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AT&T Sunsetting 2G, Expanding Mexico LTE

Dan Jones
4/27/2016

It was a tale of networks old and new for AT&T on Tuesday's first-quarter earnings call.

AT&T's CFO says it is on track to shut down its venerable 2G network by the end of 2016, while more than 50 million people in Mexico can now access Ma Bell's 4G LTE networks in Mexico.

"We plan on decommissioning [2G] by the end of year," said CFO John Stephens on the call. AT&T first started saying it would close the GSM network in 2012, when it had around 12 million customers on the 850MHz and 1900MHz networks. (See AT&T: Say Goodbye to 2G in 2017.)

"We've migrated a significant amount [of customers] already" the CFO said. "About 6 million," he said when asked for specifics during the Q&A session later.

"In some markets we may only have a 2x5[MHz] slice of that spectrum left [running 2G]," he added.

AT&T's desire to get off 2G is no mystery. It costs money to maintain the spectrum, which could instead be re-used for more profitable 4G services. "We're anxious to capture those savings," Stephens said.

It may help also explain the rush to develop NB-LTE and other narrowband services for the Internet of Things (IoT). Cellular 2G has frequently been used as the wireless transport for machine-to-machine (M2M) communications, like sensors, which can work in the field for years and years. So enterprise and industrial customers are looking for networks that will be around for the foreseeable future. (See AT&T to Test 4G Specs for Unwiring IoT.)

So, all you AT&T flip-phone fans rocking a Motorola V70 have about seven months before it all goes dark. Stephens says that AT&T is expecting to lose some customers because of the shutdown, but that this had already been factored into earnings expectations.

Meanwhile, south of the border, AT&T has been making good on its promise to bring LTE to Mexico. Stephens says that the operator is in 42 markets today -- covering 51 million people -- and plans to be in 160 by the end of the year. (See AT&T Going South of the Border With Huawei? and AT&T Claims North American LTE Crown.)

"We added more than 500,000 wireless customers [in Mexico] this quarter," Stephens explained.

The service provider is in the process of rebranding its Lusacell and Nextel Mexico with the AT&T name. The carrier is hoping to cover 75 million people in Mexico with LTE by the end of 2016. (See AT&T Commits $3B More to Mexico.)

AT&T said it added 2.3 million wireless net subscribers in North America during the quarter. Total revenue was $40.5 billion, up 24% year-on-year, while operating income was $7.1 billion compared with $5.6 billion in the same period the year before.

Results were buoyed by AT&T's acquisition of DirecTV last year and strong wireless results, the company said in a statement. The operator is expecting to see DirecTV "merger synergies" of $1.5 billion or more by the end of the year.

— Dan Jones, Mobile Editor, Light Reading

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kq4ym
kq4ym
5/3/2016 | 10:53:31 AM
Re: Incentive Auction
I did notice that some of the subsidized customers still using the 2nd generation phones were notified this month that newer phone sets were being offered since the 2G networks were being shut down and the old phones would not longer work. It's clear too that there's going to be the opportunity for the providers to up their income, as  "It costs money to maintain the spectrum, which could instead be re-used for more profitable 4G services." 
DanJones
DanJones
4/27/2016 | 6:34:01 PM
Incentive Auction
O yeah, they said they couldn't talk about the 600MHz incentive auction because of the quiet period but were pleased with the progess of AWS-3 and WCS are making.
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