FirstNet Brings New Opportunities for Rural Operators

By Jeff Johnston

November 28, 2018

Key Points

  • FirstNet will enable rural wireless operators to evolve their business model with AT&T to a co-locate/backhaul structure versus just a roaming relationship, which opens the door to new long-term recurring revenue opportunities.
  • In order to meet the FirstNet coverage mandate AT&T will be deploying over 1,000 new towers, many of which will be in rural America. Rural operators have an opportunity to participate in this build.
  • ILECs with fiber networks are well-positioned to provide backhaul services for AT&T’s expanded coverage footprint.
  • Given AT&T’s efforts to drive costs out of its business, margins on new commercial agreements rural operators sign with AT&T could be under pressure.
  • In the near-term, the competitive threat for rural wireless operators stemming from AT&T’s FirstNet build should be minimal. However, that could change over the long term if AT&T has success with FirstNet, and/or if it builds out its distribution presence in rural markets.

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