FWA in the USA: Getting ready for Phase 2 – Light Reading

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Millions of new fixed wireless access (FWA) customers at Verizon and T-Mobile haven’t affected the performance of the operators’ respective 5G networks, according to new findings from network-monitoring company Opensignal,

“Despite adding more than eight million 5G FWA subs using 400+ GB per month of data since Q1 2021, the overall mobile network experience on T-Mobile and Verizon’s mobile networks has not been compromised,” Opensignal analyst Robert Wyrzykowski wrote in the firm’s new assessment of FWA technology.

Network speeds at T-Mobile and Verizon. (Source: Opensignal)

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Opensignal monitors wireless network performance through apps running on users’ phones, which can collect measurements via both user-initiated tests and automated tests.

In its new report, Opensignal found that areas in the US with a larger number of FWA customers actually showed better networking performance than areas with fewer FWA customers. Meaning, Verizon and T-Mobile offered increasingly speedy connections even in geographic locations with higher concentrations of FWA users.

“We would expect low-FWA penetration areas to see better mobile and FWA performance because of less load on the network. However, our data demonstrates the opposite trend,” Wyrzykowski explained.

Other Opensignal findings: Around 6% of urban Internet customers subscribe to FWA; in rural areas that figure is 7%. Some 74% of FWA customers pay less than $75 per month for their services. And 35% of FWA customers are between 18-34 years old, whereas that age range is 25% for cable.

Opensignal’s findings provide an important view into the FWA industry in the US as its subscriber growth begins to slow. For example, T-Mobile added 405,000 FWA customers during the first quarter, far less than the 541,000 FWA customers it added during the fourth quarter of 2023.

However, that slowdown is happening just as AT&T is beginning to ramp up its own 5G FWA offering. And both AT&T and T-Mobile recently fleshed out their FWA offerings for business customers: T-Mobile through a new partnership with Ericsson’s Cradlepoint and AT&T through one with with Cisco.

Ongoing threat to cable

“5G FWA services have been on a dramatic growth trajectory in the US, absorbing all broadband subscriber growth in the market since mid-2022 and amassing more than 600-700 thousand net adds per quarter,” wrote Opensignal’s Wyrzykowski. “This is despite the USA being a mature broadband market with nearly 97% broadband adoption and modest household growth.”

Indeed, the nation’s cable companies have recorded historic declines in their core Internet businesses amid the growth of FWA in the US.

The financial analysts at TD Cowen predict the US cable industry will collectively lose more than half a million customers in the second quarter of this year. They attribute that decline to FWA competition as well as other factors including the end of the US government’s Affordable Connectivity Program (ACP).

The situation for cable might get even worse if FWA providers like T-Mobile and Verizon decide to invest further into their fixed wireless businesses.

“The pain for cable may continue for longer than expected as the ability for cable to return to broadband subscriber growth may take longer (if ever),” wrote the TD Cowen analysts in a recent note to investors.

Others agree. For example, the analysts at S&P Global wrote that cable service providers in general have been losing value to wireless network operators despite cable’s efforts to bundle mobile services into cable offerings.

“Wireless players have the advantage over cable providers when capacity is available for FWA given the marginal cost advantage of bundling services on one network, which is likely to persist for at least the next 2-3 years,” the S&P analysts wrote in a recent report.

Expanding ambitions

Thus, all eyes are on T-Mobile and Verizon to see whether they can continue their FWA growth trajectories. Some believe they can.

“We’re committed to getting to 4-5 million FWA customers, and then we’ll come back and explain how we’ll grow beyond that,” Sowmyanarayan Sampath, EVP and CEO of Verizon’s consumer business, said last month.

Verizon has said it will ultimately gain 4-5 million FWA customers by 2025. T-Mobile expects to gain 7-8 million by that time.

But as that date approaches, some analysts expect both operators to set bigger goals beyond those figures.

“T-Mobile and Verizon will likely raise targets,” wrote the analysts at TD Cowen in a May report to investors.

The analysts noted that T-Mobile has already hinted at FWA ambitions beyond 8 million customers. In 2018, when it was preparing to acquire Sprint, T-Mobile promised to offer in-home Internet services to roughly 9.5 million American households by 2024, or about 13% of the country.

Similarly, Verizon officials have said that the operator has a significant amount of spectrum that it hasn’t yet put into use in its network, including millimeter wave (mmWave) spectrum. At the same time, data traffic growth on its network is starting to slow. Both of those trends could potentially pave the way for the operator to expand its FWA operations.

“With lowband, midband and 1,700MHz of millimeter wave spectrum, we have almost unlimited spectrum,” Verizon’s Sampath said at a recent investor event. “So we have all the tools available to us, and we are very confident we can meet that and more in our long-term design of the network.”

Already Verizon’s CEO said that Verizon would deploy a mmWave FWA product targeted at multiple-dwelling units (MDUs, or apartments) later this year.

How they’ll do it

There’s plenty of speculation over exactly how T-Mobile, Verizon and potentially AT&T might expand their network capacity for additional FWA customers.

One option might include installing external receivers on customers’ houses, a move that could strengthen the connection between a broadcasting tower and a customer’s home or office. Another option might involve the installation of mmWave equipment; already UScellular has boasted of 1 Gbit/s FWA services over mmWave connections at distances up to four miles (mmWave spectrum generally only supports short-range connections).

But there might be other options, according to the TD Cowen analysts. “We learned OEMs such as Nokia (a FWA vendor for T-Mobile) and Samsung (a FWA vendor for Verizon) are launching meaningful FWA capacity upgrades at tower sites at very affordable levels,” they wrote in a recent research note. “Essentially, if wireless carriers can affordably upgrade FWA tower capacity at the levels that OEMs are suggesting, the FWA performance and TAM [total addressable market] may grow far more than what the carriers are targeting today.”

For example, they wrote that Nokia and Samsung could increase the number of MU-MIMO “layers” in their radios from four to 16, or they could employ additional beamforming and site optimization technologies. They could also improve FWA customer premises equipment (CPE) to include eight receivers instead of four today.

However, most of those options – such as improved receivers or additional mmWave equipment – could require additional investments into hardware. Whether T-Mobile and Verizon believe that kind of investment would pay off remains to be seen.

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