaying buying many devices, including new mobile phones, Stephens said. The way AT&T is building 5G, with improvements in LTE, “the customers that we have get the benefit of what we’ve done with the equipment that’s in their hands today,” he said: “They don’t need to buy a new device, although we do expect 5G to provide new opportunities and new applications.” Businesses may be more inclined to embrace 5G under the current economic downturn because of the cost savings and efficiencies, Stephens said. On the consumer side, no one suggested 5G would mean big revenue increases this year, he said: “We think that will come over time.”

AT&T is well positioned on spectrum and is deploying on the licenses it holds with the FirstNet build, Stephens said. AT&T has the high band it needs for 5G, he said. The C band, set for auction starting in December, is “interesting” but has to be cleared and requires new devices to use, he said. AT&T’s strategy is unlikely to change after President John Stankey replaces Randall Stephenson as CEO July 1 (see 2004240040), Stephens said: “The overall strategic view for the company is going to be very consistent.”

Small Cells

Networks vary, but COVID-19 increased data demand by up to 30%, with 2020 likely to have overall growth of 55%, iGR consulting firm President Iain Gillott said during a FierceMarkets webinar. The growth next year will likely also be higher than average because of the virus, he said. Wireless networks must be able to carry all that data, Gillott said: “You can only put so much on a tower. A lot of this requires densification.” Carriers can only add limited capacity by bringing on new bands, he said. Gillott warned some states continue to put up roadblocks to deployment. “It’s getting better, but it’s not fully addressed yet,” he said. Siting approvals remain “a huge problem” and it can take 12-18 months to get clearance for a site, he said: Getting backhaul and power to small cells is sometimes also a problem, he said.

Mike Burkhalter, EnerSys senior director-emerging technologies, said carriers face differing requirements on attaching cells to utility poles, and rules vary across the U.S. Verizon and AT&T own lots of their own poles, and cable companies deploying wireless have a “distinct advantage” because of franchise agreements with cities. Strand-ready attachments get permitted and built more quickly than other deployments not on poles, and can be more readily attached to power and backhaul, he said. “It’s not a slam dunk,” but pole attachments are growing in popularity, he said.

Pole attachments can be much faster to deploy than other kinds of cells, said Todd Loeffelholz, Airspan Networks vice president-business development. A small crew can install eight-10 small cells a day. A lot of cities are complaining about “too much 5G, too many small cells” and they have to blend in with the pole, he said: “The ability hide that small cell is important and to keep it out of people’s view so they’re not even thinking about it.”

Airspan is seeing lots of interest in the citizens broadband radio service band, with the biggest use offload for mobile virtual network operators trying to cut their connection costs, Loeffelholz said. It’s “really good spectrum in the rural environment where there are not a lot of people trying to use it,” he said.

Notebook

TDS and U.S. Cellular have been able to absorb COVID-19 increases of 15% for wireless and 25% for wireline, and are deploying as much fiber as they can, TDS CEO LeRoy Carlson said at a JPMorgan conference Tuesday. Both are subsidiaries of Telephone and Data Systems. Churn is lower because of the pandemic, he said: “People are nervous about doing anything” to change “something that works well.” The companies are building out 5G using 600 MHz spectrum, but unlike bigger competitors are using the band just for 5G and not LTE, Carlson said. “We’ve also been active in the millimeter-wave auctions,” he said: “We’ve assembled a nice patch of spectrum … that should allow us to provide very high speeds in certain areas with high traffic.” People appear to be willing to pay up to 15% more for 5G and “that’s a big deal in this industry,” he said. Carlson said credit markets are “recovering” and the companies should have access to capital if they decide to participate in upcoming C-band and CBRS auctions.

Verizon still plans to launch 5G nationwide this year, CEO Hans Vestberg said at the same conference. Verizon already has a fast 4G network and has to “come up with something” with “high quality and high performance.” The improvements over 4G will be small at first, but “dramatic” over time, he said: “We already have one of the best 4G networks in the world, so that's what you compete with."