5G Fixed Wireless Might be the Biggest Near-Term New Use Case, in Terms of New Revenue Sources

As easy as it might be to dismiss fixed wireless, it might be equally easy to overstate its impact. At the end of 2021 there might have been about 70 million fixed wireless connections in service globally, according to Deloitte. Ericsson believes there were as many as 90 million fixed wireless connections in service in 2021.  

So how significant is that? Perhaps not so significant when service providers have other alternatives. But fixed wireless might be highly consequential for service providers that can use fixed wireless to compete in the home broadband market where they had not be able to do so, in the past.

source: Deloitte 

By the end of 2021 there were about one billion fixed network internet access subscriptions, according to Point Topic. So fixed wireless represented possible seven percent to nine percent of fixed network internet access connections globally. 

source: Point Topic 

So fixed wireless clearly is incremental to use of other platforms, though arguably of high importance to many infrastructure suppliers.

On the other hand, fixed wireless can be incrementally important for some service providers. For some service providers it might represent a business case that other platforms cannot match, allowing those firms to compete in the home broadband for the first time, or more effectively.

That might especially be true in geographies where the cost of building cabled networks is not feasible, or where subsidies of some sort are not available to help defray the cost.

Mobile-only firms formerly unable to compete in the home broadband market, or unable to compete for much of that market, might find 5G fixed wireless viable. 

5G fixed wireless connections could--in many cases--provide significant incremental revenue growth, allowing mobile operators to compete for home broadband accounts now largely the province of fixed network operators. 

Assume global  gross national income per capita of about $11,600 and a monthly home broadband cost of five percent of GNI per capita. That is about $580 in annual revenue per line. 

So 75 million new fixed wireless accounts represents perhaps $43.5 billion in new annual revenue for mobile service providers. That can take the form of new accounts or market share taken from other suppliers. 

Fixed wireless using 5G will by 2026 support 180 million connections globally and generate US$70 billion in revenue, accounting for 40 percent  of the total fixed wireless access market, according to ABI Research. 

Adoption likely will be highest in markets where the cost of deploying fiber to home or hybrid fiber coax remains unworkable, and where demand for moderate-speed internet access is high. Some might argue that 5G fixed wireless is most directly the successor for 4G fixed wireless and digital subscriber line. In some markets that opportunity might last for a substantial amount of time.

5G fixed wireless might be especially important for firms that have not yet been able to compete in all of most of the home broadband market. For T-Mobile in the U.S. market, that represents a huge opportunity, since T-Mobile has had zero percent share of the home broadband market. 

And Verizon expects that fixed wireless will underpin as much as 71 percent of the potential locations it will reach for home broadband service by about 2025. 

Some will counter that 5G fixed wireless speeds will not generally match those of fiber to home or cable modem services. That is likely to be true.

But 5G fixed wireless is likely to be attractive to a substantial portion of the market. In rural areas, where service might only be available in the 50 Mbps range, that still could be competitive.

Overall, about 20 percent of U.S. home broadband buyers purchase services operating no faster than 100 Mbps. So the issue is general availability of fixed wireless services offering speeds of 100 Mbps to  200 Mbps. 

source: Openvault

Nearly half the market presently buys service operating between 100 Mbps and 200 Mbps. And nearly 68 percent of the U.S. market buys service operating no faster than 200 Mbps. 

Also, the U.S. home broadband market is big enough that gaining just a couple of points of the installed base and market share generates substantial revenue. By 2023, fixed wireless might represent about 4.5 percent of all home broadband accounts , some estimate.  

To put that into perspective, consider projected revenue for other new services. In 2024, it is conceivable that  IoT connectivity revenues for mobile operators globally could  be in the low millions to tens of millions of dollars, according to Machina Research. Millions, not billions. 

In 2026 the global multi-access edge computing market might generate $1.72 billion. Even if one assumes all that revenue is connectivity revenue booked by mobile operators, it still is a far smaller new revenue stream than fixed wireless represents. 

In 2020 there were perhaps 80 million fixed wireless subscriptions in service. Researchers at Mobile Experts see that number growing to almost 200 million by 2026. 

Ericsson notes that more than 70 percent of all service providers now offer fixed wireless access   services. Ericsson also predicts that fixed wireless connections will exceed 180 million by the end of 2026.

By 2026, assuming these forecasts are accurate, fixed wireless will represent about 12 percent of fixed network broadband connections, Ericsson estimates.  

Keep in mind that the incremental revenue from 75 million 5G fixed wireless connections does not include the revenue from 4G fixed wireless connections, which might represent another 110 million connections. 

That represents an additional $104.3 billion in annual revenue, assuming a global average of $48 per month, per line. 

The point is that incremental revenue from 5G fixed wireless might dwarf new revenues earned by mobile operators from edge computing and internet of things.

"Both And" Will Prevail for Network Slicing, Private Networks, Edge Computing

Engineers tend to be a practical lot. They are used to tradeoffs when considering any technology solution to a business problem. For that reason, though they can get involved in "religious" arguments about solutions, most of the time they will acknowledge that there almost are multiple ways to solve any particular problem.

To the extent that network slicing (virtual private networks) is a solution for some latency, bandwidth or availability issues, both private networks and edge computing provide possible substitutes. 

So some might theorize that private networks and edge computing will minimize the market for network slicing or virtual private networks. 

In the end, this likely will shape up to be another “both and” outcome. As we once debated the extent to which Wi-Fi could be a substitute for mobile connectivity, the likely outcome is that we will use virtual private networks, edge computing and private networks, for different use cases.

As often is the case in the communications and computing businesses, there is no one size fits all solution. Wide area private networks can optimize latency, bandwidth,  support for low-power devices and apps or availability and reliability. 

source: STL Partners 

  

But edge computing can address those same problems. So can private networks. Both network slicing and edge computing are suitable for mass deployment apps. Private networks are better for single-enterprise apps. 

Private networks and edge computing arguably are better for supporting compute-intensive apps that also have very low latency requirements as well. Network slicing arguably is better suited for mass market, high-scale, highly-distributed apps. 

In the end, private networks will not be a complete substitute for network slicing, any more than edge computing will be a universal substitute for network slicing or private networks.

Correlation is Not Causation, for Broadband, Internet or Mobility

Some problems are difficult to solve: wealth disparities, including Pareto distribuion patterns; population density and economic growth that benefits most geographies and regions instead of urban centers.   

Though it is widely believed that broadband access leads to economic growth, that cannot be proved, though many studies suggest a correlation. But correlation is not causation. 

“A  positive relationship between broadband expansion and employment growth could arise for other reasons,” says Jed Kolko of the Public Policy Institute of California. “For example, if

broadband providers expand in locations where they anticipate future growth, then the positive relationship would in part or entirely reflect this strategic decision of providers rather than a causal effect of broadband on growth.”

“Alternatively, population growth could cause both broadband expansion and employment

growth: Broadband providers could invest in areas where population (and therefore demand for broadband) is growing, while at the same time population growth could cause employment growth in industries (such as retail, restaurants, and personal services) that serve local populations<” Kolko says. 

Virtually everyone believes it is “a good thing” for people to have access to roads, clean drinking water, electricity and internet access. Yet even when these goods are nearly-universally supplied, disparities in economic growth; job creation; wealth and income persist. Those forms of infrastructure are perhaps necessary but not sufficient to cause the outcomes. 

Likewise, economists Chris Doucouliagos, Professor of Economics, Deakin University and 

Tom Stanley, Professor of Meta-Analysis, Deakin University, examined 59 studies of economic growth in developing and developed countries. 

Even some studies reporting correlation between digital technology use and economic development note the uneven outcomes, ignoring for the moment the issue of correlation or causation. 

As always, we must separate causation from correlation. They find “evidence that ICT has indeed contributed positively to economic growth, at least on average.” In other words, as we all might expect, information and communications technology are correlated with economic growth.

But “benefit” or “contributed” value is not necessarily the same as causation. It is correlation and presumed “advantage,” to be sure.

The researchers find a greater “benefit” from mobile phones than landlines, for example. They argue that mobile service has a growth effect “twice as strong as landlines.” 

source: Researchgate 

But we can note the correlation in the reverse: since mobile phones have a global penetration rate in excess of 100 percent, while landline telephones have adoption only in the 

12 percent range. So one would expect greater correlation between mobile use and fixed telephone impact. 

Perhaps economic growth leads to higher mobile phone use. Perhaps the cost of building mobile networks, compared to fixed networks, is high enough to cause much-higher mobile availability. Perhaps mobile costs are lower, and value are higher,  than for fixed service. 

In other words, perhaps mobile usage is so high because its availability is so high; its costs relatively low; its value considerable for all sorts of reasons not dependent on contribution to economic growth. 

“In contrast, we find little evidence that the Internet has had a positive impact on growth,” say the economists at Deakin University. 

As a matter of public policy, virtually everyone believes all citizens should have electricity, internet, mobile and fixed communications, clean drinking water and sanitation. Most likely believe income and wealth disparities are a problem to be fixed, if possible. 

Most likely believe that economic growth, education and other quality of life measures in rural areas should be close to that of urban areas. 

But disparities stubbornly persist. It is one thing to prefer ubiquitous access to infrastructure. But it is quite something else to believe that once provided, such ubiquitous infrastructure actually can overcome all the other background factors that create disparities of wealth, income, economic growth rates or other social amenities. 

Perhaps another way of stating the issue is that it is one thing to assure that necessary infrastructure is in place. It is quite something else to expect that what is “necessary” is therefore “sufficient” to cause different economic and social outcomes. 

Universal broadband access is a “good thing” to achieve. But it is no panacea for economic growth. In fact, we cannot actually prove that broadband “causes” growth. It might be easier to argue that broadband quality is itself an artifact of economic growth.

Wi-Fi Value Has Changed Since 3G

The perennial debate over Wi-Fi ability to substitute for mobile network access will not change in the 5G era. But user behavior could change as moble access speeds become a functional substitute for fixed (Wi-Fi) access and as unlimited-usage plans eliminate the financial incentive to switch to Wi-Fi access. 

Beyond a fairly low threshold (perhaps 25 Mbps to 50 Mbps), most apps do not benefit from higher access speeds. With a few exceptions, the primary benefits of higher-speed connections (500 Mbps to a gigabit per second) are enough bandwidth to support multiple devices and users simultaneously, plus any financial advantages of unlimited-usage plans, higher return bandwidth or other values bundled with the connection. 

As has been the case in the 4G era, Wi-Fi access might have more value for multi-user households; less value for single-user households and households where every inhabitant pays for their own mobile access. 

Mobile-only access wil have higher value for lower-income households and users, phone-centric users and younger adults. 

Unlimited-usage data plans will eliminate the financial incentive to switch to Wi-Fi, at least when mid-band spectrum is available to support 5G access, as there will not generally be a speed incentive to switch to Wi-Fi access. 

On the other hand, signal strength could be a more-inportant driver of behavior. Indoor signal coverage has been an issue since mobile operators began using frequencies around 2 GHz. Should that become a worse problem when other mid-band frequencies in the 3.5 GHz to 6 GHz range are used, then Wi-Fi offload will still make sense. 

In the 3G era, the advantage of switching to Wi-Fi was speed. In the 4G era the advantage was cost. In the 5G era, the advantage could often be signal strength. 

 

But T-Mobile believes customers of its unlimited usage  5G service are starting to rely on the 5G network and not shifting access to Wi-Fi. 

In mid-December 2021, T-Mobile said “13 percent fewer MAX users are connecting to Wi-Fi, 80 percent more are hosting a Wi-Fi hotspot and their hotspot usage is up 20 percent on average during the weekends.”

That is not unexpected, as the leading mobile service providers shift users to higher-priced unlimited usage plans that eliminate the financial incentive to switch to Wi-Fi. 

In 2021, Wi-Fi represented as much as 46 percent of total global end user IP traffic, according to Cisco. Mobile networks supported about 17 percent of total end user IPtraffic in 2021. Fixed networks delivered nearly 53 percent of internet traffic in 2021, compared to the share delivered by mobile networks, at about 21 percent, Cisco says. 

Usage varies by market. In India, about 98 percent of total internet access uses a mobile device. Globally, mobile users consume as much as 60 percent of total data on fixed networks (Wi-Fi).

In recent years, U.S. mobile customers have spent about half their connected time on Wi-Fi (fixed network), not the mobile network . 

By 2023, U.S. mobile users might offload as much as 75 percent of data consumption to fixed networks, some in the Wi-Fi community believe. But much hinges on how consumers behave when they have unlimited usage plans, which might reduce Wi-Fi consumption. 

source: Cisco, WiFiForward 

It might also matter how mobile tariffs are shaped. Home broadband allows multiple users and devices to share a single account. As mobile plans move towards unlimited usage, and if multi-user plans create incentives for smartphones to remain on the mobile network all the time, and if indoor reception is not an issue, then more users might remain connected to the mobile network all the time. 

An Ericsson study found that 5G customers on unlimited-usage plans reduced their reliance on Wi-Fi. In markets such as the United States, Taiwan, Switzerland, Finland and South Korea, where a higher proportion of 5G users are on unlimited plans, 22 percent have decreased their home Wi-Fi usage, while 14 percent have stopped using Wi-Fi after upgrading to 5G, Ericsson found.

Older data (from 2016) shows the same pattern. A 2018 analysis suggested that unlimited-usage mobile data plans decreased use of Wi-Fi by about eight percent. 

source: Nielsen 

Motivations can change over time. In the 3G era, users switched to Wi-Fi because Wi-Fi was faster than 3G. In the 4G era, when 4G was generally faster than Wi-Fi, the switch to Wi-Fi made sense because it reduced mobile data plan usage. 

The 5G pattern is not so clear, at least not yet. Assuming the financial benefit of switching to Wi-Fi is not present, then speed, signal stability or other advantages could be decisive. 

5G Uptake Will be an S Curve

Even if the 5G networks could magically spring up fully-deployed, with no construction obstacles, there would still be a lag between availability and customer acceptance. The reason is that not all customers are early adopters 

Early on, innovators and early adopters drive take rates. For them, the value of better performance is enough to create demand, even in the absence of compelling new use cases or applications. 

source: Researchgate 

Novelty does not create demand for mainstream customers, who need a value proposition oriented around some practical value beyond bragging rights. Mainstream customers must see a solution to some existing problem.

In some cases, that problem might be “predictability of service charges” more than “speed” as such. “No overage charges” is a value people understand. In other cases the lure might be “no additional cost video streaming subscriptions.” In yet other cases the value might be the ability to “use all the features of my new phone.”

The point is that mainstream consumers need tangible benefits, and those benefits might not flow directly from “faster speed” claims. 

The concept of the S curve describes consumer adoption behavior,  product life cycles, suggests how business strategy changes depending on where on any single S curve a product happens to be, and has implications for innovation and start-up strategy as well. 

source: Semantic Scholar 

Some say S curves explain overall market development, customer adoption, product usage by individual customers, sales productivity, developer productivity and sometimes investor interest. 

It often is used to describe adoption rates of new services and technologies, including the notion of non-linear change rates and inflection points in the adoption of consumer products and technologies.

In mathematics, the S curve is a sigmoid function. It is the basis for the Gompertz function which can be used to predict new technology adoption and is related to the Bass Model.

I’ve seen Gompertz used to describe the adoption of internet access, fiber to the home or mobile phone usage. It is often used in economic modeling and management consulting as well. 

The S curve also fits and explains consumer adoption of new technologies.

Why Some Users Find 5G Unsatisfying

5G value is an issue for some users who have bought it, especially in some markets where low-band spectrum has been the way 5G is mostly experienced. But there arguably are reasons why user experience could be challenged even in markets where mid-band spectrum underpins 5G experience.

One reason is the difference between what users do--and what the networks must support--on fixed and mobile networks. Fixed networks are multi-use networks. So the obvious value in a fixed network setting is "speed" or "bandwidth" to support multiple simultaneous users.

That is not the case on mobile networks, where accounts are set up on a one device, one user basis. Even when there are multiple users on a single account, those users do not "share" a local access connection. So the advantage of "speed" is different on a mobile network.

There is no "sharing" of a single connection. Also, fixed networks support screens of many sizes. Mobile networks mostly support very-small screen devices. That shapes bandwidth demand.

Apps typically used on large screen or medium-screen devices further shape bandwidth demand. Entertainment devices such as 4K TVs will consume more bandwidth than standard-definition or high-definition viewing on very-small screens.

Mobile-connected devices supporting artificial reality are the exception, at the moment, but also are relatively rare. And even many of those use cases rely on a local Wi-Fi connection, not the mobile network.

Up to a point, bandwidth affects user experience. Just as surely, additional bandwidth does not improve experience, once a threshold is reached. Latency and jitter also matter, but users might not be able to discern such changes, or wrongly attribute the lack of perceived improvement to "bandwidth" issues.

But if 4G provides any evidence, 5G value is going to change over the lifespan of the network. 

The initial value will be “speed,” even if user experience is less changed than some will expect, even if the perceived value is the marketing value of 5G delivering data faster, irrespective of user experience value.

The value after a decade will be “new use cases” and apps, for consumers and business use cases. But that will take time. And consumers might well find there is "not much difference" between 4G use cases and new 5G apps. They have not been created yet.

The betting early on is that many--perhaps most--of the new use cases will come from enterprise, not consumer uses. 

After a decade or so, we are likely to have discovered new consumer apps as well. It just is hard to say what those mass deployed use cases will be. Perhaps nobody predicted the emergence of ride sharing as an important 4G use case. 

Few predicted turn-by-turn navigation would be important. And though streaming video and audio were foreseen, even those apps do not rely so much on “speed” as the creation of easy-to-use and popular streaming apps.

In fact, the rise of “mobile-first” apps does not depend, strictly speaking, on bandwidth improvements brought by 4G, though faster speeds are an enabler. 

That would not be unusual for a next-generation mobile network, up to a point. If nothing else, coverage is an issue, early on. Even a better network does not help if it is not “generally available.”

Complicating matters is the rollout of 5G during the Covid pandemic and many restrictions on “out of home” and “on the go” usage. Working or learning remotely, many users likely spend most of their time connected to home Wi-Fi. So even if 5G is faster, the amount of time any single user might use it is far more limited than under normal circumstances. 

Still, faster speeds should help, up to a point, with existing applications, as page loading on a 600-Mbps fixed network connection should provide some noticeable advantages compared to a 300-Mbps connection (especially in multi-user and simultaneous multi-device usage cases. 

Since 3G, the key user experience gain has been “faster mobile data access.” Sometimes that is tangible; but sometimes not so much.

An argument can be made that latency has even greater user experience impact on a mobile network. Beyond some relatively low point, additional speed might not improve user experience. We can debate what that threshold is, as it changes over time. 

If a consumer’s primary reason for buying 4G was a tethering experience closer to fixed network experience, the 4G advantage was immediately tangible. If the primary advantage sought was mobile web browsing experience similar to fixed network experience, then the advantage might well have been tangible. 

5G poses a bit of a tougher problem. When downstream 4G speeds are routinely in the 20 Mbps to 30 Mbps to 35 Mbps range, how much does experience change when 5G offers 165 Mbps? It should help, but how much?

It depends on what a user does on a phone. Web page loading will be faster, but how much faster? Ignore for the moment the authoring of a web page (optimized for mobile access or not; how well optimized). 

For fixed network access, faster access speeds have not necessarily meant that web pages are loading faster, for example. 

On mobile networks, connection speeds have improved, but mobile page load times tracked by have increased, according to the Nielsen Norman Group.

source: Nieslen Norman Group 

Of course, page and landing page loading times are not a direct function of access speed but perhaps largely an artifact of remote server performance. So access speed is not the only, or perhaps not even primary determinant of user experience. 

The build-out phase of a national next-generation network takes years, so coverage outside of urban cores will typically be an issue. In some markets, where low-band and millimeter wave frequencies have been the mainstay, users might not often find there is much mobile data performance difference.

Fixed Network Broadband Grows, Mostly in China

Even if mobile internet access remains the main way most humans use the internet, fixed broadband accounts continue to grow at a two-percent rate, according to Point Topic. 

source: Point Topic 

Where global fixed network broadband accounts number a bit over one billion, mobile broadband accounts are nearly seven billion, according to Ericsson. 

source: Ericsoon 

And much of the increase in fixed broadband is happening in China. 

source: Point Topic