Calling a spade a spade, AT&T Inc. (NYSE:T) is a slow-moving behemoth, and something of a stodgy, old-school investment. That’s not necessarily a bad thing, mind you. Plenty of owners of T stock like the fact that it can leverage its size and strength to continue paying a nice dividend, while at the same time acquiring its way to a bigger footprint.
Still, that doesn’t change the fact that the company’s sheer size (it sports a market cap of $257.7 billion) can make it difficult for AT&T to be meaningfully nimble.
And yet, every now and then this ancient telco manages to remind current and would-be owners of AT&T stock that it’s still got a few technological tricks up its sleeve. Tuesday morning’s press release is one of these gentle reminders of why T remains a favorite holding for investors of all ilks.
AirGig Nears Fruition
If you thought every possible way of delivering broadband Internet had already been developed and is now being utilized, think again. AT&T is close to what amounts to a beta test of technology that delivers high-speed Internet service using the same power lines that deliver electricity to your home.
It’s called Project AirGig. Although AT&T has been working at it for several years now, and officially introduced to the idea (by name) in the middle of last year, few — including most T shareholders — have taken the idea seriously. Now, they’ll have to.
If the premise rings a bell, it may be because it’s been tried before, to no avail. A company called International Broadband Electric Communications, backed by International Business Machines Corp. (NYSE:IBM), developed and commercially delivered a so-called broadband over powerline (BPL) service a few years ago, but it never went anywhere. Ultimately, the speed of the service was simply too low.
Project AirGig is an entirely different kind of technology, though. The highly-patented platform is capable of delivering multi-gigabit data speeds that are comparable to (and in some cases superior to) broadband service carried over coaxial cables or telephone lines.
And, the lab work is done. The next step is putting it through its paces in the field. That’s going to happen this fall, if not before. One test site will be in the United States and the other has yet to be determined.
Potential Game-Changer
Still, knowing the mass commercialization of this technology is years out, it may be difficult for T stock holders to get too excited. Indeed, AT&T is already capable of delivering broadband to millions of houses and businesses across the nation, and it’s also capable of providing 4G wireless (soon to be 5G wireless) from coast to coast. What’s the upside of the new delivery method? There are a couple of big ones.
For starters, this type of connection could potentially work in your home just as effectively as wired connections do now…yet wouldn’t need to be wired all the way to a house. An antenna would need to be placed on the powerline pole, but that antenna could service several homes without requiring any new wires or lines. Power lines are fairly ubiquitous.
That means AT&T could, theoretically, provide service to any consumer anywhere in the country, provided the utility company is on board. And, utility companies are already showing interest.
The other benefit of this technology is one that most T stock investors will immediately appreciate: Although delivered wirelessly from the powerline pole, the radio spectrum that carries the data from the pole to a home or handheld device doesn’t require a spectrum license. A limited availability of radio frequencies is proving to be a big bottleneck for wireless service providers.
Opening up this wireless Internet access to AT&T wireless customers would, obviously, require getting over a logistical hump. Specifically, smartphones would need to be seamlessly capable of switching between 5G connectivity and access supported by power lines. Such capability is well within reach, though. It’s just a matter of doing it, and having a reason to do it. This is a reason.
Bottom Line for T Stock
It’s admittedly difficult to get terribly excited about a relatively unusual technology that won’t be commercially viable for at least a few years. AT&T stock’s current value is ultimately based on its future prospects — at least to the extent investors can perceive them — but Project AirGig may be a tough one for T owners to see.
All the same, it’s nice to see this old, stodgy company quietly working on something that could be far more game-changing than most anyone is giving it credit for.
As of this writing, James Brumley held a position in AT&T (T).
