The 5G LTE Wireless Technology Brings Many Changes

Guest Post

The cellular (wireless) telecommunications business will reconfigure itself with the deployment of 5G LTE wireless technology by 2020. 5G LTE is about capacity, not speed. It will be deployed to meet users’ data demands as more customers use LTE; however, data speed will not change. It will allow more efficient utilization of the wireless spectrums, advanced interference cancellation, higher numbers of connected devices, higher efficiency, lower battery consumption and better coverage. It will reduce cost, merge wireless with satellite networks to provide high-tech services to rural America at greatly reduced cost. It will accelerate the movement of basic telephone services from analog/fiber to wireless and reduce construction and labor costs.  When it is fully deployed, voice, data, and video services will be moved to the 5G LTE wireless network and operating costs will drop immensely.

All of the above changes, plus new services such as improved home security, will come to pass as reduced wireless  cost is realized within all users’ budgets. The greater the usage, the more cost reduction. This new heterogeneous service will cause consolidation to only two providers in the wireless telecommunications arena. Currently, AT&T’s revenue is split about 50-50 between analog/fiber and wireless services.  Only the strong will survive this consolidation, and for the survivors, profits will rise. We will not see the reemergence of Ma Bell, but her two strongest offspring will be alive and well. We know them today as AT&T and Verizon. These two former Baby Bells are poised to take advantage of 5G LTE wireless capabilities. Both are making strategic acquisitions to position them to take advantage of this new technology. The most notable recent move in this direction is AT&T’s $48 billion purchase of DIRECTV. The future is now.

James W. Smith,

District Manager - AT&T (Retired)

The opinions or views expressed in these guest posts are those of the author and do not necessarily reflect the opinions and recommendations of Tarifica, its staff or affiliates. 

AT&T Head to Head with Time Warner Cable

AT&T is in advanced talks to acquire DirecTV, the U.S.’s largest satellite television provider, for about US $50 billion, according to a report. Under the plan being discussed, the current management of DirecTV will continue to run the company as a unit of AT&T, while DirecTV CEO Mike White plans to retire after 2015. The two companies are still negotiating a price, which could come close to US $95 a share, depending on the proportions of cash and stock in the transaction. Also on the table is the size of the termination fee to be paid in the event that regulatory approval is not granted. An agreement between the two companies is said to be one to two weeks away from completion.  DirecTV’s rival Dish Network had previously considered a merger, but Dish chairman Charlie Ergen recently said he thought DirecTV was too expensive to pursue. This deal would have a substantial impact on the pay-TV landscape in the U.S., comparable to that of the pending Comcast–Time Warner Cable merger. It certainly underscores the fact that combined services (phone, broadband internet, TV and mobile services) are the wave of the future for telecom providers and entertainment content providers alike. AT&T has already made a foray into TV with its IP-based U-verse streaming TV service; now, by acquiring the country’s largest satellite-TV provider, it would gain a national footprint, placing itself in a very strong position to take advantage of the public’s growing appetite for pay-TV and the increased range of choices it offers. Furthermore, because DirecTV is already operating in Latin America, the deal would extend AT&T’s TV range beyond the U.S. As for DirecTV, we believe it would gain significant competitive advantage for the future by being combined with internet services instead of offering a stand-alone product. Of course, everything depends on whether this deal receives regulatory approval, a process that could take up to a year. The FCC will be considering the Comcast–Time Warner and AT&T–DirecTV deals simultaneously. If both deals are approved, the two combined entities will go head to head in competition, and it does seem more likely that both or neither will go through than that the FCC would allow one and not the other.  The above item appeared in a recent issue of Tarifica's "The Story of The Week", a weekly report that analyzes two noteworthy developments in the telecoms industry from around the world. For past issues or to learn more about The Story of The Week :  http://www.tarifica.com/storyoftheweek.aspx