AT&T, Verizon Wireline Sales Hit by Tech Shift, Cannibalization скачать в хорошем качестве

AT&T, Verizon Wireline Sales Hit by Tech Shift, Cannibalization

AT&T and Verizon's business wireline revenue may remain in decline through 2026 and possibly beyond on contracting legacy sales as customers transition to newer, more cost-efficient services. This trend could keep offsetting growth in new offerings this year and next. Still, telcos aim to regain share from cable in the small and midsized business (SMB) segment by expanding their fiber and fixed-wireless access broadband base. John Butler, Bloomberg Intelligence Senior Telecom Analyst, joins Bloomberg Intelligence to discuss Verizon and AT&T. AT&T's Business Wireline and Verizon's Business Segment sales -- good proxies for industry wireline trends -- could decline through 2026 as high-margin legacy services contract amid a shift to new, lower-cost alternatives. The pressure from falling legacy sales such as MPLS and T1 may stifle growth until revenue from new offerings is large enough to pick up the slack. Legacy broadband share loss to cable has also crimped growth, mostly in the SMB segment. Service revenue in Verizon’s Business segment fell 1.3% in 1Q and 2% in 2024, while AT&T’s Business Wireline service sales fell 9.5% in 1Q and 10.9% last year, reflecting a legacy drag that could take years to abate. Longer term, we see new high-speed broadband and 5G enterprise services, such as private networks and mobile edge compute, potentially picking up the slack. A big source of pressure in Verizon and AT&T's wireline units has been a migration to SD-WAN from MPLS circuits, as the former can carry traffic more efficiently and at lower cost, which is resulting in less revenue for the carriers. This migration is still underway and could take several more years to play out. Even with data traffic rising every year, demand for MPLS circuits continues to fall on the appeal of SD-WAN's cost efficiency. A similar unfavorable transition that's denting wireline sales is the displacement of legacy Ethernet connections with newer broadband technologies such as fixed-wireless access, as the latter is often sold at a lower price point. Other headwinds that the carriers have cited is wholesale-price increases on leased lines out of region and broadband cannibalization of legacy T1 lines. AT&T, Verizon and T-Mobile are expanding their fiber networks to support multi-gigabit broadband services. The carriers are also using fixed-wireless access services, along with fiber, to win back share from cable in the SMB market. For years, cable's high-speed hybrid-fiber-coax offerings have outsold the telcos' slower copper-based xDSL services. But FWA and fiber are proving more popular than cable and AT&T is directing most of its investment toward expanding its fiber network in and out of region, while Verizon is buying Frontier to significantly expand its footprint. All three of the leading US carriers offer enterprise, with T-Mobile in the lead. Fiber and FWA growth is expected to outpace cable in 2025-29, according to Omdia, with the first two posting average annual growth of 10.1% and 9.4%, vs. cable's minus 1.5% Verizon's Business segment may decline 1.1% this year, our analysis shows, vs. a 2% drop in 2024 as enterprise mobile services and FWA offer a lift. Wireline continues to fall as MPLS and legacy voice services decline, though cost cuts and a shift to software-based services may offset some legacy margin pressure. The Frontier acquisition will expand Verizon's fiber network, SMB access and enterprise backhaul capacity. It also launched AI Connect in 1Q that bundles fiber, wireless and MEC to handle enterprise AI workloads. Wireless is a big growth driver in the Business unit, with sales up 2.8% in 1Q on gains in private 5G networks and Internet of Things. The advent of private networks and edge compute aligns with Verizon’s goal of marketing converged infrastructure, yet the legacy drag may yield uneven near-term results. -------- Watch Bloomberg Radio LIVE on YouTube Weekdays 7am-6pm ET WATCH HERE: http://bit.ly/3vTiACF Follow us on X:   / bloombergradio   Subscribe to our Podcasts: Bloomberg Daybreak: http://bit.ly/3DWYoAN Bloomberg Surveillance: http://bit.ly/3OPtReI Bloomberg Intelligence: http://bit.ly/3YrBfOi Balance of Power: http://bit.ly/3OO8eLC Bloomberg Businessweek: http://bit.ly/3IPl60i Listen on Apple CarPlay and Android Auto with the Bloomberg Business app: Apple CarPlay: https://apple.co/486mghI Android Auto: https://bit.ly/49benZy Visit our YouTube channels: Bloomberg Podcasts:    / bloombergpodcasts   Bloomberg Television:    / @markets   Bloomberg Originals:    / bloomberg   Quicktake:    / @bloombergquicktake