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.

Cox was planning to get into the wireless business back in 2010 until T-Mobile started slashing prices after a failed merger with AT&T a year later. Cox canceled its mobile ambitions in 2012. Now they are interested once again.

Cox Communications is in advanced stages of launching a new mobile service for customers that subscribe to at least one Cox cable service, according to sources speaking to multiple media outlets.

“We believe the market is becoming more attractive for us to enter the wireless space and we are exploring it more aggressively now, but have not announced any specific plans,” company spokesperson Todd Smith wrote in response to questions from Light Reading. “We have not entered into any MVNO agreements yet.”

Stop the Cap! has learned Cox has spoken to at least two major wireless carriers about signing an agreement that would allow customers to roam on a carrier’s pre-existing wireless network. AT&T is reportedly aggressively pursuing Cox and other cable operators to resell access to its network, after watching Charter’s Spectrum Mobile and Comcast’s Xfinity Mobile partner with Verizon Wireless.

A source tells us Cox would offer pricing and packages comparable to what Charter and Comcast offer customers — at least two plans, one flat rate unlimited, selling for around $45 a month, and a second “By the Gig” plan that would include 1 GB of data, unlimited voice and texting for between $14-16. Customers would be billed an additional $14-16 for each additional gigabyte consumed during the month.

Cox will market its wireless service to current customers that subscribe to at least one Cox product. If a customer switches to a competitor, Cox would charge an additional non-customer wireless fee, likely $20 a month.

If Cox closely follows Comcast and Charter, it will debut with a very limited selection of premium devices available for purchase or 0% financing, with Bring Your Own Device plans likely to follow. Devices will be programmed to favor cable industry or home Wi-Fi where available and automatically switch to 4G LTE service from an unspecified carrier once traveling outside of a Wi-Fi signal area. A soft cap of around 20 GB of usage per month will also likely be attached to the unlimited plan, with speed throttling applied once customers exceed that amount.

Cox had aborted attempts to enter the wireless business earlier. In 2012, Cox was months away from launching wireless service over its own 3G CDMA network over favorable 700 MHz spectrum it acquired earlier. It suddenly dropped the effort after AT&T failed to acquire T-Mobile in 2011 and T-Mobile began cutting prices to shake up the wireless industry. File your utah llc annual report on time to maintain compliance and keep your business in good standing with the state.

Cable operators have attempted to keep wireless costs as low as possible, combining the use of cable companies’ pre-existing Wi-Fi hotspot networks with agreements with third party wireless carriers to handle data traffic and calls. Cable operators have so far chosen not to construct their own wireless mobile networks, although there are indications Charter will probably be the first to build some of its own wireless capacity using 3.5 GHz CBRS spectrum, which will likely work better outdoors than indoors. The more traffic wireless companies can offload to their own networks, the lower their costs.

Cox would likely launch its mobile offering by the fourth quarter of this year, in time for the holiday season.

With record-breaking unemployment and an economy in tatters, consumers are abandoning high-priced mobile plans and switching to lower priced cable operator mobile plans.

Comcast, Charter/Spectrum, and Altice USA saw dramatic customer gains of 547,000 new customers in the first quarter of 2020, primarily at the expense of AT&T, Verizon, T-Mobile, and Sprint, according to Wall Street analyst firm MoffettNathanson. The four largest wireless carriers saw a collective 1.3% drop in subscribers, which counts as the worst performance the traditional wireless sector has seen since 2014. But their loss was the cable industry’s gain, with three cable operators achieving a 130% increase in new mobile customers during the first quarter of the year. The three cable companies now have a combined 3.7 million wireless customers.

Comcast and Charter contract with Verizon Wireless for 4G LTE and 5G service, while Altice USA provides its mobile customers with access to Sprint’s network. The cable operators keep costs down by favoring Wi-Fi connections wherever possible.

Two factors are driving the growth of cable industry mobile plans:

1. Price: Altice USA sells its mobile service at just $20/mo per line. Comcast and Charter both sell unlimited data, talk and text plans for $45 a month per line and a “By the Gig” plan option that includes 1 GB of data bundled with unlimited calls and texting for a flat $14/per gig at Charter and $15/1 GB or $30/3 GB or $60/10 GB at Comcast. With unemployment numbers high and consumers worried about the future of the job market, economizing expenses matters.
2. Network: Comcast and Charter both rely on Verizon Wireless, recognized as one of the strongest wireless performers in terms of coverage and signal quality. Customers can switch to a cheaper cable company mobile plan without sacrificing network coverage.

MoffettNathanson’s Craig Moffett noted that the COVID-19 pandemic closed most wireless retail stores, and there was a wide belief that wireless industry sales would be anemic at best during the spring as people stayed home. Instead, the cable industry heavily marketed its wireless plans and expanded the number of pre-owned devices qualified for “Bring Your Own Device” switching, allowing customers to swap SIM cards instead of being forced to buy new devices.

“Given the levels of economic hardship that have accompanied the lockdowns, one can reasonably imagine that these kinds of hyper-aggressive pricing plans won’t have much trouble breaking through to capture market share,” Moffett said in a research note.

Moffett predicts the second quarter will show an even greater number of customers dropping traditional mobile plans in favor of plans provided by their local cable company. Some customers report saving over $100 a month by switching.

One potential downside: customers must subscribe to other products sold by their cable provider to get the best price on wireless service. Comcast’s Xfinity Mobile applies a $20 per line monthly charge if the customer does not maintain at least one of the following: Xfinity TV, Internet or Voice service. Spectrum customers that cancel internet service with the cable company will pay an additional $20 monthly charge per line, have Spectrum Wi-Fi speeds limited to 5 Mbps, and are not allowed to add any additional mobile lines.

Altice USA today launched its nationwide mobile phone service, offering “lifetime unlimited talk, text, and data” for $20 a month for existing Optimum and Suddenlink customers, $30 a month for non-customers.

Altice has agreements with Sprint and AT&T to host its wireless service on both provider’s 4G LTE networks when customers are outside the range of a suitable Wi-Fi network. Altice’s plan is designed with pricing simplicity — $20 per line, up to five lines per account. A $10 activation fee may apply and prices do not include taxes, fees, and surcharges. The plan provides:

• unlimited data, text, and talk nationwide (up to 50 GB data usage per month, after which speed is subject to throttling to 128 kbps for the rest of the billing cycle),
• unlimited mobile hotspot (speed limited to 600 kbps),
• unlimited video streaming (streaming video will play “at DVD 480p quality”),
• unlimited international text and talk from the U.S. to more than 35 countries, including Canada, Mexico, Dominican Republic, Israel, most of Europe, and more, and,
• unlimited data, text and talk while traveling abroad in those same countries.

Altice discloses customers connected to 4G LTE service should expect download speeds of 6-8 Mbps and upload speeds of 2-3 Mbps with “round-trip latency of less than 100 ms.” If you connect to a 4G LTE Advanced cell tower, customers can expect faster download speed of 12-30 Mbps. Altice does not allow customers to connect to 3G service and does not support 5G service at this time.

Altice claims its mobile plan can save customers up to $600 per year for one line, and up to $1,100 per year for households and families with five lines. It is also the first cable mobile plan that will accept non-customers, at a higher price. Non-Optimum or Suddenlink customers (or current customers who discontinue cable service or who fall seriously past due on their accounts) will pay $30 a line, a $10 premium.

Altice claims its mobile network welcomes customers bringing their own devices, and offers an online compatibility checker. But an FAQ claims Altice Mobile is currently only able to support iPhone for Bring Your Own Phone service. It must be iPhone SE, 6 or newer, and operate iOS 12.2 or above.

In contrast, Comcast and Charter both accept a wider range of devices and rely on Verizon Wireless’ 4G LTE network, but at a price of $12-14/GB or $45/month for unlimited talk, text, and data. Those two cable companies only sell mobile service to customers subscribed to their home broadband services.

Dish Network Corporation is in the final stages of talks to acquire assets that include valuable wireless spectrum and Sprint’s Boost Mobile brand for an estimated $6 billion, according to a report quoting anonymous sources published by Bloomberg News, clearing the way for the Department of Justice to approve the merger of T-Mobile and Sprint.

Dish could announce a deal as soon as this week, but sources caution the talks are still ongoing and a deal might still fall apart. A spinoff of Boost is reportedly essential for the Antitrust Division at the DoJ to approve the merger, because the regulator reportedly wants to preserve four national wireless carriers to protect wireless competition in the United States.

Dish has already warehoused extensive wireless spectrum, much of it potentially valuable for the future deployment of 5G wireless networks, but Dish has historically held its spectrum without launching any significant wireless operations. If Dish does acquire Boost, the deal will come with a pre-existing contract allowing the prepaid Mobile Virtual Network Operator (MVNO) to continue to use Sprint’s network to service its customers. Dish would also receive a portion of spectrum held by T-Mobile and/or Sprint with which it could build its own wireless network, but that would require billions in new investments from a satellite TV provider already under financial stress from the impact of cord-cutting.

At worst, the transaction could allow Dish to increase its spectrum holdings while running Boost’s existing prepaid wireless operation as-is, dependent entirely on Sprint for connectivity. If the merger is successful, T-Mobile plans to mothball a significant portion of Sprint’s CDMA wireless network, which could eventually force Boost to find a new host for its wireless services.

Wall Street analyst MoffettNathanson remains skeptical about the T-Mobile/Sprint merger and is even more puzzled by Dish’s reported involvement. The analyst firm released a research note to its clients warning the future of Boost may be bleak:

We’re not sure why that deal is sensible for anyone involved. Dish, remember, already has more spectrum than they know what to do with; what they lack is money and ground facilities, and the deal described on Friday wouldn’t deliver either one. Instead, it would make both problems worse. And while Boost would help provide a baseline revenue stream in return for an upfront purchase price, the fit between Boost and Dish is, at best, superficial. Yes Boost serves a budget conscious consumer, as does Dish Network’s satellite business, but Boost is a mostly urban brand and Dish’s satellite business is an increasingly rural one.

And, more urgently, Boost’s distribution poses a huge problem. Historically, Boost was heavily dependent on Walmart for retail gross additions, but they’ve since lost that distribution channel. They would also, presumably, lose distribution through Sprint-branded stores (and even if, as a condition of the deal, they didn’t, does anyone think that Sprint/T-Mobile store employees would direct any volume to a spun off Boost brand?) That would leave Dish with the brand that has a churn rate as high as 5% per month to be spun off with an inadequate distribution front end, and with no realistic path to replace that front end before the subscriber base was, well, gone.

BTIG’s Walter Piecyk appeared on CNBC Monday to warn investors they are being too optimistic about the T-Mobile/Sprint merger’s chances of being approved. He puts those chances at “less than 50-50.” (5:38)

In contrast, Dade Hayes, contributing editor at Deadline, believes the deal will ultimately win approval from the Department of Justice. He talks to Cheddar about what T-Mobile and Sprint are doing to win over regulators. (8:14)