For the past decade and more, AT&T has cultivated strong relationships with some of the nation’s most skilled contractors. In return, these contractors have provided AT&T with on-call maintenance crews capable of handling nearly every aspect of their network needs, often with an almost intuitive understanding. They know that troubleshooting a sector is quite distinct from building one and America’s communications rely upon their experience and dedication.
This collaboration has kept AT&T’s network finely tuned for its subscribers and ensures the reliability of FirstNet, the nation’s only communications network designed in partnership with public safety and built on AT&T’s infrastructure.
As an example, among the thousands of trouble tickets that AT&T deals with, one of their major contractors reports that over 20% of them are related to PIM issues. Remarkably, 90% of these issues are considered high-priority because they directly impact FirstNet. Left unresolved, they could result in dropped calls, endangering the ability of first responders to communicate. Another contractor mentioned that their FirstNet-related PIM calls were even more significant.
While there’s an expectation that Capital Expenditure (CapEx) will decrease by approximately 10% this year, AT&T’s 2024 initiative to reduce Operational Expenditure (OpEx) by eliminating network operation personnel and consolidating maintenance could potentially jeopardize both FirstNet and their overall network infrastructure.
One undeniable concern is the potential impact on the livelihoods of hundreds of technicians and the possible closure of some companies that have supported AT&T’s success for decades.
In December, approximately 29 significant contractors received unexpected news when AT&T, driven by the need to reduce costs, informed them that they would no longer provide services directly to market managers. Instead, they would be eligible as secondary contractors once their contracts expire on March 1, 2024. These contracts will be transitioned to MasTec Network Solutions and Pearce Services, both turfing vendors with numerous crews capable of handling maintenance requests, but clearly not enough to service many areas of the country.
MasTec will primarily oversee the East Coast, while Pearce will manage the West Coast.
Three contractors informed Wireless Estimator that AT&T requested pricing for new three-year contracts. Although two companies had provided a slight increase in their pricing to cover inflation, they were informed that their bids were considered too high, ranking between third and sixth in their respective markets.
Faced with concerns about retaining employees and struggling with almost non-existent profit margins, they reluctantly agreed to honor their 2020 pricing, but even that was deemed too high by AT&T. As a result, it was implied that their services would no longer be required after March.
The third contractor took a more assertive stance, stating, “They haven’t approached us for a reduction, but if they did, I’d firmly decline. We’ll find ways to operate without AT&T.”
However, many contractors find themselves in a precarious position, needing to identify additional client bases within the next two months. Failure to do so could lead to laying off at least 20% of their workforce in the near future.
“AT&T has been instrumental in expanding my business over the years,” said another contractor. “Demanding a 30% reduction in pricing would be devastating.”
A Midwest contractor expressed willingness to accept lower pricing but expressed concerns about entering an uncertain relationship where they might only receive work when Pearce was unavailable. They stated, “How can you run a business when you have no idea what the workload will be from day to day?”
If a sufficient number of maintenance contractors reject reduced pricing, it’s possible that a larger contractor may attempt to step in and fill the void, effectively consolidating the work currently spread among numerous contractors. However, history has shown that partnering with a corporate giant like AT&T can be risky, as experienced by past businesses like Bluestream.
New maintenance entrants would need to acquire regional knowledge of AT&T sites and contend with uncompensated expenses for equipment such as cranes, man lifts, snow-cats, or mandatory costs associated with access to structures.
Furthermore, in the event of a national or regional catastrophe, these new contractors may not have the capacity to provide recovery assistance and maintain uninterrupted coverage for FirstNet, as one concerned contractor pointed out.
“In my market, neither Pearce nor MasTec have a noticeable presence where you can see our vehicles up and down the highway,” emphasized a contractor who was unwilling to reduce their pricing. They also highlighted the challenges of assembling maintenance teams, which require years to develop due to the highly technical skillsets involved.
