Will 5G accelerate consumer device upgrade cycle?

AT&T invested big in video content with its $85 billion acquisition of Time Warner and is hyping up the mid-year launch of the new HBO Max streaming platform. Speaking last week at the Citi 2020 Global TMT West Conference in Las Vegas, company SVP and CFO John Stephens discussed consumer demand for bundled services–something he said AT&T is well-positioned to provide given its asset mix and capital investments.

“When I think back on 2019 and what our strategic imperatives were and how we’ve come at it, in the short sense, we’ve done a really good job I think of accomplishing and doing what we said we’re going to do and setting ourselves and taking advantage of the investments we’ve made,” he said.

Stephens went through the operator’s investments in standing up 5G using millimeter wave spectrum and plans to extend 5G into lower bands later this year, fiber broadband offering, television properties and strength in both the prepaid and postpaid segments.

“As we see it, we’re going to be in the best position for the future to provide those services.” He noted Verizon’s recent promotion around Disney+, giving unlimited subscribers a free year of access to the platform. “”I get that,” Stephens said. “I actually smile because it reinforces our thought processes on HBO Max. The difference is, I have owner’s economics. Owner’s economics…is really important. So we feel really good.”

Speaking about the growing reach of AT&T’s 5G network, the executive called it a “tremendous magnet for customers,” that could translate into a spike in 5G-compatible devices sales as more handsets hit the market at the premium and sub-premium price tiers. This would be a shift in a stagnating upgrade cycle that that has seen both AT&T and Verizon reporting record-low device upgrade rates in recent quarters.

Postpaid MVNO Ting Mobile’s survey of more than 3,600 people found that 47% of respondent kept their mobile phone for between three to five years before upgrading — and an even higher percentage, 55%, said they expected to keep their current phone for 3-5 years before upgrading again. Eight percent of respondent kept their phones for more than five years.

“The phones in peoples’ hands now are getting old,” Stephens said at the Citi conference. “And we’ve got this tremendous technology upgrade. And we’ve got something to bundle with it.” That combination will “lead to significant sales of phones,” he said.




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