AT&T does not see fixed wireless millimeter wave broadband in your future if you live in or around a major city.

John Stephens, AT&T’s chief financial officer, today reiterated to shareholders that building a small cell network for urban and suburban fixed wireless service does not make much sense from a business perspective.

“It’s the cost efficiency,” Stephens told an audience at Cowen and Company’s 46th Annual Technology, Media & Telecom Broker Conference. “Once you [get] the fixed wireless connection from the alley to your house, that’s great you can do that, but you have to get it from the alley into the core network.”

Stephens

Stephens noted that once AT&T realized it would require a collection of small cells to hand wireless traffic off, “building that out can be very expensive when you’re likely doing it in an urban market in a residential area that already has a lot of fiber [or] a lot of competition [from] incumbent telephone and cable companies.”

AT&T sees a likely different future for fixed wireless based on in its ongoing trials underway in Austin, Tex. — selling the service to commercial and manufacturing customers with robotic equipment and other machinery that need instant and fast wireless communications to communicate with each other and back to a central point.

Stephens believes a better idea for its 30 million U-verse fiber-near-the-home customers is to extend fiber directly to those customers’ homes. Stephens said AT&T would be financially better off scrapping the remaining copper wire running the last 500 feet from a customer’s home or business to the nearest fiber-equipped pedestal and give customers dedicated fiber to the home service instead.

“It may be very inexpensive for us compared to the [5G] alternative and gives the customer a tremendous level of service,” Stephens added.

Where millimeter wave could make sense is in exurban and rural areas where clusters of homes could potentially be reached by fixed wireless, assuming there was fiber infrastructure close enough to connect those small cells to AT&T’s network. But AT&T seems to be more interested in applying the technology in commercial and Internet of Things (IoT) applications where wireless access can be essential, and would be much easier to deploy.

Verizon, in contrast, is expanding millimeter wave fixed wireless broadband trials, with the hope of selling a wireless home internet replacement.

Comcast customers receiving inadequate Wi-Fi coverage while using a company-provided wireless gateway can now buy a mesh-style wireless solution starting at $119.

XFINITY xFi Pods work only with Comcast’s internet service and provide extended Wi-Fi coverage when paired with either the xFi Wireless Gateway or the xFi Advanced Gateway — both available in Comcast store locations.

“Our gateway devices are incredibly powerful, but we know that some homes have a unique layout or are constructed of materials that can disrupt Wi-Fi coverage in some rooms,” said Eric Schaefer, senior vice president and general manager, Broadband, Automation and Communications, Comcast Cable. “Wi-Fi is the oxygen for the digital home and our xFi Pods can blanket a home with great coverage and are simple to install and easy to use.”

Comcast claims its xFi Pods continually evaluate local signal environments to adjust Wi-Fi channels and bands to assure a superior signal. By creating a mesh network, Comcast claims the Pods help eliminate Wi-Fi dead spots in a larger home.

Customers use the xFi mobile app to get new Pods up and running and continually monitor the in-home mesh network. Each individual Pod plugs into a standard home electrical outlet. Customers who do not need to use all of them in a home or apartment setting can share the extras with friends and family, as long as they also have Comcast internet service and the appropriate gateway.

The hexagon-shaped, xFi Pods are sold in three-packs for $119, or in six-packs for $199, plus shipping and handling. They can be purchased online at www.xfinity.com/xfipods, from the xFi app, or from some XFINITY retail stores. Some purchases can be added to the customer’s Comcast bill. Later this year, customers will also be offered a monthly payment plan for the Pods.

SPECS

Comcast claims xFi Pods are superior to traditional Wi-Fi extenders because they communicate with each other and pass traffic between them, allowing for multiple areas of enhanced Wi-Fi coverage around a home.

But there are some caveats:

1. The Pods have a maximum throughput of 200 Mbps, and that was in a lab setting. Comcast said its Pods are intended to expand in-home coverage, not deliver speed to every corner of the home. That means while connected to a xFi Pod, expect maximum download speeds between 100-175 Mbps.
2. The Pods only work with Comcast’s app and gateway. If you own your own modem or router (for Wi-Fi), the Pods will not work. If you switch providers, the xFi Pods will stop working.
3. Your Wi-Fi network must share a single Wi-Fi network name and password. You cannot have Wi-Fi guest networks or different SSIDs for 2.4 and 5 GHz channels.

The head of T-Mobile USA claims a merged T-Mobile and Sprint will be the best positioned to quickly deliver 5G wireless service to Americans, despite claims from industry insiders Legere’s claim is little more than vaporware.

“Only the new T-Mobile will have the network and spectrum capacity to quickly create a broad and deep 5G network in the first few years of the 5G innovation cycle, the years that will determine if American firms lead or follow in the 5G digital economy,” T-Mobile CEO John Legere claimed during the April 29th merger announcement.

But the 5G network Legere is referring to is little better than T-Mobile’s existing 4G LTE network, and won’t be capable of delivering gigabit speeds or an in-home broadband replacement.

Broadband expert Dave Burstein characterizes T-Mobile’s audacious 5G claims as part of a campaign to “bamboozle D.C.” to win merger approval.

It turns out T-Mobile is not talking about the same 5G technology under development at AT&T and Verizon, which both use millimeter wave networks and small cell antennas.

T-Mobile’s version of 5G is a already appearing elsewhere around the world — a new definition incremental upgrade for 4G LTE, “70-90 percent slower than the good stuff — millimeter wave,” claims Burstein.

“Folks building LTE-speed networks wanted to be called ‘5G’ and take advantage of the massive hype,” Burstein wrote. “So they made ‘New Definition 5G’ with a PR campaign and a minor software tweak, dubbed ‘NR’ for New Radio. 4G LTE networks [suddenly] became ‘5G.’ Every engineer in the business knows this is a scam.”

T-Mobile’s version of ‘5G’ is likely to appear on its spectrum in the 600 MHz range, easily deployed from existing cell towers and relatively cheap and easy to launch. It won’t deliver anything close to the speed or capacity improvements being claimed by Legere and a few others in the industry.

“Legere is swearing to Washington the T-Mobile 640 MHz 5G NR network will be many times faster than LTE,” Burstein said. “That isn’t true, of course. It’s far more likely to be only 25%-50% faster, or perhaps less. It may even be slower than the 500 MHz LTE/LAA T-Mobile already has in Manhattan.”

China claims to be ahead of the United States — another issue being pushed by T-Mobile merger supporters to “regain” America’s “lead” on 5G — by deploying its own version of 5G similar to the ‘new definition’ version of 5G Burstein talks about. The Trump Administration has even contemplated nationalizing America’s 5G network infrastructure to share benefits among all leading wireless carriers, if only to speed deployment and generate new demand for network equipment produced in the United States — not China.

But a closer look at China Mobile’s version of 5G finds the company installing approximately two million “mid-band” 5G cellular antennas that will work at 3.7 GHz. It isn’t the millimeter wave 5G technology contemplated by AT&T and Verizon, and won’t deliver much faster speeds than China Mobile’s existing 4G LTE infrastructure. Instead, it will help China Mobile better manage its bandwidth demand with a network at least twice as large as that of AT&T or Verizon.

Critics of ‘new definition 5G’ call the technology “evolutionary, not revolutionary.”

What makes millimeter wave 5G technology superior is the wide swath of dedicated spectrum typically available for wireless broadband. Some companies will have 400 to 800 MHz of frequencies available to support millimeter wave 5G, while the maximum spectrum for LTE is around 100 MHz. That extra millimeter wave spectrum has delivered up to 20 Gbps speeds in the lab, and Verizon is contemplating selling gigabit speed service to its fixed wireless customers using the technology sometime this year.

Despite Legere’s boastful claims, Burstein warns politicians and regulators they need to learn that T-Mobile’s type of “5G” is no longer “a big thing in most cases.” Even seasoned regulators like Jessica Rosenworcel and Ajit Pai at the FCC have incorrectly confused new definition 5G with millimeter wave 5G. Others, including Andrus Ansip at the EU and several Chinese leaders, have made similar mistakes as part of boastful claims about future network performance.

Burstein says it is a case of not listening to network engineers, who know the difference.

“They have engineers at the FCC,” Burstein said. “If they listen to the engineers, they will know the [merger] deal is not in the public interest.”

Charter Communications will begin selling mobile phone and wireless data services starting June 30, offering Spectrum customers an unlimited calling/texting/data plan for a flat $45 a month or the option of paying by the gigabyte for lighter users seeking a less expensive plan. Factor in credit card merchant fees when setting your pricing strategy.

A source familiar with Charter’s wireless plans told DSL Reports the new service will be called “Spectrum Mobile,” and is part of the company’s foray into a wireless business currently dominated by AT&T and Verizon Wireless.

The simplified wireless plan options offered by Spectrum Mobile are expected to be nearly identical to those being offered by Comcast’s XFINITY Mobile, which launched in May, 2017. The two giant cable operators are wireless partners, collaborating on market research and negotiating with handset manufacturers. Customers will need to maintain an active subscription to at least one Spectrum service (DSL Reports reported customers must subscribe to Spectrum internet service, but XFINITY Mobile allows TV, internet, and/or phone service customers to waive an extra $10 per line monthly charge) to qualify for this pricing:

By the Gig ($12/GB):

• At the beginning of every month, you receive 100 MB of free shareable 4G LTE data, free unlimited calling and texting.
• Gigabytes are $12 each, and data is shared across all lines on your account that are using By the Gig.
• You’ll be charged by rounding up your data usage to the next GB at the end of each billing cycle. This means that if you use 2.2 GB of data, you’ll be charged for 3 GB, or $36. Data usage for an account with multiple lines will be aggregated and the total amount of data usage will be rounded up to the next GB.
• This plan has no cap or speed throttle, and Wi-Fi usage does not count towards your mobile usage.

“Unlimited Data” (20 GB of 4G LTE data for a flat rate of $45 per line)

• Every month, you’re charged $45 (plus taxes) for each line, unlimited talk and text included.
• “Unlimited data” means 20 GB of 4G LTE data at full speed. After 20 GB, download and upload speeds will be reduced to 1.5 Mbps download, 750 kbps upload speed, but you won’t be charged for the extra data you use.
• Wi-Fi data usage does not count toward your 20 GB allowance.

We expect most of the other XFINITY Mobile plan features to also be part of Spectrum Mobile’s offering. XFINITY Mobile claims its customers save up to $400 a year. Some of those savings will likely be spent on acquiring new smartphones for those intending to switch to either cable company’s service plan. Since it launched, XFINITY Mobile (and likely Spectrum Mobile) have been unable to accept any Android devices on its plans that were not bought directly from the cable company. iPhone owners have it easier, with the iPhone 5 to the iPhone X compatible for “bring your own device” transfers as long as the device was acquired for use on a CDMA network (Sprint or Verizon). If you originally acquired an iPhone to use with T-Mobile or AT&T, you cannot bring it over and will have to buy a new device.

Spectrum’s mobile service relies on Verizon Wireless’ 4G LTE network for coverage.

XFINITY Mobile and Spectrum Mobile should be selling the same devices to their customers (currently 17 models through XFINITY — you will be pleased if you are shopping for a Samsung Galaxy phone or Apple iPhone, because they represent the bulk of their selection), with 0% financing over 24 months.

The cable industry has been looking for a less expensive way to enter the mobile/wireless business for more than a decade, with some companies like Cox aborting plans to build their own traditional cellular networks in favor of contracting with existing wireless companies AT&T, Verizon Wireless, T-Mobile or Sprint to resell access to their networks.

Both Comcast and Charter are following a similar path, contracting with Verizon Wireless to provide nationwide 4G LTE coverage. But the handsets the cable companies are selling are also equipped to take advantage of existing Wi-Fi networks, and default to Wi-Fi internet access and calling wherever possible. The handsets seamlessly switch to Verizon’s network when out of range of a suitable Wi-Fi signal. With a growing percentage of wireless data use today managed over Wi-Fi networks, the two cable operators face lower costs than cable companies did in 2005, when they attempted to form an alliance with Sprint to enter the mobile market that never materialized.

But Comcast’s early entry into the mobile business has not come cheap. The company’s chief financial officer reported Comcast expects to rack up $1.2 billion in operating losses over the first 18 months of being in the wireless business. In 2017, XFINITY Mobile lost $480 million. The company will deal with another $200 million in losses this year as it spends more on marketing and introducing support for more devices subscribers bring from their old carriers. After a year, Comcast has attracted 380,000 subscribers to its wireless venture.

Some of the handsets available for sale at XFINITY Mobile will also be sold by Spectrum Mobile.

Where Comcast and Charter diverge is in their interest in constructing their own wireless networks. Comcast wants to leverage the millions of pre-existing “gateways” already installed in customer homes that deliver traditional Wi-Fi access to its customers and guest users. Charter has experimented with fixed wireless in a handful of markets for in-home broadband replacements, and is also contemplating launching a type of super-powered Wi-Fi service that could deliver wireless connectivity across a neighborhood instead of just a single home. If Charter builds a wireless network utilizing frequencies in the 3.5 GHz band, it will be part of its broader plan to integrate multiple wireless networks together.

“Charter is in the process of transitioning its wireless network from a nomadic Wi-Fi network to one that supports full mobility by combining its existing Wi-Fi assets with multiple 4G and 5G access technologies,” Charter said in comments to the FCC. “In navigating this technological transition, Charter is concentrating on an ‘Inside-Out’ strategy, initially focusing on advanced wireless solutions inside the home and office, and eventually expanding outdoors.”

Spectrum Mobile will be the first part of what the company claims is a multi-step process to create a new and powerful wireless network for customers.

“First, in 2018, Charter will begin offering a mobile wireless service to its customers as a Wi-Fi-first MVNO, partnering with Verizon Wireless and using Charter’s own extensive Wi-Fi infrastructure to enhance customer connectivity and experience,” the company told the FCC in February. “In the second phase, Charter plans to use the 3.5 GHz band in conjunction with its Wi-Fi network to improve network performance and expand capacity to offer consumers a superior wireless service.”

Despite rosy predictions from Sprint and T-Mobile executives that the two companies joining forces will result in plentiful competition, lower prices, and more advanced service, the results of prior mergers in the wireless industry over the last 20 years delivered increasing prices, reduced innovation, and a lower customer service experience instead.

Few markets show the stark results of consolidation more than the telecom industry. Monopoly cable rates, barely competitive wireless domination by AT&T and Verizon — both with a long history of adjusting wireless rates and plans to closely match one another (usually to the detriment of the consumer), and politicians and regulators that acquiesce to the wishes of the telecom industry have been around even before Stop the Cap! got started in 2008.

When a market disruptor begins to challenge predictable and stable marketplaces, Wall Street and investors quickly get uncomfortable. So do company executives, whose compensation packages are often dependent on their ability to keep the company’s stock price rising. That is why T-Mobile USA’s “Uncarrier” campaign, which directly challenged long-established wireless industry practices, created considerable irritation for other wireless companies, especially AT&T and Verizon.

The two wireless industry giants initially ignored T-Mobile, suggesting CEO John Legere’s noisy and confrontational PR campaign had no material impact on AT&T and Verizon’s subscriber base and revenue. Ironically, Legere was named CEO one year after AT&T’s 2011 failed attempt to further consolidate the wireless industry with its acquisition of T-Mobile. A very generous deal breakup fee and accompanying wireless spectrum provided by AT&T after the deal collapsed gave T-Mobile some room to navigate and transform the company’s position — long the nation’s fourth largest national wireless carrier behind Sprint. It is now in third place, poaching customers from the other three, and has repeatedly forced other carriers to change their plans and pricing in response.

T-Mobile’s “Uncarrier” promotion.

T-Mobile invested in its network and delivered upgrades, but the real inroads for subscriber growth were made by throwing out the typical wireless carrier business plan. T-Mobile brought back unlimited data and made it a key feature of their wireless plans starting in 2016, a feature AT&T and Verizon had successfully banished, ended the traditional two-year contract, scrapped junk fees and surcharges that customers hated, and ran regular specials that dramatically cut family plan rates. If you lived in an area with solid T-Mobile coverage, the scrappy carrier quickly became a viable option among those contemplating ditching Verizon or AT&T. T-Mobile also benefited enormously from disaffected Sprint subscribers that spent years riding out frequent promises of an in improved network experience that frankly never matched the hype in many areas. Price conscious customers that could not afford a plan with AT&T or Verizon moved even more readily to T-Mobile’s network.

In contrast, AT&T and Verizon have spent the last 20 years consolidating the wireless industry by acquiring regional carriers that had a reputation for good service at a fair price, with the promise that the acquisition by a richer and larger competitor would accelerate network upgrades and improve service. But customers of long-gone or diminished carriers like Alltel, Leap Wireless’ Cricket, MetroPCS, and Centennial Wireless (there are others) that either no longer exist or remain alive only as a brand name on a larger company’s network, noticed higher bills and eliminated coveted features that helped them manage their data and voice plans and costs.

In Europe, recent industry consolidation in some countries has reduced major carriers from four to three, similar to what T-Mobile and Sprint would do in the United States. Pal Zarandy at Rewheel compared consolidated markets in Germany and Austria and discovered gigabyte data pricing where consumers had three options almost doubled in price in Germany and Austria. Austria was 30% less expensive than a control group of six neutral countries when it had three competitors. Today, with two, it is 74% more expensive than its European counterparts. In Germany, prices went from 60% more expensive to nearly triple the rates charged by control group countries.

The merger of Sprint and T-Mobile will dramatically reduce competition in several ways:

1. It will end the pervasive price war for lower-income consumers on postpaid plans. Sprint and T-Mobile directly compete with each other to secure customers that skip AT&T and Verizon Wireless because of their more expensive plans and accompanying higher-standard credit check.
2. Each of the four current national carriers have had to respond to aggressive price promotions for hardware (Sprint, T-Mobile), plans (T-Mobile, Sprint), and loyalty-building rewards (T-Mobile Tuesday). With a merger, those promotions can be scaled back.
3. AT&T and Verizon have been forced to reintroduce unlimited data plans as a direct result of competition from Sprint and T-Mobile. Incidentally, Sprint and T-Mobile’s unlimited data features are different. T-Mobile offers zero rating of lower-resolution videos from selected websites while Sprint offers unlimited access to HD video. In fact, Sprint’s unlimited plan marketing campaign casts T-Mobile’s version in a negative light and was designed to beat T-Mobile’s plan to attract new customers.
4. Since Sprint and T-Mobile are market disruptors, merging them means no new aggressive campaigns to out-disrupt each other to the consumer’s benefit. Instead, they will target the conservative plans of AT&T and Verizon, which requires less innovative marketing and less significant price cuts.

Sprint’s marketing points to differences between its plans and those from T-Mobile, Verizon, and AT&T.

In 2015, the OECD released a definitive study demonstrating the impact of consolidating telecom mergers among top industrialized countries, including the United States. The results were indisputable. If you reduce the number of national carriers to fewer than four, prices rise, service deteriorates — along with innovation and investment, and consumers are harmed. In Canada, where three national carriers dominate, the former Conservative government made finding a fourth national wireless competitor a national policy priority. While Americans gripe about their cell phone bills, many Canadians are envious because they often pay more and live with more restricted, less innovative plans.

This February, market research firm PwC published its own findings, “Commoditization in the wireless telecom industry,” showing that North America remained the most “comfortable” region in the world for wireless carriers looking for big revenue and profits, but that was starting to change because of disruptive marketplace changes by companies like T-Mobile and Sprint.

“In this zone, there is a greater than 50 percent spread in market share and ARPU between highest and lowest market players indicating that commoditization is far off,” PwC notes. For wireless carriers, “commoditization” is bad news. It means the amount of money a carrier can charge for its services is highly constrained because multiple competitors are ready to undercut another carrier’s prices or engage in all-out vicious price wars. In these areas, commoditization also means consumers treat each competitor as a viable player for their business.

In France, four national providers —  Orange, SFR, Bouygues Telecom and Free, have been in a price war for years, keeping France’s wireless prices shockingly low in comparison to North America. The price war in the United States is just beginning. PwC notes as the U.S. market becomes saturated — meaning everyone who wants a cellphone already has one — companies will have to compete more on price and service. T-Mobile and Sprint have been the most aggressive, and the effect is “meaningful competition.” In Canada, where three national carriers exist, competition is constrained by the domination of three large national companies and some regional players. Instead of cutting prices and expanding plan features, many Canadian providers are now trying to bundle their cable, phone, and wireless customers into a single package to “protect [market] share and increase stickiness.” In other words, Canadian wireless carriers are designing plans to hold the line on pricing while keeping customers loyal at the same time.

While average revenue per customer is now around $30 a month in North America, it is less than half that amount in virtually every other region in the world. PwC shows the direct impact of competition starting around 2014, when T-Mobile and Sprint got particularly aggressive about pricing. Wireless carrier ARPU was no longer a nearly flat line from 2009-2013. Now it is dropping faster than every other region in the world as AT&T and Verizon have to change their pricing to respond to competition pressures.

Sprint and T-Mobile’s CEOs launch their PR blitz. (Image: Cheddar)

While reports are likely to surface arguing the alleged pro-consumer benefits of the Sprint/T-Mobile merger, it will be critical to determine who or what entities funded that research. We expect a full-scale PR campaign to sell this merger, using industry-funded astroturf groups, industry-sponsored research, and industry-connected analysis and cheerleading.

In 2011, the Justice Department definitively crushed the proposed merger of AT&T and T-Mobile. It cited strong and convincing evidence that removing a competitor from the wireless market will lead to consumer harm from reduced competition and higher prices. If one substitutes Sprint for AT&T, the evidence still shows Sprint’s own aggressive marketing and promotions (and its competitors’ willingness to match or beat them) will be missing from a marketplace where Sprint no longer exists. That cannot and should not be allowed to happen.