What are the Natural Limits to Fixed Wireless Market Share?

T-Mobile says it is on track to reach seven million to eight million fixed wireless accounts in 2025, and perhaps as many as 12 million by 2030. 

If there are about 110 million to 125 million U.S. home broadband accounts, that suggests T-Mobile alone--which had zero market share of the home broadband market until recently--already might claim five percent of the market. 

we might estimate that cable TV internet service providers continue to hold the largest share, but with fixed wireless accounts growing substantially.

One of the odd realities of the U.S. internet access business is that--save for a recent Verizon statement, none of the big leaders of the internet access business actually ever says how many homes their networks pass. But Verizon recently noted that is passes 25 million homes. 

My own past estimates have suggested, out of a total of 140 million U.S. homes (higher than figures some use), that AT&T’s landline network passed 62 million. Comcast had (can actually sell service to) about 57 million homes passed.

The Charter Communications network passed about 50 million homes, the number of potential customer locations it can sell to.

I had estimated Verizon homes passed might number 27 million, which is higher than the 25 million Verizon now says it passes. 

Lumen Technologies never reports its “homes passed” figures, but likely has 20-million or so consumer locations. 

Of course, if one uses the lower 110 million to 125 million figures, then T-Mobile’s share might be higher. It never is very clear whether reported “home broadband” figures include small business locations or not, but most such reports probably do include small business accounts. 

My own past estimates have pegged U.S. homes in the 140 million range based on estimates by the U.S. Census Bureau. As a practical matter, at any given point in time millions of those locations are not part of the cabled home broadband market.

Some units are vacation homes are unoccupied most of the time. Other units are fully unoccupied and therefore not candidates for home broadband services. Some units are boats, trailers or other locations not easy or possible to serve using cabled networks. 

Also, some units are so remote it is economically unfeasible to reach them by a cabled network at all. That might be up to two percent of all U.S. homes. 

AT&T, for example, reports revenues for mobility, fixed network business revenues and consumer fixed network revenues from internet access, voice and other sources. But those are traditional financial metrics, not operating indices such as penetration or take rates, churn rates and new account gains. 

source: AT&T 

Nobody seemingly believes the same effort should be made to measure the number of home broadband provider locations or dwellings reached by various networks. Better mapping, yes. Metrics on locations passed? No. 

And yet “locations passed” is a basic and essential input to accurately determine take rates (percent of potential customers who actually buy). That input matters quite a lot to observers when evaluating the growth prospects of competitors, even if that figure does not matter much for policymakers, who mainly care about the total degree of home broadband take rates, on an aggregate basis. 

The U.S. Census Bureau, for example, reported some 140.5 million housing units housing units as part of the 2020 census. The estimate for 2021 units is 142.2 million units. Assume 1.5 million additional units added each year, for a 2022 total of about 143.6 million dwelling units. 

Assume vacancy rates of about six percent. That implies about 8.6 million unoccupied units that would not be assumed to be candidates for active home broadband subscriptions. The U.S. Census Bureau, though, estimates there are about 11 million unoccupied units when looking at full-time occupied status. That figure presumably includes vacation homes.

Deducting the unoccupied dwellings gives us a potential home broadband buyer base of about 132.6 million locations. 

That has implications for the theoretical maximum market share any of the leading providers might claim. Depending on one’s choice of the base of addressable homes, and keeping in mind there is overlap between at least one of the cable and one of the telco providers in virtually every territory, Comcast and AT&T are best positioned to lead share statistics, in some future market where skill and resources are full deployed (telcos have largely built or acquired fiber-to-home facilities, for example), simply because their networks pass the most homes. 

That does not speak to actual market shares; only potential share were any particular provider to take 100 percent share of the market within its cabled network footprint. 

ISP	Homes Passed	Total Homes Low	Total Homes High	Max Homes Passed Low	Max Homes Passed High
Comcast	57	110	140	52%	41%
Charter	50	110	140	45%	36%
AT&T	62	110	140	56%	44%
Verizon	25	110	140	23%	18%
Lumen	20	110	140	18%	14%
T-Mobile	(not yet applicable)

T-Mobile’s initial foray into cabled networks is important, in that regard, but the potential share stats will not be significant for quite some time, given the small number of homes T-Mobile cabled networks could reach. 

For T-Mobile, fixed wireless is the key to its home broadband share gains. Fixed wireless remains important for Verizon Fixed wireless might become important for AT&T. 

The point is that only AT&T has potential to take significant share in the overall home broadband market, based on its extensive homes passed footprint. Only Comcast and Charter are in the same league. Verizon and Lumen, no matter how well they do in their regions, do not pass a similar number of U.S. homes. 

In principle, T-Mobile gains will be limited by its use of fixed wireless as the primary platform, as that platform appeals to the value portion of the market, for the most part (customers purchasing service at speeds no higher than 200 Mbps). 

Right now, that means T-Mobile’s fixed wireless service, itself limited by T-Mobile only to regions where it has excess capacity, is not available to the up-to-20-percent of the U.S. home broadband market. The T-Mobile addressable market is “homes content with access speeds no higher than 200 Mbps” and further reduced by T-Mobile’s own unwillingness to offer fixed wireless home broadband “everywhere.” 

T-Mobile and Verizon should continue to take market share for some time. Eventually, though, the market segment most attracted to fixed wireless will saturate, leaving the bulk of competition to the cable HFC and telco FTTH facilities. 

In principle, fixed wireless speeds can grow over time, as more spectrum is made available or network architectures move to smaller cells, but there remain physical limits to either of those strategies, especially since the key revenue driver remains mobile device service.

How Much Will ACP Demise Affect Home Broadband?

It is not unusual to see estimates of U.S. households that will “lose their home broadband service” because a particular subsidy program is out of funding at about six million homes, or roughly 25 percent of households that had used the ACP subsidy, as estimated by researchers at Maravedis, for example. 

According to the Federal Communications Commission, some 21 million ACP accounts were in service in December 2023. 

The issue then is how many of those households will find some other way to obtain home broadband, as was the case before the Affordable Connectivity Program was funded. In other words, users of ACP subsidies often had already been buying home broadband service, or had chosen to use their smartphones, before the ACP was available. 

So the end of the ACP subsidy does not automatically mean all or most of those who used the program will simply stop buying home broadband services. By way of reference, it has been estimated that “low-income households” with less than $30,000 a year in income had home broadband buy rates in the 70-percent range before the ACP was funded. 

source: Pew Research

Also, according to Pew Research estimates, about 15 percent of U.S. adults say they rely on their smartphones to access the internet, though such practices are about 27 percent of adults with incomes less than $30,000 annually  and about 19 percent of adults with incomes less than $50,000 but at least $30,000 annually. 

 

source: Pew Research

By implication, perhaps 46 percent of U.S. adults with incomes less than $50,000 annually rely on their smartphones for internet access instead of buying home broadband. 

Keep in mind, though, that home broadband is purchased “by the household” while “smartphone internet access” is purchased by the person. 

So 86 percent of U.S. adults with incomes of $30,000 or less are estimated to use internet access services by some means, while 91 percent of U.S. adults with incomes of $30,000 to $50,000 have internet access. 

In total, between 93 percent and 95 percent of U.S. homes purchase home broadband services, according to Pew Research estimates.  

If one assumes that it was primarily the adults with annual incomes of less than $30,000 annually that were the bulk of the ACP subsidy recipients, and if ACP accounts numbered about 23 million households, with an average household density of about 2.5 persons, that suggests as many as 57.5 million U.S. adults might have been using the ACP (some of the household members were younger than 18). 

The Federal Communications Commission survey of ACP recipients in December 2023 said ACP recipients numbered 21 million. The FCC survey found that mobile-only service was used by 25 percent of survey respondents; 30 percent had both mobile and home broadband access and 23 percent already had home broadband service. About 22 percent reported they had no internet access prior to the ACP. 

The FCC survey also found that 11 percent of the “had no internet access service” respondents also said they had no need to access the internet. And more than 80 percent of those reporting no pre-ACP internet access said they used access services in some other way (library, school, business or friend’s account). 

Using the FCC’s 21 million ACP account figure, and subtracting the 11 percent of respondents who said they had no need to use the internet, perhaps 2.5 million of the ACP accounts were homes that wanted to use the internet and did not have a home broadband service prior to the ACP.

On the other hand, more than 50 percent of respondents who already had mobile internet access before the ACP was available said they used the subsidy to reduce the cost of mobile service they already had, and did not add a home broadband service. But a significant percentage (about 38 percent) said they did add home broadband using the ACP benefit. 

About 84 percent to 85 percent of respondents who already had some form of internet access used the ACP to reduce the cost of their existing plans. 

None of that is to minimize the remaining portion of the U.S. adult population that does not buy internet access or home broadband. But consumer choices also play a role. 

The whole point of public, school and business access is to allow people to use the internet without buying a personal subscription. Some consumers make rational choices not to purchase home broadband, instead using their mobile connections or free access of some sort.

Not every statistical artifact is the result of invidious action or circumstances.

What is StreamSaver's Business Purpose?

StreamSaver is a new streaming bundle including Peacock, Netflix, and Apple TV that available exclusively to Xfinity customers, in the same way that Xfinity mobile services are only available to Xfinity customers. 

But it might be reasonable to suggest the new bundle will boost Peacock and Apple TV market share by only single digits.

Netflix, Amazon Prime are the clear leaders leaders, with Disney (Disney, Hulu, coming ESPN service) poised to emerge at the top as well. All the others remain well into secondary or tertiary roles, and the new bundle likely cannot move the needle very much.

Of course, Comcast might see the value not so much in Peacock market share growth (Comcast owns Peacock) but in the value of customer acquisition and retention for its overall subscription businesses (mobile service, home broadband, linear TV).

As with Comcast's mobile phone service, the new bundle can be purchased only by existing Comcast customers (home broadband or linear video service). So the effort is primarily to increase the value of Comcast services.

As often is the case with bundles, the value is partly the price. The advantage of product bundles for the end user (aside from the bundles of features) is almost always the lower price. Streamsaver features the ad-supported versions of the services at $15 per month, where the a la carte prices of those services cost between $6 and $10 a month each.

A reasonable question is how many accounts, and how much revenue, that new service could attract.

Perhaps the easiest assumption is that Xfinity customers who already buy Peacock, Netflix and AppleTV+ will be most inclined to switch. Perhaps next most likely to adopt are Xfinity customers who already buy one or two of those services (Netflix as the presumed anchor and leader) and who can be convinced to the other services. 

The other issue is that the new bundle can only be purchased by Xfinity customers buying either home broadband or Xfinity linear video services. And that means the bundle can likely only be considered by people living in roughly half of U.S. homes. 

The potential market issues can be illustrated by Comcast’s similar approach to selling mobile phone service. 

The context is that Comcast will only sell the bundle to its existing fixed network customers. Since the Comcast fixed network might only reach 45 percent of U.S. dwellings, that puts an upward limit on accounts. 

Then the issue is how much market share Comcast can take from the mobile market leaders (Verizon, AT&T, T-Mobile) that collectively have about 97 percent of the installed base of customers. 

In the third quarter of 2023, Comcast’s Xfinity mobile service had about six million accounts, with revenue growth near 25 percent per year. 

According to the CTIA, there are 523 million mobile devices in the U.S. market with 97 percent of adults owning a mobile phone. Using a (definition of “adults” as those 18 or older, the U.S. Census Bureau estimates that in 2020, adults represented 78 percent of the total population, or 258.3 million people.

If 97 percent of those people have mobile phones and service, that implies something on the order of 250.55 million accounts. If correct, Comcast has an installed base of about two percent of the market. 

The U.S. Census Bureau estimates there were around 140.7 million housing units in the United States in 2020, about 90 percent occupied. So assume dwellings with people living in them at about 126.6 million, with an average occupancy of 2.5 people, for a total of 316.58 million potential mobile accounts. Assume 97 percent have such accounts, for an implied subscriber base of around 307 million, excluding separate business accounts. 

So the installed base of accounts might range from 250 million to 307 million. Assume Comcast’s network passed about 57 million homes (including small business accounts, that figure could reach 80 million locations, by some estimates. Assume it continues to sell exclusively to its own customers. Assume that its installed base of customers is about 55 percent of homes passed (customers buying internet access or video services). 

That suggests terminal adoption ranging from 31.4 million to 44 million locations. If each location features 2.5 accounts, that implies a theoretical terminal customer base of perhaps 78.5 million to 110 million accounts. 

Those figures are the theoretical maximum, keeping in mind that the leading mobile service providers today have installed bases in the 30 percent range each. According to Statista, in May 2023, mobile market shares were:

Verizon: 34.9%

AT&T: 32.2%

T-Mobile: 29.5%

Other Carriers: 3.4%. 

Many observers believe Xfinity therefore will not reach terminal share as high as 55 percent, even within its own service territory, as its fixed network reaches perhaps 45 percent of occupied homes. So with the present policies, Comcast cannot sell to 55 percent of the market. 

With those conditions, were Comcast to reach relative parity with any of the leading mobile service providers, it might hope to reach a ceiling of about 14 percent total market share (assuming 30 percent as a reasonable share within its sales territory, representing 45 percent of locations). 

The new streaming bundle will face the same geographic limitations as does mobile service. On the other hand the streaming market still is growing, and is not mature, as is mobile service. And, obviously, the attraction of the bundle--for Peacock and AppleTV--is the potential to increase share in a market dominated by Netflix, Amazon Prime and Disney. 

Streaming Provider	Estimated Market Share
Netflix	32%
Amazon Prime Video	22%
Hulu	14%
Disney+	12%
Other (HBO Max, Apple TV+, Peacock, etc.)	20%

But the bundle also increases the range of products and value for Xfinity customers. Right now, it is hard to say whether ultimate value comes from growing Peacock share or increasing the value of the Xfinity service overall (reduced churn, for example) or serving as a means of supporting higher revenue per account. 

It might be reasonable to assume all three sources of value will be in play. There are lots of moving parts, though, as most of the other leading or contending streaming firms also are moving to create bundles. 

The coming Disney and Warner Bros. Discovery bundle combines Disney+ with Hulu (including both ad-supported and ad-free options) and Warner Bros. Discovery Max content. 

Also, a new sports streaming service featuring content from Disney (through ESPN), Fox, and Warner Bros. Discovery, Venu Sports, also is launching. Unknown at this point is whether the coming ESPN streaming service will be available as part of that bundle. 

The differences are that StreamSaver can only be purchased by Xfinity customers. The other bundles can be bought by any U.S. consumer.  

Still, the streaming bundles seem to suggest that Netflix and Disney could emerge as the tentpoles of the business. 

Private Equity, Overbuilder and Telco FTTH Payback Models are Very Different

Firms backed by private equity have different business models than other long-term operators of connectivity assets. PE-backed firms aim to create value (typically double the asset value within seven years) and then sell the assets. 

That is a different model than used by connectivity service providers who operate for the long term, where fundamental issues of free cash flow, revenue growth and profit, as well as the ability to pay dividends, are the key constraints. 

And so it is with investors in fiber-to-home assets. 

Back in the heady days of 1996, when the Telecommunications Act of 1996 became law, business models for firms providing connectivity services changed in a big way. For legacy providers, maintaining market share became the key issue. For attackers, gaining share became the obvious key issue. 

Beyond that, the imperatives were different. Legacy providers, operating their businesses for the long haul, could not adopt the “fast growth rather than profits” models as used by many attackers. At a time of “easy money” and “we want you to grow fast” attitudes of key investors, that made sense for attackers.

And, as has been true for many software startups, long-terms operating profits were not the goal. Instead, fast growth in a “hot” area was the objective, since such firms had reasonable expectations they would simply be bought out at some point before they ever reached “terminal value.”

That, at least, is what one has to assume when looking at the costs of FTTH networks and costs to actually connect customers and earn a profit on those services.

The reported cost per-home-passed (CPHP) for underground FTTH deployments ranged from $1,600 to $2,600, according to a recent estimate by Cartesian researchers. The CPHP for aerial deployments was lower than those of underground, ranging from under $700 to $1,500 for respondents in suburban and urban environments, and $1,300 to $2,700 in more rural areas. 

source: Fiber Broadband Association 

Actually connecting a paying customer adds another $600 to $830 in drop costs. 

source: Fiber Broadband Association 

So the per-home cost of serving a paying customer includes an attributed cost of building the network; an assumption about take rates and then the cost of the drop and installation; plus operating and marketing costs. 

Take rates matter. At a 50-percent take rate, for example, the per-customer cost of the network can range from $2,600 to perhaps $5,200, with an additional $600 to $800 in drop costs, for a per-customer network cost ranging from a “best case” of perhaps $3,200 up to perhaps $6,000. 

But that is just the network platform. One would have to add in operating and marketing costs, plus any debt service and loan principal repayments. Operating and marketing costs might range from about $210 per year to $800 per year, per customer, according to some estimates. 

Cost Category	Low Estimate ($/year/subscriber)	High Estimate (/year/subscriber)	Sources
Network Infrastructure	$100	$500	FTTH Council: $200-$300,  Deloitte: $300-$500
Operations & Maintenance (O&M)	$25	$75	FTTH Council: $40-$60. Analysys Mason: $25-$35
Customer Acquisition (CAC)	$50	$150	BroadbandNow: $50-$100, Analysys Mason: $60-$150
Customer Care & Billing	$25	$50	Analysys Mason: $25-$35,  Leichtman Research Group: $30-$40
Marketing & Sales	$10	$30	Analysys Mason: $10-$20,  Leichtman Research Group: $15-$25
Total Operating Cost	$210	$805	Sum of individual ranges

And one might have to add interest charges and eventual debt principal repayment in addition to those charges. 

And there is a possible additional range of investments as well. Some firms must first acquire copper-based legacy telco assets first, before starting the FTTH upgrade, either to own and operate over the long term, or to sell the assets in five to seven years. 

Transaction	Date	Buyer	Seller	Asset Type	Homes Passed (M)	Price (USD Billion)	Cost per Passing (USD)	Source
Brightspeed - Lumen assets (20 states)	Oct 2022	Brightspeed	Lumen	Fiber	0.3	3.0	10,000	Reuters
Consolidated Communications - NewWave Communications	Aug 2022	Consolidated	NewWave	Fiber	0.18	0.65	3,611	Fierce Telecom
Windstream - MetroNet Holdings (FL)	Aug 2022	Windstream	MetroNet	Fiber	0.06	0.28	4,667	Fierce Telecom
Frontier Communications - Verizon (WA, OR)	Dec 2021	Frontier	Verizon	Mixed (Fiber & Copper)	0.14	1.05	7,500	Fierce Telecom
Allo Communications - Lincoln Telephone & Telegraph	Nov 2021	Allo	Lincoln	Mixed (Fiber & Copper)	0.11	0.21	1,909	TelecomTV
Ziply Fiber - US Cellular assets (WA, OR)	Oct 2021	Ziply	US Cellular	Fiber	0.12	0.51	4,250	Fierce Telecom
CNSL - Searchlight Investment	Jan 2020	Searchlight	CNSL	Mixed (Fiber & Copper)	0.71	0.425	600	CNBC

In many cases, the capital investment to acquire assets is equal to, or more than, the cost to add the FTTH upgrade. But that’s where the business case lies. If one assumes a copper asset can be purchased for $600 to $800 per passing, but then an upgraded FTTH asset can be sold for $5,000 to $10,000 per passing, that is the business case for making all the investments in FTTH. 

It might still be a difficult business case for a shorter-term owner, but “buying copper assets; upgrading to FTTH and then selling” can work. 

The payback for longer-term operators always has been equally challenging, if not more challenging, and has gotten arguably tougher as total account revenues including voice and video entertainment have dwindled, forcing the payback model to be based on home broadband alone. 

The main point is that FTTH payback models for private equity investors and service providers are quite distinct. What makes sense for a PE firm might not always make sense for a legacy fixed network service provider or an “overbuilder.” 

That is perhaps one reason why GFiber (owned by Alphabet) has not purchased copper telco fixed network assets before upgrading them. As with other “overbuilders,” GFiber has simply built its own greenfield FTTH networks from scratch.