2018
John C. Hodulik - UBS Securities LLC
Hi. Hey. How you guys doing? First on the satellite business, or the linear TV, are you guys seeing cannibalization from the DIRECTV NOW product? And the churn you mentioned, is there a way you could ascribe it to maybe traditional competitors versus these over-the-top guys? And have you seen that accelerate since the launch of YouTube TV a few weeks ago? That's first.
And then maybe on the Straight Path and FiberTower deals, could you just comment on how quickly you think that gets deployed? And is the holdings of the millimeter wave spectrum that you would have if you were able to successfully complete the Straight Path transaction, is that sort of what you need to sort of fulfill your sort of 5G initiatives? Thanks.
Randall L. Stephenson - AT&T, Inc.
I'll start, John, and I'll let John Stephens clean up after me, okay? On the satellite question, there's obviously some cannibalization of DIRECTV NOW, but it's fairly nominal, to be quite honest with you. The satellite churn that I referenced, I mean, it is heavily concentrated, John, in those customers where we just have a standalone TV product. It's not bundled with broadband or it's not bundled with our wireless service. And so obviously it's a world where the integrated offers are what's winning in the marketplace. And so you can figure out who we're losing those subscribers to; it's traditional cable players.
And so this is where we're going to have to get aggressive in a number of areas, moving aggressively on bundling these satellite customers with our wireless offers and also doing some new things in the marketplace that we think can shore this up. But it's no secret where these are coming from; it's coming from integrated offers from other players in the market. And where we have multi-product bundles in the marketplace, those customers, the churn rates continue to be very strong. And in fact you saw our postpaid phone churn, 0.9%. You put TV or broadband with it, and those churn rates just get even better. So we continue to be big, big advocates of the integrated bundle and multiple service bundles. And so we don't see that changing. It's going to require us to get a little more aggressive in those single-play, standalone TV offers.
On Straight Path and FiberTower, so we've talked at length about when the standards are going to be out for 5G. I think we're now in 2018 time horizon.
John J. Stephens - AT&T, Inc.
2018.
Randall L. Stephenson - AT&T, Inc.
And so having equipment and handsets, we're talking 2019 before we start deploying in 2020 when you probably have what I would call scaled offerings. If we get both Straight Path and FiberTower accomplished, it pretty much fills our spectrum requirements we need for a long period of time as it relates to 5G deployment, John. So right now this is all preparing for the future of 5G, and the standards are on track, and we hope to be deploying and putting this spectrum to work in the 2018-2019 timeframe, scaling in 2020.
John J. Stephens - AT&T, Inc.
John, with regard to that on – as Randall said, the FiberTower itself gives us a base of 39 gigahertz nationwide to really build on and plan on. And so that in and of itself is a great starting point and gives our network team an opportunity to incorporate that planning into our project evolution and this next-generation network. When you look at Straight Path, it really has two holdings, the 39 gigahertz, which would complement FiberTower's and give us that depth that we would prefer, and so that would be great, but it also adds a strong 28 gigahertz piece, which we could incorporate into our network and use that way, or we could, as we've done in the past, use as an opportunity for spectrum swaps to take advantage of other opportunities.
I can give you a perfect example; this last quarter I mentioned that we had about a $100 million gain on the spectrum swap with Verizon, where we traded some PCS and AWS – three licenses to get both of ourselves in a better position to serve our customers. So that's where I'd leave us. The 39 gigahertz would be a great depth of position, and quite frankly with FiberTower an opportunity to really plan on that build as we go into project evolution.
