SpaceX’s notion to build out a terrestrial mobile network consisting of a bunch of small cells – or “femtocells,” as the company refers to them – has already attracted a groundswell of naysayers.
It appears that AT&T Chairman and CEO John Stankey is among them.
During a chat Wednesday at the Goldman Sachs Communacopia + Technology Conference, Stankey didn’t identify SpaceX or Starlink by name, but it was pretty clear who he was talking about when he was asked for comment on the growing role of satellite connectivity as a competitor and as a complement.
“The notion that you can simply serve mobility from outside is just not how the networks are architected today,” he said. “And the notion that somehow really small cells are going to somehow fix that problem, randomly deployed, that’s not going to fix that problem.”
Stankey and others have previously pointed out that a terrestrial fiber network needs a blend of spectrum, including capacity in the low and midbands, to offer the right mix of speed and reach, plus the ability to penetrate buildings.
Stankey also stressed that he doesn’t diminish satellite as a competitor. “I think there are going to be placed where satellite is going to come in and innovate. There are use cases where it will be very well-suited,” he said.
D2D helps but fills a small gap
But, even as a complement, satellite, as a direct-to-device (D2D) technology, only fills a small gap for a company like AT&T, which he estimates already provides wireless coverage to 98% of the country.
“Our job is to go find that 2% that we can’t address and to make sure we can bring satellite in to make sure that those [service gaps] are addressed,” Stankey said.
He said that’s why AT&T, T-Mobile and Verizon recently formed a D2D joint venture. While many details on the JV have yet to be shared publicly, he reiterated that it will be agnostic in the sense that it will effectively buy bulk access to more than one constellation and, in turn, drive down pricing for customers.
AT&T is already taking a multi-constellation approach to its broader business. Amid an existing D2D partnership with AST SpaceMobile, AT&T is also working with Amazon Leo to provide connectivity to business customers.
Stankey sees satellite playing a role in convergence by using it to complement fiber and terrestrial wireless and effectively provide “always-on connectivity” while also managing the experience and the billing relationship.
He also believes that so-called convergence is still in the early innings, largely used to provide packages and bundles that deliver discounts. But the future of convergence, he said, will be a lot more than that. He expects satellite services to be bundled in soon.
“When you start … giving somebody always-on connectivity, always working, very consistent, that moves beyond [the notion] of it’s just a discount,” Stankey said. “It’s not just a discount; it’s a product that works better for the customer.”
Meanwhile, AT&T is seeing some benefits from the discounted end of convergence in the early going, including a 45% convergence rate of mobile and broadband in its fiber service markets.
AT&T is now focused on attaching its mobile service to home broadband in the recently acquired Lumen fiber markets. Stankey said AT&T is already seeing a 50% rise in gross adds for AT&T mobile/broadband convergence subs in the Lumen footprint.
“That play is going to work and it’s going to drive a lot of value, not because we can move more broadband but because we can move more wireless with broadband,” he said.
