AT&T's 'Internet Air' looks to be its FWA replacement for DSL connections

A new AT&T website outlines an "Internet Air" fixed wireless Internet offering that appears to be the 5G product the operator will offer customers affected by the dismantling of its aging copper wireline Internet network.

"AT&T DSL Internet customers, upgrade to AT&T Internet Air," the company urges in a video on its website. The service is promoted as better, faster and more secure than AT&T's 100-year-old copper network.

"Internet Air is our new, fast home Internet delivered over the reliable AT&T wireless network," the video explains.

Figure 1: AT&T's website touts its new "All-Fi Hub" FWA receiver.
(Source: AT&T screenshot)

According to the AT&T website, the fixed wireless access (FWA) service costs $55 per month, offers "typical download speeds" between 40 Mbit/s and 140 Mbit/s, and does not carry any overage charges. Users can install the service themselves via the new "All-Fi Hub" receiver and test the offering for free for a week.

An AT&T representative contacted by Light Reading didn't offer any additional details about the service – such as which vendors are powering the service.

According to the financial analysts at Wells Fargo, there are still 6.2 million customers on AT&T's DSL network, though that figure is declining at a rate of 1.3 million per year.

Catching customers

AT&T officials have been clear about their plans to offer a new FWA service that's mainly designed to retain customers in millions of locations where it is dismantling its copper network and will not offer a fiber alternative. Company officials have called the effort AT&T's "copper catch" program.

During AT&T's earnings call this week, CEO John Stankey said the operator recently introduced the FWA product to some customers.

"We are in the process of scaling up so that we make sure that we do it the right way. And we are going to use it where we think we can offer a customer a better set of services than what they currently have," Stankey said, adding that Internet Air would use AT&T's newly available midband spectrum.

Stankey said AT&T will be measured in its approach to FWA, applying it where the wireless network possesses "underutilized capacity" and in areas with no fixed infrastructure. He added that AT&T sees a role for FWA/mobile bundles.

"There are certain consumer segments where that's durable, but it's not most consumer segments, in my view," Stankey said.

AT&T is now joining T-Mobile and Verizon in using midband spectrum holdings and 5G technology to offer FWA services across the country. However, AT&T is primarily targeting its offering at existing copper customers, whereas T-Mobile and Verizon are offering it in locations all over the country.

AT&T has outlined a massive fiber network buildout program that involves expanding fiber connections to around 30 million locations by 2025. However, according to the financial analysts at Evercore, AT&T serves about 60 million locations with copper, and the operator is working to turn off that aging network.

That means that after everything is done in 2025, around 15 million AT&T copper locations won't be offered a fiber replacement, according to analysts. The operator has said it will use FWA to service those customers.

AT&T introduced a fixed wireless product on its 4G network using 3.5GHz CBRS spectrum in 2019, in part to meet Connect America Fund Phase II buildout requirements. According to FierceWireless, the company counted around 500,000 FWA customers on that network last year.

Tumbling shares

News of AT&T's new FWA product arrives the same week as a historic decline in the company's stock price. After AT&T announced its first quarter earnings, its shares recorded their biggest drop in 40 years.

Financial analysts appeared baffled.

"In 40 years, AT&T has only been down more than yesterday once. There is no fundamental explanation," wrote the analysts at BofA Global Research in a note to investors Friday.

"We view the stock reaction as way overdone," agreed the analysts at Wells Fargo.

Analysts said investors appeared surprised at AT&T's lower-than-expected free cash flow (FCF) in the first quarter, but they predicted that the operator will likely improve it over the course of 2023.

"Investors are skeptical of AT&T's FCF guidance following a shortfall this quarter. We understand the skepticism, following years of unreliable commentary and poor disclosure; however, in this case we suspect the magnitude of skepticism is misplaced," argued the financial analysts at New Street Research. "While the sell-off today may be overdone, we remain Neutral [on the company's stock] because we have concerns about returns in the wireless market more generally."

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano