Verizon, AT&T Earnings Show Diverging Fixed Wireless Strategies

AT&T and Verizon are approaching fixed wireless access in unique ways as both companies shift their business wireline segments away from legacy products.

The carriers reported earnings this week, showing varying results across their wide sweeping technology portfolios and customer segments. AT&T boasted of its mobility and consumer wireline revenues, and Verizon touted its wireless service and fixed wireless revenues.

But both vendors noted that those gains were offset by decreasing business wireline revenues. AT&T in its Wednesday earnings said business wireline revenues declined 7.8%, to $4.8 billion in the quarter. Business wireline operating income at AT&T dropped a whopping 83%, to $64 million.

"While the wholesale market has stabilized, the reality is that businesses are transitioning to mobile and cloud-based services at an accelerated rate as post-pandemic workplace restructuring takes hold," AT&T CEO John Stankey said on an earnings call. "We see the benefits from this connectivity transition in business solutions where wireless service revenues grew 4.6% in the first quarter, outpacing our overall mobility services revenue growth."

Verizon doesn't share business wireline numbers, but the company said business wireline contributed to Verizon business operating income decreasing 27.6%, to $399 million.

Those challenges are not unique to AT&T and Verizon, as many carriers are seeking to cut expenses associated with legacy business wireline services that are seeing less demand. Business wireline contains a large spectrum of services that include Ethernet-based fiber, VoIP and even the cool new kid on the block: fixed wireless access.

AT&T spokesperson Brittany Siwald said the company has been undertaking a significant investment to shift away from older products such as DSL. She pointed to AT&T's Internet Air for Business fixed wireless offering and Dynamic Defense cybersecurity offering.

AT&T's Brittany Siwald

"Most companies don’t need phones at their employees’ desks anymore – this isn’t a new trend and something we planned for," she told Channel Futures. "For us, connectivity products that use 5G and fiber are actually helping partially offset the declines in business wireline. We’re in the process of transitioning these legacy networks largely to fiber because it is more sustainable, cost-efficient and offers a significantly better experience."

AT&T, Verizon Sell, Report FWA Differently

While Verizon's business wireline broadband connections dropped slightly from 466,000 to 458,000 year over year, business fixed-wireless access (FWA) broadband connections skyrocketed. The company reported its largest number of business FWA net additions (151,000) in the first quarter.

"On the business side, we're seeing new use cases that we didn't see before," Verizon CEO Hans Vestberg said on the carrier's quarterly earnings call. "I mean, all the way from coffee shops replacing cable with fixed-wireless access to large enterprises ... replacing with fixed wireless access as well for different use cases."

AT&T's Stankey pointed to Internet Air as a connectivity source that will play an important role for SMB customers going forward.

"We believe this is a durable national play with business because it's able to serve as a reliable 5G-powered primary internet connection, where fiber is not available in remote locations when temporary access is needed or with small and medium businesses that don't require always-on video streaming," he said.

Stankey emphasized to investors, however, that he doesn't intend to promote fixed wireless in the same manner as competitors T-Mobile and Verizon. Stankey said he doesn't view wireless networks as the best long-term option for the average single-family home. For that reason, AT&T has situated its capital allocation "more heavily on fiber" as a way to meet customer's performance demands.

Fixed wireless most certainly has a place in the AT&T portfolio, Stankey said. He said many businesses are seeing a convergence of wireless and wireline needs, which fixed wireless can solve for at an ideal price and performance. And in some cases, fixed wireless will give AT&T a "bridging or hold strategy" as it works to transition customers from copper to fiber.

"Where I've got small numbers of data customers in place, I need to get them off of fixed infrastructure that I ultimately want to shutter because that allows me to turn down a geography that is a low utilization geography and a low profitable geography on the fixed side," Stankey said. "And I can turn out the lights, walk away, take cost out of business; I will do that."

Cost Reductions Impact Partners

Various carriers have reduced their workforces in recent years, with Lumen's recent 7% reduction a prime example. Last summer, different partners selling through the carriers in the agent model said they've broadly seen customersupport decline at the vendor level due to the lower headcount.

Christopher Scott, principal owner at technology consultancy StratoNet, said he has seen a "very noticeable degradation of service" across the telecommunications space, including cablecos, incumbent local exchange carriers (ILECs) and competitive local exchange carriers (CLECs).

StratoNet's Christopher Scott

"Now, these layoffs are really affecting total inbound revenue. Specifically, quotes take much longer to get back, and orders are taking much longer to complete," Scott told Channel Futures. "Basically this is the equivalent of your local grocery store laying off all of the checkers but one or two. In this example, rather than wait in long lines for grocery fulfilment, shoppers would typically go to a different grocery store. However, in this case, your local government has allowed this crappy grocery chain to buy all of the other surrounding grocery stores. Thus, we wait in line and curse the company."

Kat Lopez Shelby, co-owner at Shelby Technology Solutions, said she saw a similar slowdown. She noted however, that there could be cause for optimism.

"Over the last 6 months, there has been a noticeable slowdown in order processing and accuracy due to the layoffs and reorganizations in the channel," she told Channel Futures. "However, I've observed positive signs with new initiatives at many of the ILECs starting in 2024. It seems they are more invested in the channel and are actively seeking to enhance processes moving forward, while also striving to add stability to the channel and the existing relationships.”