Why Fixed Wireless Generally Competes with DSL

According to Openvault data, about a quarter of all U.S. households buying home broadband services are customers of lower-speed services typically available on digital subscriber line facilities. 

Most observers would classify new fixed wireless offers as generally competitive with DSL services in terms of capacity (speed). According to Allconnect, fixed wireless services also are substitutes for DSL accounts in terms of price per Mbps. 

source: Allconnect 

In principle, that means fixed wireless will generally compete with DSL services in terms of customer demand, with some services, in some locations, possibly competing for the broad middle tiers of demand, with speeds in the 200 Mbps to 400 Mbps range. If fixed wireless is eventually able to supply 400 Mbps on a “generally available basis,” that suggests a market opportunity of up to half of the market, on a near-term basis. 

As with the whole market, typical speeds will have to keep climbing over time, as average and top speeds continue to climb.

Why Global Connectivity Revenue will Close to Double Over 10 years

Though executives and participants might prefer a higher rate of revenue growth (not inflation adjusted), a two-percent annual revenue growth rates, which is around consensus, still manages to approximate a doubling of revenue in a bit over 10 years.

The global connectivity services market represented $1.8 billion in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 6.2 percent (not inflation adjusted) from 2020 to 2030, according to Grand View Research estimates. 

Statista also forecasts revenue in about that range as well. 

In simple annual terms, that implies an annual growth rate just a bit under two percent, with growth close to doubling over the 10-year period (not inflation adjusted). To actually double in 10 years, a CAGR of about 7.2 percent is required. As with all such forecasts, some analysts predict slightly higher growth rates, while some project slightly lower.  

Given the relatively saturated nature of developed country markets, it might come as a surprise that growth rates in the U.S. market, for example, are nearly identical to global growth rates, as shown by Grand View Research estimates.

The issue is how much revenue growth can be gotten outside the mobility segment of the business, which in 2022 represented more than 76 percent of total service provider revenues globally. Consumer revenue represents about 60 percent of total, with “business” revenue generating about 40 percent of total revenue. 

Some observers believe that the share of business revenue will drive incremental revenue growth in the 5G and 6G eras. We will have to see. That 60/40 revenue split between consumer and business revenues has been consistent in both fixed and mobile segments for decades, varying more by geography (urban area versus rural; economically robust or not) than customer type. 

For all the hopeful talk about the internet of things driving new revenue, Grand View researchers see little chance that segment will grow very much between now and 2030. In part, that is because no matter how many devices are attached, with new subscription revenue, the revenue per connection is small, compared to a mobile phone connection. 

Also, there exist many other alternatives for connecting sensors and devices, including Wi-Fi, Bluetooth and specialized data networks. 

We also can see that little growth is seen for fixed network voice or subscription video services. 

To the extent private networks or edge computing drives new revenue, it is recorded in the fixed network access services category, which does show growth. 

Since about 1980, global revenue growth rates have slowed dramatically, despite the huge increase in global population using mobile phones. Mobile service subscriptions now represent 75 percent of total service provider revenue. 

Year	Annual Growth Rate
1980	10.2%
1981	8.4%
1982	6.7%
1983	7.3%
1984	8.2%
1985	9.1%
1986	8.9%
1987	8.6%
1988	8.3%
1989	8.0%
1990	7.7%
1991	7.4%
1992	7.1%
1993	6.8%
1994	6.5%
1995	6.2%
1996	5.9%
1997	5.6%
1998	5.3%
1999	5.0%
2000	4.7%
2001	4.4%
2002	4.1%
2003	3.8%
2004	3.5%
2005	3.2%
2006	2.9%
2007	2.6%
2008	2.3%
2009	2.0%
2010	1.7%
2011	1.4%
2012	1.1%
2013	0.8%
2014	0.5%
2015	0.2%
2016	-0.1%
2017	0.0%
2018	0.3%
2019	0.6%
2020	0.7%
2021	1.9%
2022	2.4%

Are Mobile Services and Home Broadband Really Recession Proof?

Are mobile services and home broadband now “recession proof?” Maybe “recession resistant” is a better characterization. A recession will temporarily halt revenue growth patterns for most suppliers. The bigger question is “how much?” and “how long” the dip will last. 

The probable answers are that growth will turn mildly negative, with that trend lasting perhaps “12 to 18 months. In a worst case scenario of a major and severe recession, the revenue growth dip might be more severe, but probably would not last any longer than a mild recession would cause. 

To be sure, this story is cyclical, not secular; short term rather than long term. The exception to the general trend is the widespread economic shutdown caused by the Covid pandemic, which arguably increased the level of spending, most connectivity suppliers would say. 

Cyclical trends are those which correlate to business cycles while secular trends tend not to correlate. The amount of money consumers spend on various types of products tends to be cyclical: up in good times, down in bad. 

Secular patterns tend to persist across business cycles, such as more spending or engagement with digital products; greater reliance on remote or cloud computing; greater reliance on e-shopping compared to place-based retail. 

As recession looms, we’ll see many more stories about how consumers and businesses are reacting to recessionary conditions. As virtually always is the case, discretionary spending will drop. 

And the issue always is whether mobile phone service, home broadband or other connectivity services are more discretionary or more essential. The historical data suggests mobile phone service and home broadband are more “essential” than “discretionary.”

In recent recessions, consumer spending on mobility and home broadband has dipped, but only slightly. On the other hand, a severe recession, such as happened in 2002 and 2008, will cause significantly more disruption, doubling or tripling the percentage declines. 

Product	Percent Change During Recessions	Percent Change in Buying Behavior for Prior Recessions
Mobile Phone Service	-2%	-5% in 2002, -1% in 2008
Home Broadband	-1%	-3% in 2002, -1% in 2008
Video Entertainment	-2%	-5% in 2002, -1% in 2008

So much depends on the severity of the coming drop, though some (a minority) observers believe it is conceivable no drop will actually happen. Most observers believe a recession will happen, and the issue is whether it is a mild or severe. 

Some might argue that mobile service and home broadband are “recession proof.” Some might argue “recession resistant” is a better characterization.