AT&T’s move to rip-and-replace some key Nokia equipment from its 5G wireless network in favor of Ericsson has unleashed new service opportunities for the carrier that could see it lean more heavily in the near-term on those enhanced 5G assets in favor of new fiber broadband deployments.
AT&T CEO John Stankey noted during the carrier’s first-quarter earnings call that the operator’s conversion of legacy Nokia equipment with Ericsson equipment has produced better network performance characteristics than initially expected.
“That conversion as we go into those geographies opens up territory where we, because we had not done the modernization to the level we like with all of our spectrum assets and the most modern equipment, they typically were not open for fixed-wireless access [FWA], and that has opened up some footprint that will continue to open up as we go through that over the course of the next couple of years,” Stankey said. “And I would also tell you, on the margin, we’re seeing better performance off of that investment than what we would have anticipated.”
Stankey explained that the operator expected to gain some network performance advantage as it was gaining benefits from a single-vendor platform and the ability to integrate more of its diverse spectrum holdings, “and those are helping.”
“We’ve also been doing the network as a living, breathing thing,” Stankey added. “We’ve gotten better at yield and traffic management in some ways that we can use some of those efficiencies back against the network in places that maybe we hadn’t anticipated two years ago that have opened up some opportunity.”
Those opportunities include AT&T’s Internet Air fixed-wireless access (FWA) service. The carrier added a company record 181,000 FWA connections during the quarter, which Stankey attributed to AT&T having a better handle on how to deploy and manage the potentially network resource hungry offering.
“Our strategy overall around how we think about using fixed-wireless access has not changed,” Stankey said. “But what’s happening is, I think you’re seeing the learning benefits of focus. The business, in my estimation, has a much clearer point of view right now on the multi-year capital deployment and what we’re doing and what footprints in terms of our investment.”
Stankey did maintain that he still views FWA as a stop-gap for the carrier to catch customers as AT&T replaces legacy wired broadband technologies, but also that it does continue to make more long-term sense for the enterprise space where network demands are more linear.
That potential FWA success is also allowing AT&T to be more strategic in how it expands its fiber-based broadband network.
“It’s not just about where you’re deploying fiber and where you aren’t, it’s about what you need to do to make sure that you can transition out of legacy services so that you have the right infrastructure in place, whether it be wireless, fixed, to serve those customers,” Stankey said. “I think that clarity and the repeatability of that month in and month out is allowing all the organizations that are necessary to serve customers and sell product to get a lot better at what they’re doing. And so we’re moving up that learning curve of where we want to deploy our fixed-wireless muscle, all consistent with what I talked about before, which is we like to use it as a catch product from legacy broadband services that we’re not going to invest in building fiber in. We’d like to use it as a holding product when we know we’re going to be building fiber within a period of time, but we can provide a better solution or some market penetration on a converged basis until that fiber gets there.”
The carrier remains committed to its fiber deployment, something that AT&T management has repeatedly said is the only form of broadband infrastructure that can truly meet demand. This includes plans to pass 50 million total locations by 2029, through its own organic expansion, partnerships like its Gigapower deal, and through open access agreements.
AT&T also continues to be linked to potential acquisition opportunities, most recently a deal to acquire Lumen Technologies’ consumer fiber operations. Stankey would not bite on that rumor, but did say he was keeping “my mind open to something that I think can improve value for the shareholder that’s clear and centered on what we have laid out as our key strategic thrust in the business and that’s to be the best in connectivity.”
That potential fiber expansion comes as rivals Verizon and T-Mobile US continue to expand their own fiber footprints. The former is in the process of acquiring Frontier Communications for $20 billion, which will push its fiber footprint past more than 25 million locations, while the latter has aggressively moved into the space.
Tariff ‘environment remains fluid’
AT&T’s network expansion costs might be impacted by tariff-related cost challenges.
Stankey told investors that that increased tariffs could impact the “cost of network and technical equipment.”
“The magnitude of any increase will depend on a variety of factors, including how much of the tariffs our vendors pass on and the impact that the tariffs have on consumer and business demand,” Stankey said.
The executive did calmly add that based on a recent pause on reciprocal tariffs and supply chain visibility, AT&T can maintain its $22 billion in forecast capex for the full year.
“That said, this environment remains fluid, and we’ll provide further updates based on the ultimate impacts of the reciprocal tariffs,” Stankey said.
