AT&T Chief Executive Randall Stephenson said Friday that the wireless industry is likely to experience more consolidation, with firms buying up each other’s spectrum assets to deal with skyrocketing demand by smartphone users.
He said data use will increase 75 percent every year for the next five years. Indeed, consumers in the next two years may be able to buy data-only plans as they use voice calls and text messaging less often.
But he still feels burned after regulators rebuffed the company’s last attempt at a major merger. Stephenson said it would be “difficult” for AT&T to attempt another blockbuster acquisition as it did with its failed $39 billion bid for T-Mobile USA last year. But he said smaller mergers by all wireless companies are inevitable.
“The wireless industry is really stressed because there is not enough spectrum to accommodate the demand everyone is experiencing,” Stephenson said during a Q&A at the Sanford C. Bernstein communications conference for investors in New York.
“So I will be surprised if you don’t see other attempts at consolidation in this industry,” he said.
Indeed, chief rival Verizon Wireless is trying to close a $3.6 billion deal to buy spectrum from cable companies and cross-market wireless, Internet and television services. Verizon Communications on Friday announced a $612 million bid for Hugh Telematics, which provides wireless services for cars.
Stephenson said said regulators are working hard but have challenges. He said they have been like “sands in the gears of the industry” and haven’t done enough to help carriers meet their demands. The Federal Communications Commission and Commerce Department have proposed government agencies and private companies share spectrum bands for consumer use.
That idea, however, doesn’t appeal, he said.
“It’s hard for a company like us to [share] and manage quality of service,” Stephenson said. “I don’t see that as a fix for addressing the issues we have.”
For consumers, Stephenson said AT&T is reconsidering data plans and services. It has shifted to usage-based pricing — or data caps — and the chief executive said more partnerships will emerge with apps and content companies that will be willing to pay for consumers to get their content for free.
Comcast, for example, offers streaming Xfinity videos for XBox customers that doesn’t count against data plans. Those types of offerings have sparked criticism from companies such as Netflix, which fears its users will stream fewer videos because of monthly data caps.
AT&T’s Stephenson said the company will also allow tablet users to begin using smartphone data plans to connect over devices to the carrier network. He said users don’t want two data plans so they aren’t connecting their iPads and Galaxy tablets to wireless networks.
“Customers say, ‘I don’t want one more data subscription,’” he said. ”So we will let them aggressively use their smartphone subscription and if the price is right and usage sensitive, the smartphone [plan] will be the platform to put on new devices. Think about laptops. Think about in 12 months, the car.”
This story has been updated.