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Fixed wireless set to play big role in AT&T's goodbye to DSLFixed wireless set to play big role in AT&T's goodbye to DSL

Fixed wireless presents a 'nice replacement' as AT&T considers a plan to shut down a portion of its DSL infrastructure that won't be upgraded to fiber, CEO John Stankey says.

Jeff Baumgartner

May 24, 2021

4 Min Read
Fixed wireless set to play big role in AT&T's goodbye to DSL

AT&T CEO John Stankey shed a bit more light on the company's fixed wireless strategy, emphasizing that the technology is profiling as an attractive alternative to DSL in areas that are unlikely to be upgraded to fiber.

AT&T's stance with fixed wireless is not nearly as aggressive as that of T-Mobile or Verizon, but Stankey believes it definitely has its place, particularly "in the outer reaches" of AT&T's traditional ILEC footprint that today is served by low-speed DSL.

"We believe [fixed wireless] is a nice replacement for some percentage of the data customers that are out there," Stankey said Monday at the JP Morgan Technology, Media and Communications Conference.

He also believes that approach will allow AT&T to shut down some of its DSL infrastructure over time.

"We have a voice replacement service now, so that allows us to look at our options around the footprint that used to be in place and the fixed costs that used to be there and begin the work of starting to shed some of that footprint and reduce the number of square miles that have that fixed infrastructure in place that ... you're never going to have an incentive to ultimately upgrade to fiber – I shouldn't say 'never,' but [for] the next several years," Stankey said. "The best way to serve them is with robust wireless infrastructure and stepped up investment in that case, and we'll do that."

But that won't all happen overnight, as Stankey doesn't expect to see that piece of AT&T's investment accelerating in a big way until 2023 and beyond.

Stankey also reiterated that AT&T will take a somewhat targeted approach with fixed wireless. "We're not as robust in our point of view on what fixed wireless can do in urban and highly attractive suburban areas," he said.

That also syncs up a bit with recent comments from Jeff McElfresh, CEO of AT&T's communications business, that data usage trends will make it difficult for 5G to keep pace with in-home broadband needs.

Even as fixed wireless eventually plays a limited role at AT&T, the company has been distancing itself from DSL in other ways. Amid a greater emphasis on fixed fiber and wireless connectivity, the company halted DSL sales last October. AT&T shed another 39,000 DSL customers in the first quarter of 2021, ending the period with just 527,000.

AT&T's big focus on the fixed side of the business centers on fiber-to-the-premises (FTTP) expansion. Its current plan is to add another 3 million FTTP locations this year and another 4 million in 2022 on the way to a target of 30 million locations passed. AT&T added 235,000 FTTP subs in Q1 2021, extending its total to nearly 5.2 million.

Stankey said lower vendor costs and the potential to layer new services on top of those fiber networks could open up an opportunity to add another 10 million passings to AT&T's FTTP footprint.

Defending the Discovery deal

Part of Monday's discussion also centered on the proposed deal to combine AT&T's WarnerMedia unit with Discovery, a pending transaction that will result in the spinning-out of DirecTV and the rest of AT&T's pay-TV business.

Stankey reiterated that the moves will allow AT&T to focus on the size and scope of its core connectivity business.

"We need to be the best core connectivity provider in the market, for both fixed and mobile; that's just where we need to be," he said. "I don't want to underestimate the amount of work that has to be done to make that happen. I'm not naïve. That means we have to change our brand position and that we have some work to do on our customer support processes, and we need to thin down this business to be more focused and agile in that regard."

Driving direct-to-consumer scale

On the other end of it, he believes a link-up with Discovery will help achieve the global scale necessary for HBO Max and the company's broader direct-to-consumer ambitions.

"What's become clear is that the opportunity for direct relationships with customers and media is truly going to be a global opportunity," Stankey said. "Our connectivity business...is kind of capped to the United States for the most part."

He said the combination of WarnerMedia and Discovery could also open the door to a direct-to-consumer business that can expand beyond the distribution of premium video, and into music and, possibly, gaming.

"They will build one of those scalable bases and they'll have opportunities to think about how they distribute other things on that platform," Stankey said.

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— Jeff Baumgartner, Senior Editor, Light Reading

About the Author(s)

Jeff Baumgartner

Senior Editor, Light Reading, 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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