Fixed wireless access has potential in targeted instances where fiber buildouts are economically unattractive, but AT&T will continue to place big bets on fiber buildouts, says company CFO Pascal Desroches.

Jeff Baumgartner, Senior Editor

September 7, 2022

3 Min Read
FWA not 'good enough' for the long term, AT&T CFO says

Fixed wireless access (FWA) has a role to play in certain segments of the market, but the technology simply won't hold up over time, Pascal Desroches, AT&T's CFO, contended Wednesday at the Bank of America Media, Communications & Entertainment Conference.

"Long term, we don't believe [FWA] will be good enough," Desroches said. "That's why we think it's really important to place our bets now with fiber."

Figure 1:

Reiterating AT&T's general stance on the topic, he allowed that FWA can make sense in certain situations, such as rural areas where fiber builds might not pan out or might not be immediately feasible.

FWA, Desroches added, makes sense as a "good catch product," putting AT&T in position to later transition those customers to a fiber-based product.

AT&T rivals Verizon and T-Mobile, of course, have a different view – both are using FWA extensively to help drive home broadband subscriber growth.

Though fixed wireless isn't core to AT&T's connectivity strategy, the company does intend to improve its current FWA product set. "It's fair to say we have a [FWA] product that needs to be updated. You'll hear from us soon on that," Desroches said.

But he was pressed to explain why AT&T seems so reluctant to say it's committed to using both fiber and FWA in its connectivity strategy.

"Because, long-term, the tax on our mobility network for fixed wireless ... makes it a very expensive solution that is sub-optimal," Desroches reasoned. "It's not a good customer experience over time as more and more demand hits the network ... That's why our focus is on fiber. That's where our priority is."

Fixated on fiber

With respect to fiber, AT&T is pursuing a plan to build to 30 million locations by 2025, up from about 18 million today.

"All told, where we have fiber, we win," Desroches said. "Where we have fiber, we take share."

AT&T lost 25,000 total broadband subs in Q2 2022 as fiber gains of 316,000 subs still weren't enough to offset losses from the company's legacy DSL products.

Desroches believes the pendulum will swing the other way as AT&T expands its fiber footprint, but isn't saying when.

"As we build out more homes [with fiber] we will reach that inflection point," he explained, noting that AT&T expects subscriber penetration to reach 40% in its fiber service areas over time and that fiber provides an ARPU lift of about 20% over DSL. "We are at inflection point where the growth of fiber revenues is surpassing the decline in legacy product."

Here's a snapshot of other nuggets from Desroches' talk:

  • Customer payment cycles and related collection issues have returned to "pre-pandemic norms," Desroches said. "As stimulus money is drying up, what we're seeing now is a return to norms that were common pre-pandemic ... Customers are paying us. It's just that they're paying us a little slower."

  • The market demand for mobile services "remains really healthy" and churn levels remain low. Desroches said AT&T expects the company's mobility business to see service revenues growth in the range of 4.5% to 5%, with ARPU (average revenues per user) on track to accelerate in the back half of the year.

  • Multiple factors are driving a decline in AT&T's business services segment, but the company believes it can do better to grow the small and mid-sized segment of the market. "For years, we allowed cable to take share with no competition. We have to get better there," Desroches said.

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— Jeff Baumgartner, Senior Editor, Light Reading

About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading

Jeff Baumgartner is a Senior Editor for Light Reading and is responsible for the day-to-day news coverage and analysis of the cable and video sectors. Follow him on X and LinkedIn.

Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.

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