How Much Mobile Substitution for Fixed Network Home Broadband, and How Fast?

Observers continue to debate the importance of 5G fixed wireless as a driver of increased home broadband market share for Verizon and T-Mobile, as well as a cause of slower cable TV home broadband net additions.

Cable operators predictably deny that fixed wireless will prove a threat, arguing that hybrid fiber coax speeds are fast enough to stay ahead. But financial results posted by Verizon and T-Mobile suggest that fixed wireless already has proven to be a key driver of home broadband market share gains.

The issue now is the fixed wireless rate of growth, compared to new fiber-to-home additions. Despite cable executive denials, more observers believe FTTH and fixed wireless are going to eat into cable's market share over time. How fast that happens is an issue.

But there have been signs of mobile ability to substitute for fixed network service over the past five years or so.

Some studies show that users in 2018 often found 4G mobile internet access was faster than their home broadband using Wi-Fi. 

A key caveat here is that Wi-Fi device speed inside the home is not the same thing as the speed delivered to the home by the internet service provider.

source: Deloitte 

Another possible caveat is that it is not clear how many of the speed comparisons used home Wi-Fi compared to public hotspot Wi-Fi. It is almost certainly the case that home Wi-Fi runs faster than public Wi-Fi. 

Wi-Fi is slower than line speed for a number of reasons, so to note that 4G data access is faster than home Wi-Fi is not to say that 4G mobile networks perform better than ISP fixed networks. 

It is to say that a smartphone or other device able to use a 4G network might often experience faster speeds than delivered to that same device by the in-home Wi-Fi. 

This might be even more relevant for comparisons of home Wi-Fi experience compared to 5G mobile network experience, as 5G is going to be faster than 4G, once the networks are substantially or fully populated. Even as early as 2020, early 5G was faster than Wi-Fi, according to Opensignal.  

That also goes for 5G fixed wireless, as it is rolled out on a variety of frequencies globally. Generally speaking, if 4G was faster than Wi-Fi, there is a very good chance that 5G will be even faster, in comparison to Wi-Fi. 

source: Opensignal 

In countries that launched 5G early, 5G has proven to be faster than 4G and Wi-Fi, according to Opensignal. The sole exception was the U.S. market, where early 5G used low-band spectrum that does not support mid-band or millimeter wave speeds. 

source: Opensignal 

All of this is important for the development of 5G fixed wireless as an alternative to fixed line networks. In some markets, 5G fixed wireless is expected to be a key challenger to fixed network service. 

Fixed wireless has become a major driver of Verizon home broadband net new account additions. That also is true of T-Mobile home broadband net account additions in the U.S. market. 

In its first quarter of 2022, for example, fixed wireless supplied 85 percent of Verizon net home broadband account additions. 

For its part, T-Mobile got fully a third of total net home broadband additions in the U.S. market in 2021, and all of those accounts gained used fixed wireless. 

So 5G mobile and fixed wireless speeds will be a huge material factor in driving Verizon and T-Mobile home broadband market share gains, as well as a limitation on cable TV operator net additions as well.

How Fast is "Fast Enough?"

Determining what an acceptable internet access speed “ought to be” requires knowing how many users are sharing a connection, what they do when connected, how often they are connected simultaneously, the days of week and times of day when that happens. 

And it is hard to avoid the conclusion that most of the discussion we hear about “how fast is fast enough, ” when it comes to internet access and home broadband,  is a political or lifestyle or values statement, not a technology statement. 

The minimum amount of bandwidth to support one user is not the same as that to support four users, each connected simultaneously to a few devices. Even assuming every user requires streaming video support, most of the time, minimum bandwidth requirements are not that stringent. 

source: Minim

In fact, the single best rule might be the number of concurrent users and concurrent video streams that must be supported. Not many households will find they really require speeds above 500 Mbps, assuming latency performance and upstream bandwidth requirements are tolerable. 

All that said, would I willingly downgrade from my gigabit connection, which I know I really do not need, even back to 500 Mbps or 600 Mbps? No. But that is not based on any real performance advantage I can perceive. All of my requirements are, in principle, met by a connection operating at 25 Mbps. 

I haven’t had a connection running that slow in a few decades. My consumption keeps growing, but as a technology matter I cannot really argue that I generally “need” speeds as high as I pay for. 

 

source: Minim

In a sense, the behavior is many decades old, sort of done for the same reasons as I always have purchased mobile data usage buckets that exceeded my expected usage.

The logic is similar to the reasons people often buy “unlimited usage” consumption plans that typically exceed their anticipated usage. 

The value is predictability of payment amounts, not a fine-tuned analysis of price versus usage relationships. In fact, people tend to pay more than they need to, to assure predictability of the recurring payments. 

In a similar manner, having a speed “up to Xbps” means that when the network gets congested, I still can expect to have .6Xbps as a realistic experience. Obviously, what matters is the speed one actually experiences at the most-congested part of the day, when running the most demanding applications, with the most concurrent devices or users.

EU Looks at Allowing ISPs to Treat"Some" App Providers Unequally

Network neutrality has always been a slippery, impossible to define concept, notable more for its help or hindrance to business models of various participants in the internet ecosystem. Under the rubric of “treating all bits the same,” policymakers and advocates have prevented quality of service mechanisms for consumer internet access; blocked the access equivalent of “toll free” calls and generally imposed effective price regulation on internet access providers. 

All that despite the fact that application providers routinely pay money to ensure that their own bits are “not treated the same,” using content delivery networks to circumvent public internet routing delays and uncertainty. 

Now, in an ironic twist, European Union regulators are looking at imposing just such “unequal treatment of bits” on a handful of large application providers. 

Allowing ISPs to extract fees from some app providers for the privilege of allowing bits to be delivered over ISP access networks. 

One if almost forced to conclude that the network neutrality debate was never about equal treatment; equal access or anything else related to the delivery of bits over ISP access networks. 

It seemingly always was about the perceived revenue and cost advantages and disadvantages faced by various ecosystem participants. It is hard to reach any other conclusion given the extreme range of regulator opinions.

First, “equal treatment” to benefit app providers. Now, “unequal treatment” to benefit ISPs. In addition to all that, there are other political concerns, principally the impact of policies on domestic suppliers of apps, content or access. 

If we are honest we will stop pretending “network neutrality” had much to do with “protecting bits from discrimination,” and recognize it was a political move designed to help or hinder some parts of the internet ecosystem, just as it now--in reverse--is similarly designed to help or hinder ecosystem participants. 

In the latest incarnation, it is ISPs who need “revenue help.” The business simply is not growing in Europe, and ISPs seemingly have won the argument that it is they who need help, not app providers. 

source: ETNO

As often is noted, app providers have enjoyed revenue growth, while ISPs have seen their revenue shrink since the early 2000s. 

 

source: ETNO

The point is that network neutrality is shown to be a sham. The new proposals will impose unequal treatment of bits. It is the exact opposite of “net neutrality,” whatever that was supposed to be, and to some of us the concept never had integrity. 

The same people who argued for “equal treatment of all bits” also agreed that sometimes ISPs would have to treat bits unequally to preserve network performance. 

Maybe the better advice would be to stop picking winners and losers under the charade of some sort of “fairness” or “equal treatment.” It appears to be nothing of the kind. Instead, we have governments picking winners and losers for political reasons.

If You Hate Meeings, Do Not be a CEO

Frustrating though it might be, CEOs of larger organizations spend very little time with customers: about three percent, according to a survey conducted by Harvard Business School professors Michael Porter and Nitin Nohria in 2006. 

About 72 percent of CEO time was spent in meetings.

Broadly speaking, no more than 21 percent of CEO time was spent on anything connected with business strategy. About a quarter of time was spent on function or business unit reviews and another 25 percent on “people and relationships.”

About 16 percent of time dealt with “organization and culture issues.”

source: Harvard Business Review

Does Crypto Intrinsic Value Matter?

Some believe intrinsic value does matter, and crypto currencies do not possess such value. Others make the argument there is intrinsic value. 

It matters as crypto's role and value in coming Web 3.0 and metaverse use cases might hinge, to some extent, on user belief in such intrinsic value. 

The Digital Divide Will Not Always be a Problem

Scarcity--both real and imagined--drives the prices and perceived value of nearly all products and services. “Lack of” also drives the political agendas of virtually all organizations and entities who promote an agenda. 

Those organizations require resources to operate, and resources mean jobs, prestige and power. So what happens when a “problem” is essentially solved? Do organizations disband, or do they find some other “new problem” to work on, thus inviting continued support of the entity?

Almost always, the latter is chosen over the former. So we can virtually predict that, eventually, policy proponents are going to stop talking about the “digital divide” and move on to some other problem related somehow to “inability to buy broadband internet access.”

Already, many point to “digital literacy,” which is a demand issue, not a supply issue, as a substantial remaining problem. In other words, it is not the quality of the available broadband access that limits use, it is the skills of potential users. Faster broadband does not fix that impediment. 

But to the extent that generational differences exist, that problem eventually fixes itself. Younger generations are more comfortable with all new technologies than older generations, and as each generation passes, the “lag” evaporates. 

There will likely always be “differences” in available speed, latency, reliability or price between remote areas and urban areas, to be sure. Summer fruits and vegetables cost more, and are less fresh, in the winter. 

Still, at some point, internet access is going to be good enough that bottlenecks to experience and value will shift elsewhere in the ecosystem and value chain. 

Where servers are located; what customer premises gear is needed; how pricing and packaging models are crafted; which indoor transmission platforms are operating and processing speed and power could well determine whether internet apps, services and devices work at all or work properly. 

Most are now too young to have encountered it, but back in the 1980s global communications policymakers actually were concerned about how to create “voice access” platforms for most people, as “half the people have never made a phone call.” That might have been true in the 1980s or even 1990s. It no longer is true. 

We have “solved” the problem of humans having access to voice communications. We likewise will solve the “digital divide” in a meaningful sense: not defined as absolute parity of speeds, latency or cost per bit, but in the sense of “access” no longer being a barrier to usage. 

And that will lead a whole bunch of people and organizations to find some other new problem to solve.

Will Significant 5G Revenues Come from B2B? Maybe Not

The conventional industry wisdom is that incremental new 5G revenues will come from business customers, not consumers. The bad news is that, in some regions, those new business-related 5G revenues might be quite small, by 2025.

You would be hard pressed to find any observers who do not believe edge computing, private networks and network slicing will lift revenue for mobile operators over the next decade In the Asia-Pacific or any other region.

The only question is the magnitude of those increases. And that is where matters get tricky. Some forecasts suggest sharp drop offs in Asia-Pacific mobile revenue through 2025, compared to trends up to 2019. 

But most forecasts call for revenue in the range of $230 billion to $390 billion by about 2025, with total revenue--fixed and mobile--closer to $500 billion in the region. 

If 5G revenue earned by mobile operators in the Asia-Pacific region by about 2025 reach $24 billion, then 5G would represent between six percent and 10 percent of mobile operator revenues.

If one assumes that consumer mobile connections represent 90 percent of 5G revenue in 2025, and using the higher figures of $24 billion in 5G revenue, then edge computing, network slicing and private networks together would only represent perhaps $2.4 billion in revenue.

That is a small amount contributed by three new revenue sources. 

But some believe 5G might contribute less, perhaps contributing $14 billion in mobile revenues  by about 2025. In that case, 5G would represent between four percent and six percent of mobile operator revenues in 2025. 

In that case network slicing, private networks and edge computing would be negligible revenue contributors, generating perhaps 1.4 percent of mobile operator revenues. 

At such levels, the impact of changes in subscription volume, average revenue per account, increases in internet access revenues and market share changes will have far more impact on mobile operator revenues than network slicing, edge computing and private networks.