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MarketScreener Homepage  >  Equities  >  Nyse  >  AT&T Inc.    T


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Pentagon Opens Door to 5G Network Shared With Civilian Cellphones

09/21/2020 | 07:30am EST

By Drew FitzGerald

U.S. officials are exploring concepts for a new 5G wireless network that would let Silicon Valley giants and other businesses tap valuable Pentagon airwaves, setting up a potential clash over how to deploy the next-generation technology.

The Department of Defense issued a request for information Friday that could open the door for investors to bid on contracts to build a domestic cellular network for both the military and for commercial operators. That dual-use structure would allow companies to link connected cars, factories and hospitals over ultrafast fifth-generation signals without bidding for the licenses at auction.

The proposal would keep the Pentagon in control of the airwaves, which are used for radar and other military hardware. Most cellphone signals today travel over frequencies that carriers like Verizon Communications Inc. and AT&T Inc. spend billions of dollars to reserve.

The U.S. wireless market has been dominated by three providers since T-Mobile US Inc.'s takeover of Sprint earlier this year. All three companies have started rolling out 5G services by upgrading their existing networks, expecting to sell ultrafast connections for their smartphone customers.

But several technology giants have sought toeholds in wireless communications on their own. Google owner Alphabet Inc. has been an active advocate of sharing wireless spectrum. Some Google executives discussed the Pentagon proposal in meetings with government officials earlier this year, according to people familiar with the talks.

It is unclear whether Google would participate in a potential Pentagon project or is simply advocating a policy that could lower the market price of internet data on the go, which would benefit its advertising and cloud-computing businesses. A Google spokeswoman declined to comment on the meetings.

The process already has attracted interest from defense contractors, according to a person familiar with the discussions. The request published Friday highlighted the network's military purpose, noting its "intent is to ensure the greatest effective and efficient use of the Department of Defense's spectrum for training, readiness, and lethality."

The most valuable asset available to any contract winner would come from the spectrum. Companies bid about $4.6 billion for licenses in a recent Federal Communications Commission auction for similar mid-band frequencies. Another license sale slated to start in December will fetch tens of billions of dollars, according to industry analysts. Leasing military spectrum, as the Pentagon has suggested, would lower those network operators' acquisition costs.

A shared network could still face opposition from wireless carriers and from factions within the administration. White House officials including President Trump publicly rebuked a similar proposal for a nationwide network in early 2018.

Former Google Chairman Eric Schmidt has also publicly urged the administration to adopt the plan. Mr. Schmidt, who ended an advisory relationship with the online search giant in February, has remained active in the venture capital world through Schmidt Futures, a philanthropy. He also served on the Pentagon's Defense Innovation Board until last week, when his term expired.

During a recent industry event hosted by telecom trade group Incompas, Mr. Schmidt called the lack of 5G coverage "a national emergency" that put U.S. industry at a disadvantage to China "unless we do some form of sharing."

Past spectrum-sharing proposals have faced stiff opposition from the wireless industry. Nick Ludlum, a spokesman for the wireless industry trade association CTIA, said the U.S. already enjoys two nationwide 5G networks with a third on the way. "We must stay the course and focus on private-sector solutions," he said.

Backers of the new Pentagon-supported system have said it would work much like FirstNet, a $40-billion AT&T program to provide wireless services to police, firefighters and other civilian public-safety customers. AT&T benefited from that arrangement because its cellular subscribers can tap FirstNet frequencies for phone calls and downloads during times of low demand from public-safety users.

The White House recently sided with traditional cellphone carriers by pledging to direct 100 megahertz of Pentagon spectrum toward an FCC auction in late 2021. FCC auctions are usually winner-take-all affairs and have seen the most participation from telephone companies, though other companies including cable operators have also paid for spectrum. Satellite operator Dish Network Corp. has spent more than $21 billion amassing wireless spectrum for a cellular network.

The new shared-network proposal would target a much wider chunk of the Department of Defense spectrum. Telecom engineers say those mid-band frequencies, when available in broad swaths, are ideal for new 5G technology and are seeing commercial use in other countries.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com


Stocks mentioned in the article
ChangeLast1st jan.
ALPHABET INC. 2.10% 1763.9 Delayed Quote.31.69%
AT&T INC. 2.13% 29.23 Delayed Quote.-26.77%
DISH NETWORK CORPORATION 3.70% 36.43 Delayed Quote.2.71%
T-MOBILE US 0.14% 128.06 Delayed Quote.63.07%
VERIZON COMMUNICATIONS INC. 0.68% 60.64 Delayed Quote.-1.91%
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Financials (USD)
Sales 2020 171 B - -
Net income 2020 12 456 M - -
Net Debt 2020 145 B - -
P/E ratio 2020 16,7x
Yield 2020 7,14%
Capitalization 208 B 208 B -
EV / Sales 2020 2,07x
EV / Sales 2021 2,02x
Nbr of Employees 235 000
Free-Float 93,4%
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AT&T Inc. Technical Analysis Chart | T | US00206R1023 | MarketScreener
Technical analysis trends AT&T INC.
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 31
Average target price 31,93 $
Last Close Price 29,23 $
Spread / Highest target 30,0%
Spread / Average Target 9,24%
Spread / Lowest Target -41,8%
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John T. Stankey President, CEO, COO & Director
Randall L. Stephenson Executive Chairman
John J. Stephens Chief Financial Officer & Senior Executive VP
Matthew K. Rose Lead Independent Director
Scott T. Ford Independent Director
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