It is virtually impossible to argue with the proposition that the first new revenue stream of any significance enabled by 5G is fixed wireless internet access. Revenue from fixed wireless far exceeds revenues from other potential new revenue sources.
Revenues from 5G fixed wireless, in the near term, will dwarf internet of things, private networks, network slicing and edge computing, for example. 5G fixed wireless might, in some markets, represent as much as eight percent of home broadband revenues, for example.
None of the other potential revenue sources--network slicing, edge computing, internet of things, private networks--is likely to hit as much as one percent of total service provider or mobile service provider revenues in the near term.
As important as edge computing might be, as a revenue growth driver for mobile operators, revenue contributions might be relatively slight for some time. The same might be said for the revenue contributions made by internet of things services as well.
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.
If the home broadband market If the home broadband market generates $134 billion in service provider revenue in 2026, then 5G fixed wireless would represent perhaps eight percent of home broadband revenue.
Do you believe U.S. mobile operators will make more than $14 billion to $24 billion in revenues from edge computing, IoT or private networks?
Nor might private networks or edge computing revenues be especially important as components of total revenue. It is almost certain that global service provider revenues from multi-access edge computing, for example, will be in the single-digit billions ($ billion) range over the next few years.
Though a growing number of home broadband subscribers should have access to gigabit speed fixed wireless service eventually, present coverage is relatively nil.
T-Mobile and Verizon are expected to have 11 to 13 million total fixed wireless customers by the end of 2025. If total U.S. internet accounts are somewhere on the order of 111 milliion accounts, and if small business users account for 11 million of those accounts, then home users might amount to about 100 million accounts.
source: Ooma, Independence Research
If Verizon and T-Mobile hit those targets, their share of the home broadband market--counting only fixed wireless accounts-- would be about 10 percent. Significantly, most of those accounts will be gained “outside of region” for Verizon. That is significant as Verizon’s fixed network only reaches about 20 percent of U.S. households. Fixed wireless allows Verizon to grow its account base among the 80 percent of U.S. home locations that cannot buy Verizon fixed network service.
For T-Mobile, which in the past has had zero percent market share in home broadband, all of the growth is incremental new revenue. If those accounts add $600 per year in added revenue, then the 11 percent share of home broadband supplied by fixed wireless represents perhaps $6.6 billion in new revenue for the two firms.
That is a big deal, considering how hard it is for either firm to create a brand-new line of business that generates at least $1 billion in new revenue.
The other apparent takeaway is the size of the market segment that cares more about price than performance.
Segments exist in the home broadband business, as they do in many parts of the digital infrastructure and digital services businesses. In other words, even if some customers want faster speeds at the higher end of commercial availability, up to 20 percent of the market cares more about affordable service that is “good enough.”
The center of gravity of demand for 5G fixed wireless is households In the U.S. market who will not buy speeds above 300 Mbps, or pay much more than $50 a month, at least in the early going. T-Mobile targets speeds up to 200 Mbps.
During the third quarter, about 22 percent of U.S. customers bought service at speeds of 200 Mbps or below. In other words, perhaps a fifth of the home broadband market is willing to buy service at speeds supported by fixed wireless.
The other takeaway is that home broadband net account additions over the past year have disproportionately come on the fixed wireless platform, representing about 78 percent of all net new accounts.
To hang on to those accounts, Verizon and T-Mobile will have to scale speeds upwards, as the whole market moves to gigabit and multi-gigabit speeds. Some percentage of those upgraded accounts could come on some fiber-to-home platform. Even out of region, both firms could strike deals for use of wholesale assets.
But the bigger part of the retention battle is going to center on ways of increasing fixed wireless speeds to keep pace with the ever-faster “average” speed purchased in the home broadband market.
And that almost certainly means using millimeter wave spectrum to a greater degree. In the end, even using small cell architectures, there is only so much capacity one can wring out of low-band or mid-band spectrum.
As a practical matter, almost all the future bandwidth to support mobility services or fixed wireless is to be found in the millimeter wave regions.
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