Rather suddenly, cable operators have found themselves facing new home broadband competition from Verizon and T-Mobile. In the second quarter of 2022, T-Mobile and Verizon collectively added 816,000 new fixed wireless home broadband customers, while Charter and Comcast collectively lost around 21,000 accounts.
That might not seem like such a big deal, but for the past two decades, cable operators have gotten almost all the net new account additions while incumbent telcos have lost share.
The issue for some is whether fixed wireless is a temporary or permanent solution. Long term, capacity is going to be an issue. That is why industry observers always argue that fiber to the premises is the long-term solution.
But long term is not an immediate solution for many. Verizon has no financial ability to overbuild fiber to home facilities to the 80 percent or so U.S. homes it does not already pass. Neither does T-Mobile have the financial ability to overbuild 100 percent of U.S. homes it does not already pass.
Fot both Verizon and T-Mobile, the present consumer home broadband market does represent an immediate chance to take market share from cable operators using their 5G nationwide networks.
The issue for both those firms is not “fixed wireless versus FTTH” but rather “fixed wireless versus doing nothing.” And the simple fact is that, for some time, 5G fixed wireless will provide enough capacity, at a reasonable price, to be attractive to a segment of the market, allowing Verizon and T-Mobile to add accounts, revenue and profit when building “out of region” FTTH simply is not an option.
In that sense, fixed wireless is best viewed as an immediate driver of market share gains in home broadband where neither Verizon nor T-Mobile have the ability to compete using FTTH facilities they own or might build.
The long term solution is not yet clear. Advancing technology might allow both firms to keep upgrading fixed wireless to continue to serve a segment of the market.
Long term, both firms face a problem in the fixed networks space, as capital to overbuild 80 percent to 100 percent of the U.S. home market is not likely to become available.
Perhaps the fixed network equivalent of mobile virtual network operators will eventually emerge at scale, allowing T-Mobile and Verizon to partner in some way with other entities to create or use FTTH facilities.
That is a “tomorrow” issue. The immediate issue is whether fixed wireless can shift a few points of home broadband market share.
By some estimates, U.S. home broadband generates $60 billion to more than $130 billion in annual revenues.
If 5G fixed wireless accounts and revenue grow as fast as some envision, $14 billion to $24 billion in fixed wireless home broadband revenue would be created in 2025.
If the market is valued at $60 billion in 2021 and grows at four percent annually, then home broadband revenue could reach $73 billion by 2026.
If we use the higher revenue base and the lower growth rate, then 5G fixed wireless might represent about 10 percent of the installed base, which will seem more reasonable to many observers.
Assuming $50 per month in revenue, with no price increases at all by 2026, 5G fixed wireless still would amount to about $10.6 billion in annual revenue by 2026 or so. That would have 5G fixed wireless representing about 14 percent of home broadband revenue, assuming a total 2026 market of $73 billion.
If the home broadband market were $134 billion in 2026, then 5G fixed wireless would represent about eight percent of home broadband revenue.
That is a serious incremental share gain for the likes of T-Mobile and Verizon, even if it leaves the long-term strategy undeveloped. To be sure, 6G will come, and will increase capacity at least 10 times over 5G. Using other tools, it might still be possible to boost fixed wireless capacity further, or to create mechanisms for offloading much mobile traffic to the fixed networks. *-/9+88/7
Comcast and Charter continue to claim that fixed wireless is not damaging its home broadband business, and that might well be partly correct. For any internet service provider, a customer move is an opportunity to gain or add an account, so lower rates of dwelling change should logically reduce the chances of adding new accounts.
But that is akin to retailers blaming “the weather” when they have a revenue miss. Weather does play a role, but most often is not the only driver of results.
In the second quarter of 2022, Comcast reported a net loss of customer relationships and “flat” home broadband accounts.
Fixed wireless might not be a “long term” solution for every customer. But it might remain an option for a significant percentage of customers, especially if the long-term solution for T-Mobile and Verizon is yet to be created.
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