FirstNet Services Key to AT&T Growth During First Quarter
Wednesday, June 17, 2020 | Comments

New First Responder Network Authority (FirstNet) customers were a driving force for AT&T’s financial growth during the first quarter, AT&T executives said during a pair of conferences June 16 – 17.

In the first quarter, the company saw an increase of about 100,000 FirstNet customers, said AT&T Chief Financial Officer (CFO) John Stephens during the Credit Suisse Virtual Communications Conference June 17. Overall, in the quarter, AT&T saw an increase of about 163,000 postpaid voice customers.

“It was a big FirstNet gain that drove that for us, and we expect that to continue,” he said.

The strong quarter helped give AT&T a boost as the COVID-19 pandemic began to impact the economy, said AT&T Communications CEO Jeff McElfresh during the Bank of America Merrill Lynch Telecom and Media Conference June 16.

“As you saw what we did in the first quarter, we’re very proud of the performance,” he said. “We posted 163,000 postpaid net ads. And to some that might not be a big number, but to us, that’s the best performance we’ve had in a quarter in 10 years. And so, we have really nice market momentum leading into COVID-19, and we maintained momentum during this event and are going to come out of this with a head start, I would say, on some of these cost initiatives and the curation of our distribution elements.”

Even as the company is seeing those gains, it is looking at a large cost restructuring effort. The Communications Workers of America (CWA) said June 16 that AT&T had told it that it planned to cut 3,400 technician and clerical jobs across the country and close 250 AT&T Mobility and Cricket Wireless stores. That closure would impact 1,300 retail jobs, the union said.

“If we are in a war to keep our economy going during this crisis, why is AT&T dismissing troops?” CWA President Chris Stapleton said in a statement, referencing comments AT&T CEO Randall Stephenson made in March. “CWA and AT&T have been working together to protect worker and customer health and safety and to provide premium pay for essential workers. The company showed an interest in investing in its workers and its network by canceling planned stock buybacks. AT&T could help lead the country toward recovery by partnering with its workforce to build next generation networks. Instead the company is adding to the pain of the recession already underway.”

Stephens and McElfresh talked about retail store closures due to the pandemic and cost cutting measures at a high level during their appearances at the conferences but did not address the job cuts directly.

“You recall there at the tail end of the first quarter, we had reduced our retail footprint down to, what I call, a minimum viable service footprint, which was about 20 to 30 radial miles around each of our store locations,” McElfresh said. “And we maintained those minimum number of locations open to support first responders, teachers, nurses that needed wireless connectivity to conduct their business or their mission. And that, in turn, was supported by a really interesting shift to the consumer behavior of consuming more products and services via digital and online channels.

“… And so I just -- I suggest to you that, as we have been through this now, we are seeing new opportunity, and we're seeing new ways in which we can accelerate some of our transformation activities that we announced late last year that gets after some cost, but also serves for driving a bit more market momentum in key segments, like our wireless business, in key markets,” McElfresh said. “And I think you should expect AT&T will phase in and phase out many of these plays, market by market, as commerce begins to recover, shoppers begin to make their way back out on the streets and just not a one size fits all. I think it's going to be a very dynamic and local market aspect that we've got to pay attention to.”

All told, the FirstNet buildout is about 80% complete, putting it about nine months ahead of the schedule mandated by AT&T’s contract with FirstNet, Stephens said. The company has about 1.3 million customers and 12,000 agencies currently using the service.

“So, we’re getting into that sweet spot now, and we’re really trying to grow that business,” Stephens said.

The FirstNet buildout has aided AT&T in building out its 5G presence across the nation, Currently, AT&T has more than 120 million points of presence (POPs) covered by 5G and expects to have a nationwide 5G footprint that covers 200 million POPs by the end of the year, Stephens said.

That expected growth in 5G throughout the year will be due in large part to the buildout that AT&T has done during the past few years, allowing it to upgrade software across its network to quickly increase 5G coverage.

“… We’ll continue on with our FirstNet build, which will coordinate with our 5G build,” Stephens said. “They go hand in hand. We’ll see continuing buildout of our 5G capabilities in the next 18 months, and we’ll continue to see coverage improvements.”

Stephens and McElfresh noted that FirstNet capabilities, such as pre-emption and the network’s coverage, have proved useful for first responders and medical providers dealing with the COVID-19 pandemic around the country.

“I would also highlight that our FirstNet program really shined during the COVID response, and we continue to see high adoption of baseline circuits, such as fiber and VPN (virtual private network) connectivity, to health care providers and professionals in support of this pandemic,” McElfresh said.

FirstNet Board Chair Edward Horowitz echoed that theme during the June 17 FirstNet board meeting, saying the FirstNet network has done a great supporting first responders during the pandemic.

Read more about how FirstNet and other communications networks have helped agencies deal with the COVID-19 pandemic in our June/July 2020 issue.

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