AT&T today provided updates on its C-band spectrum, 5G network rollout plans, and its fiber broadband internet availability, all being key areas of digital infrastructure, at its Analyst & Investor Day.

C-band Auction Update and Deployment Plans

In this section, we discuss highlights from AT&T’s Analyst & Investor Day with a focus on C-band and the corresponding 5G rollout and availability by AT&T.

C-band Auction Results

AT&T acquired 80 MHz of national average C-band spectrum depth in the Federal Communications Commission’s (FCC’s) Auction 107. Importantly, the company plans to begin deploying the first 40 MHz of A-Block spectrum, which will clear earlier, by the end of 2021.

AT&T C-band 5G Bands Auction Estimated Payments

AT&T’s total investment in C-band spectrum through Auction 107 was $27.4bn, equating to pricing of $1.05 per MHz-PoP. This total spend includes $4.0bn of clearing costs paid to the incumbent satellite operators of the C-band spectrum. Additionally, isolating only AT&T’s payments to the FCC, the company spent a total of $23.4bn, equating to pricing of $0.96 per MHz-PoP.

AT&T’s C-band 5G Spectrum Deployment Plans

By year-end 2022, AT&T intends to cover 70 to 75 million PoPs with C-band, increasing its 5G availability to customers. Additionally, by early 2023, AT&T projects it will reach 100 million PoPs with C-band. Notably, AT&T’s pace of C-band rollout is slower than the 5G plans that Verizon laid out, only days earlier.

In order to rollout this C-band spectrum, AT&T expects to make $6bn to $8bn in capital expenditures for deployment costs. AT&T notes that this is an “allocation shift” in its expenditure budget, rather than incremental spend. Specifically, the vast majority of this spend will occur from 2022 to 2024. This initial C-band and 5G spending will focus on upgrading a portion of AT&T’s existing 80k towers with new equipment, to increase availability.

AT&T’s 5G Spectrum Position – All Bands

Over the last four years, AT&T has more than doubled the spectrum deployed in its network. Currently, 70% of the company’s low- and mid-band spectrum holdings are now in service.

AT&T Spectrum Holdings MHz Low Mid High Bands C-band 5G

As AT&T completes the remaining 30% of its low- and mid-band spectrum rollout, the company expects enhanced 5G network performance in the top 50 urban markets in the U.S. In turn, AT&T projects that these network enhancements will result in wireless EBITDA growth from profitable market share gains, subscriber growth, and further take-up of unlimited data plans.

High-Band (Millimeter Wave) Spectrum

As part of its spectrum holdings, AT&T currently has 1,040 MHz of high-band (millimeter wave) spectrum. Indeed, the company expects high-band (millimeter wave) spectrum to also be a key part of its broader network densification strategy.

Specifically, AT&T is deploying high-band (millimeter wave) for specific scenarios in high-density areas such as stadiums, airports, hospitals, and manufacturing facilities. The company notes that high-band (millimeter wave) is best served when there is dense fiber to support it. Indeed, this is one of the reasons that AT&T is becoming more aggressive in its fiber expansion.

Spectrum Holdings of U.S. Carriers – Comparison

Notably, following the C-band auction AT&T moves down to the third largest holder of both mid-band and high-band spectrum in the United States – behind Verizon and T-Mobile. Specifically, Verizon secured an average of 161 MHz of C-Band depth nationwide, placing its total mid-band spectrum holdings ahead of AT&T. Whereas prior to the C-band auction, Verizon was behind AT&T in mid-band spectrum holdings.

Future U.S. Spectrum Auctions – AT&T to Grow 5G Bands Further

During its Analyst & Investor Day, AT&T noted that it does not think that C-band is its last opportunity to add to its spectrum holdings. Specifically, AT&T’s Jeff McElfresh comments that “the environment is dynamic with new spectrum coming to market, the secondary spectrum market is opening up”.

Most notably, an additional 100 MHz of 3.45 GHz to 3.55 GHz spectrum, may go to auction in December 2021. Indeed, AT&T could be an active participant in this, or future U.S. spectrum auctions.

Fiber Infrastructure and Broadband Connectivity

In this section, we discuss highlights from AT&T’s Analyst & Investor Day with a focus on AT&T’s fiber infrastructure and broadband internet connectivity goals.

AT&T’s Broadband and Fiber Connectivity

AT&T Broadband and Fiber Internet Connectivity Rollout Availability

At year-end 2020, AT&T offers broadband and internet services to 14.1 million customer locations and has 5.0 million fiber connections. With changes in video viewing preferences and the recent work-from-home and distance learning trends, AT&T is experiencing increasing demand for high-speed broadband services.

Broadband Data Usage Increasing

Broadband Data Usage Increasing Analyst Investor Day

AT&T highlights two thematic broadband data usage trends:

Firstly, demand for uplink capacity (39 gigabytes per subscriber) is growing at a faster pace than downlink capacity (280 gigabytes per subscriber), post COVID-19 (see above left). Indeed, user-generated content is the driver of this trend, with a faster growth pace from applications such as videoconferencing.

Secondly, both mobile and fixed broadband usage are growing at 35%+ CAGRs (see above right). However, there is an increasing dependence on the fixed broadband network, shown by its faster growth. This is because the fixed broadband network provides the performance and capacity that customer applications require. Indeed, this trend has recently been accelerated by COVID-19, due to increases in work-from-home and distance learning. Importantly, fixed broadband’s faster growth (38% CAGR), is a trend that AT&T expects will continue.

Connectivity Usage Continues to Grow

Connectivity Usage Continues to Grow Fiber Internet

Projecting data usage out to 2025, AT&T expects that demand for broadband will increase 5x, in the next 5 years. At this time, the majority of broadband customers will consume 4.6 terabytes of data per month (see above left). Specifically, AT&T highlights that factors driving this increase in bandwidth consumption include: i) connected devices, ii) video streaming, iii) mobile (e.g., new 5G bands), and iv) evolving use cases like 4K content, videoconferencing, augmented reality & virtual reality, and gaming (see above right).

Case Study – High-Definition Video vs. 4K Video

Three hours of high-definition video consumption drives 9 gigabytes of data use per day, equating to 270 gigabytes per month. Indeed, this same three hours of video consumption with 4K quality content, increases those figures more than two-fold. Specifically, three hours of 4K consumption drives 21 gigabytes of data use per day, equating to 630 gigabytes per month.

Combining this shift in video quality with increases in time spent watching video, drives significant demand increases on the network. Therefore, fiber infrastructure is critical to ensure AT&T’s broadband offering can support these rapidly increasing consumption patterns.

Fiber Infrastructure – Critical to AT&T’s Broadband Offering

AT&T notes that internet customers have a need for reliable, robust symmetrical technologies like fiber. Therefore, the company is further expanding its fiber footprint to households and businesses in 90 metro areas across the U.S. Specifically, in 2021, AT&T plans to increase its fiber footprint by an additional 3 million customer locations in these metros.

AT&T expects that these 3 million additional fiber customer locations, planned for 2021, will support increased fiber penetration in its broadband unit. Moreover, the company will accelerate its target in 2022, to cover 4 million additional fiber customer locations, during the year. Overall, AT&T’s desire is to eventually have over 50% of its network covered by fiber infrastructure.

Notably, in locations where AT&T has deployed its fiber network, the company achieves 10% higher market share than its competitors. Additionally, in these fiber markets, 70% of AT&T’s gross fiber adds are new customers for the company.

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