AT&T Won't Sit Out Incentive Auction, but Questions Remain, CEO Says
AT&T will participate in the TV incentive auction but still has questions about how big it will go in the auction, CEO Randall Stephenson said Tuesday at a UBS financial conference. Stephenson said one big question is whether AT&T will be able to acquire the 2 x 10 MHz blocks that make deployment economically feasible. Executives from Verizon and T-Mobile sounded similar notes at the UBS conference Monday (see 1512070047).
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Stephenson said he is a “zealot” on 2 x 10 MHz deployments. “If you’re going to bring new spectrum into the portfolio, you need broad, deep ubiquitous footprints,” he said. “I honestly can’t remember the last auction that we did not participate in,” he said. The auction offers “some fairly rich spectrum that comes onto the market,” he said. “It obviously will be very attractive. But what I don’t know is how attractive the depth and the breadth of the spectrum will be.”
AT&T bought WCS spectrum because it offered the right kind of deployments, Stephenson said. In the AWS-3 auction “we dropped $18 billion to get that spectrum because we wanted a 2 x 10 ubiquitous nationwide footprint,” he said. The extent AT&T will pursue 600 MHz licenses remains unclear. “It’s kind of hard to assess,” he said. “I mean this is going to be one complicated process … and trying to discern who’s going to be bringing supply to the market, who is going to be bidding, who is getting preferential treatment” is difficult, he said.
Stephenson conceded that installing more small cells as an alternative to buying spectrum is also expensive. “It is not by any stretch of the imagination the most cost efficient way of getting bandwidth to the market,” he said. AT&T has opted in many cases to buy spectrum rather than densifying its network, he said. But small cells will play a role in urban markets, he said. “I think it’s going to be a very important technology over time and it will scale over time.”
Stephenson, long a strong critic of the FCC’s net neutrality order, said he views the panel that heard oral arguments on the order last week as skeptical of the case made by the FCC, indicating he had listened to the arguments. There was “obvious skepticism” from the judges, especially on applying the rules to mobile broadband, he said. Judges were also skeptical of whether the FCC had made a case for regulating interconnection agreements, he said.
The FCC “attempted a regulatory triple bank shot,” Stephenson said. “This is really a triple bank shot that they tried to achieve with this order … and it was designed very intentionally to be end-to-end regulation of all endpoints on the Internet. And the FCC has succeeded in creating a truly first-rate, jumbled mess out of this thing.”
Stephenson expressed optimism about Mexico, where the company recently acquired Iusacell and Nextel Mexico. The AT&T brand is attractive in Mexico, he said. “I loved the deals,” he said. “I can go through all the reasons why the opportunities were so great, but there is a government there who not only opened a market to competition but they did it by virtue of constitutional amendment.”
Stephenson conceded that AT&T faces tough competition as it takes on Mexican telecom giant Telmex and its CEO Carlos Slim Helú. “I’ve been partners with Carlos Slim for 22 years,” Stephenson said. “I do not expect Carlos is just going to lay down and allow us to take share. … I know this guy. He is going to be very, very aggressive. But there is a strong demand for an alternative in Mexico.”