5G

Marek’s Take: FWA is the first 5G success story

Marek's take

Fixed wireless access (FWA) is finally getting the respect it deserves. After years of being a last-ditch alternative for those living in areas with no other broadband options, FWA is now considered a competitive broadband alternative for those that want to cut ties with their cable provider. And with monthly rates of $50 or less (Verizon is currently offering a promotional price of just $25 a month with a bundled mobile plan), it’s no surprise that consumers are taking notice.

During T-Mobile’s 2Q 2022 earnings call with investors, Mike Katz, chief marketing officer at T-Mobile, said that two-thirds of the company’s FWA customers are coming from suburban and urban environments and are switching from cable broadband to FWA. The remaining one-third of T-Mobile’s FWA customers are rural customers where T-Mobile is the only high-speed alternative. 

T-Mobile added 560,000 FWA customers in 2Q and is well on its way to attaining its goal of having 7 million to 8 million FWA customers by 2025.  In fact, financial analysts queried T-Mobile executives about whether they thought the company could exceed that 2025 goal but Katz remained noncommittal. He said that T-Mobile will continue to expand the service, adding that the company is delighted with the consumer response to the product. “I think we are bringing to the market probably the real first 5G use case,” he said. “Everybody has been hunting for this thing. But in-home broadband, fixed wireless is here and it’s here to stay.”

And T-Mobile isn’t the only operator experiencing FWA success. Verizon also touted its FWA momentum, noting that it added 256,000 subscribers in 2Q, up from 194,000 in the first quarter. In total, the company now has more than 700,000 FWA customers.

During the company’s 2Q earnings call, Verizon CEO Hans Vestberg said that Verizon is adding FWA customers at a rapid rate and that network capacity isn’t an issue. Verizon’s FWA goals are a bit more modest that T-Mobile’s goals. The company has said it expects to have between 4 million to 5 million FWA customers by the end of 2025.

Cable’s changing its tune

A clear sign that FWA is having a “moment” is that the FWA subscriber gains are finally large enough to make the big cable players admit that the service is having an impact on their business. In March, Comcast Chairman and CEO Brian Roberts told investors at the Morgan Stanley Technology, Media & Telecom conference that FWA was an “inferior product” and that his company wasn’t seeing any consequences.  But just four months later during the company’s 2Q 2022 earnings call with investors, Roberts changed his tune and admitted that the FWA is contributing to the company’s flat broadband growth for the quarter.

“Today’s excess capacity in wireless networks is creating what we believe to be a temporary opportunity targeted at value-oriented customers,” Roberts told investors. However, he added that he still believes there are “significant long-term limitations” to FWA.

But perhaps the biggest sign that FWA is getting the attention it deserves is that many in the wireless industry are starting to refer to FWA as the premiere use case for 5G. “Fixed wireless access (FWA) networks are fast becoming a 5G success story,” said Tammy Parker, principal analyst at GlobalData. The research firm said that FWA is getting traction with consumers but also projected that cable operators and their hybrid-fiber coax networks will continue to dominate the U.S. broadband market for the next several years.

It’s hard to say whether this “moment” that FWA is experiencing in the broadband universe will have a long-term impact. GlobalData believes that FWA will only capture less than 10% of the residential broadband market by the end of 2027.  Nevertheless, if FWA can cause any disruption to cable’s broadband stronghold, it will be beneficial to the consumer, and to the wireless market.