AT&T CEO John Stankey is still looking to wring costs out of the business, and the company’s rural landline customers are next to take the cut.

At this morning’s J.P. Morgan Technology, Media and Communications Conference for investors, Stankey said AT&T is considering mothballing landline facilities in rural parts of its service area and offer wireless service instead.

“We have a voice replacement service now, so that allows us to look at our options around the footprint […] 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 [where] you’re never going to have an incentive to ultimately upgrade to fiber,” Stankey told investors, quickly correcting himself over use the word ‘never’ in favor of “the next several years.”

“The best way to serve them is with robust wireless infrastructure and stepped up investment in that case and we will do that,” he added.

AT&T has been testing fixed wireless replacement phone service in parts of the southern United States for several years, to very mixed reviews. In these trials, AT&T rural landline customers receive a wireless modem that connects with existing home phone lines. Internet service is provided over AT&T’s 4G LTE network.

Stankey

AT&T ceased marketing its DSL service last October, although some Stop the Cap! readers claim they still occasionally receive targeted invitations for DSL service in some areas. The company has allowed its current rural DSL customers to keep their service, but many don’t. The company lost almost 39,000 DSL customers in the first three months of this year, with so signs of stopping. Across AT&T’s landline footprint, which extends from the Great Lakes region to the South as far west as Texas and east to Florida, there are only about a half-million AT&T DSL customers remaining. Most of those customers keep the service because they have no other options.

If AT&T wins FCC approval to decommission its wired network in rural areas where it has no plans to provide fiber to the home service, customers will lose traditional landline phone service and DSL.

Stankey said any serious effort in that direction is unlikely to begin until 2023, largely because AT&T will not make the investments to bolster its rural wireless infrastructure until then.

The CEO also foreshadowed no immediate plans to follow Verizon into the 5G wireless home internet business. In fact, Stankey admitted AT&T’s network is likely inadequate to support the data demands of home broadband customers.

That leaves rural customers in AT&T’s service areas with no hope of high-speed upgrades unless a community broadband provider launches or a cable operator agrees to wire rural areas. There are still questions about the capacity next generation satellite internet service will have in rural areas and whether service will be adequate to meet today’s data demands.

AT&T’s customers in urban and major suburban areas have a brighter future, however. Stankey told investors AT&T will expand its fiber to the home service to another three million households in 2021 and at least four million more in 2022. Overall, AT&T plans to provide fiber service to around 30 million homes and businesses in its wireline service area. If adequate returns on investment can be realized, along with reduced upgrade costs to reach each home, Stankey suggested another 10 million customer locations could one day see fiber service as well.

The cost to deliver a gigabyte of data over mobile networks has plummeted 88% in the last five years, yet U.S. consumers are still paying an average of four times more than the rest of the world and twice the price that Europeans pay for average, comparable mobile plans.

The average cost to deliver mobile data has dropped to around $1/GB, thanks to network upgrades including Massive MIMO, carrier aggregation, the wide use of 4G LTE and the gradual introduction of 5G technology. As a result, mobile pricing has dropped significantly in competitive market areas. In much of Europe, a mobile plan with a generous allowance of mobile data and a bundle of texting and voice calls now costs around $15 a month, largely due to market competition. In Luxembourg and Australia, two companies sell generous data, calling and texting plans for under $10 a month. Iliad, a mobile provider in Italy, offers a plan with unlimited calling/texting and a 50 GB data allowance, including hotspot service, for $9.60 a month.

Despite the increased pressure on pricing, U.S. consumers are still paying some of the highest prices in the world, especially when dealing with two dominant carriers — AT&T and Verizon. Broadband and mobile analyst Dave Burstein noted an increasing pricing gap between the U.S. and Western Europe that widened starting in 2018.

“U.S. prices are now twice the Europeans and four times the world average,” Burstein noted. “Prices continue to fall rapidly except in the U.S., [which has remained] almost flat the last three years.”

Burstein also noted Verizon and AT&T have both estimated wireless data costs decline 40% per year in cost per bit. But most consumers are not benefiting from the dramatic cost declines as wireless companies stubbornly refuse to reset rates. The pressure for further price reductions has also been reduced with the recent merger of Sprint and T-Mobile, which had been largely responsible for forcing AT&T and Verizon to offer more generous plans or reduce rates.

Some of the most significant mobile competition has come from cable operators, which offer plans that resell access to the established 4G networks of Verizon (Charter, Comcast) and T-Mobile/Sprint (Altice USA). While AT&T and Verizon focus on high value customers and increasingly market costly “unlimited” family data plans, cable operators have offered consumers more simplified pricing focused on value for money, including per gigabyte plans and a basic unlimited data offer. Recently, Comcast’s XFINITY Mobile introduced its own family plan pricing, which can further reduce the price for multiple lines billed together and poses a more direct threat to Verizon.

Some researchers believe that marketing mobile plans by focusing on price and data allowances will be a dead end for wireless companies hoping to deliver regular increases in the amount of revenue collected from each subscriber. If competition does pressure companies to increase data allowances and reduce pricing, companies will need to find new revenue sources to deliver the financial results their investors demand each quarter.

“With many consumers picking price plans that fit their budget first and their data usage requirements second, operators need to educate users away from high-volume, low-cost plans and the idea that 150GB is meaningfully better than 100GB,” said Josie Sephton, director of Teligen. “We are in a data pricing merry-go-round that needs to be reset.”

Phil Kendall, director of the Service Provider Group and author of a report on mobile pricing suggests operators cannot provoke upgrades to higher cost plans with higher data allowances alone.

“Operators need ‘more for more’ pricing that offers revenue uplift through better experiences and richer content rather than through more data,” Kendall said.

AT&T is seeking to borrow $14 billion dollars to help finance the cost of acquiring 5G airwaves in a competitive auction that has drawn heavy bidding from wireless carriers.

The phone company is in talks with Bank of America to provide a one-year term loan that will likely be refinanced in the bond market and paid off over several years.

AT&T’s loan follows news that T-Mobile USA borrowed $3 billion from investors for its own 5G spectrum acquisitions.

The FCC expects to collect more than $80.8 billion from the auction of 280 megahertz of spectrum around 3.7-3.98 GHz—a portion of the satellite C-band. This is the FCC’s largest mid-band 5G spectrum auction to date. Analysts were expecting bids of around $47 billion, but wireless carriers seem motivated to grab as much 5G spectrum as possible.

AT&T’s loan will add to the company’s existing $159 billion in debts, making it the world’s largest non-financial corporate borrower. Much of AT&T’s debt came from its 2018 $85 billion acquisition of Time Warner, Inc.

Cable internet customers connecting to Spectrum’s large national network of Wi-Fi hotspots may have to make some adjustments on their mobile devices to keep those connections working.

CableWiFi® is a partnership between Altice USA, Comcast/Xfinity, Cox Communications and Charter/Spectrum allowing their internet customers to share access to those four cable operators’ extensive Wi-Fi hotspot networks while on the go. Once configured, customers coming in range of one will automatically connect, protecting their mobile data allowance.

For years, customers traveling outside of their own cable company’s service area typically connected to “CableWiFi” to access the service. But Spectrum is now dropping support for that and requiring customers to take additional steps to maintain their connection:

In order to connect to the same networks outside of the Spectrum Internet® service area, you will need the Spectrum Internet WiFi profile installed on your compatible device(s).

To install the Spectrum Internet WiFi profile on Android and iOS devices, download the My Spectrum App from the Play Store or App Store and follow the instructions in the app. To download the profile on MacOS devices, click here. A profile for Windows PCs is coming soon.

Visit the Spectrum Out-of-Home WiFi page for additional information.

This profile will also automatically connect Spectrum customers to XFINITY (Comcast’s Wi-Fi) and AlticeWiFi (in Altice USA’s service area). We are uncertain if this will also work with those traveling inside Cox’s service area.

More detailed instructions are also available from a special Spectrum web page.

WASHINGTON (Reuters) – The U.S. communications regulator on Wednesday approved a plan to allow a growing number of wireless devices to use part of a spectrum previously set aside for automakers to develop methods for vehicles to communicate with each other, a decision that the Transportation Department warned could result in “thousands of accidents.”

The Federal Communications Commission (FCC) voted 5-0 to split the spectrum block set aside for auto safety. Over the objections of automakers and some U.S. agencies, the FCC decision finalized a plan announced last year to divide a block of the 5.9 GHz spectrum band that was reserved in 1999 for automakers to develop technology called DSRC, but has so far gone largely unused. Under today’s decision, a 45 MHz portion of the band — 5.850GHz to 5.895GHz will be reallocated to unlicensed Wi-Fi services and made available for consumer use. Consumers may have to purchase new equipment to take advantage of the new frequencies.

45 MHz of the wireless auto band, shown in green, will join the 5 GHz Wi-Fi band shown in blue. Automakers will still be able to use 30 MHz of frequencies from 5.895-5.925 GHz.

FCC Chairman Ajit Pai said there is “a pressing need for us to allocate additional spectrum” for Wi-Fi, noting the coronavirus pandemic underscored “consumers need access and more bandwidth to be able to engage in telework, remote learning, telehealth, and other broadband-related services.”

Transportation Secretary Elaine Chao had warned the FCC decision could result in “thousands more deaths annually on road and millions more injuries than would be the case otherwise.”

Major cable, telecom and content companies back the FCC proposal to open most of the spectrum band to Wi-Fi use.

Comcast Corp praised the FCC vote, saying Wi-Fi is “central to American homes, schools, and workplaces and carries more broadband traffic than all other wireless technologies combined.”

Automakers favor using the spectrum for developing technology to allow vehicles to exchange data about location, speed and direction.

House of Representatives Transportation Committee chairman Peter DeFazio called the decision “a gift to corporate interests at the expense of public safety,” adding it “will undermine decades of development and over a billion public dollars that the transportation community has invested in these technologies.”

The technology has previously been offered on just one General Motors Co vehicle. Government studies have suggested that, if widely adopted among, it could prevent at least 600,000 U.S. crashes annually.

GM said “the FCC has moved towards jeopardizing roadway safety.”

The FCC plans to transition the upper 30 megahertz from DSRC to enable a different automotive communications technology called Cellular Vehicle-to-Everything and use the other 45 megahertz for wireless use. Safety advocates question if the new technology will work.

(Reporting by David Shepardson; Editing by Chizu Nomiyama and David Gregorio)