Fixed wireless broadband provider Starry reports having its best quarter ever in Q1, but the COVID-19 crisis is having an impact, which is not uniform across its markets.
That’s according to MoffettNathanson Research, which caught up with Starry CEO and founder Chet Kanojia last week. The investment research firm has been following the company for a little over three years and has consistently taken an optimistic view on its prospects.
Starry had to temporarily scale back expectations in Boston, its first large market, because of the coronavirus crisis. It’s currently running at about 60% of pre-virus expectations due to the hesitancy of building owners to grant access to technicians, wrote analyst Craig Moffett in a report for investors. In other markets, however, such as Washington, D.C.; Denver; and Los Angeles, it’s seen little or no coronavirus impact.
“With or without coronavirus, however, broadband is a quintessentially local business,” he wrote. “And so, like every other broadband provider before them, Starry is finding that each market is different. In Los Angeles, for example, they are seeing lower market share than in Boston. Why? Because in LA buildings, tenants often park in underground garages and take elevators directly to their apartments, bypassing lobbies where Starry would otherwise stage field marketing like sign-up tables.”
New York City has been slow going, particularly in Manhattan, where Starry is often the third or fourth player in a building, but Brooklyn and the Bronx have been better, according to Moffett.
Triangulating from the various numbers the startup has and can disclose, “it sounds to us as though Starry will get to ~100K subscribers sometime around the end of the year,” he added. “For a company the size of Starry, that is an impressive milestone, and their performance seems to be accelerating.”
Starry’s baseband radio is based on 802.11 technology and it uses millimeter wave spectrum. The rest of the tech stack, such as front ends and antennas, for its point-to-multipoint system are developed in house.
MoffettNathanson’s recent check-in with Kanojia, who was the founder and CEO of online TV platform Aereo, served as a reminder that, whether wired or wireless, even the most successful technologies and business models are slow to make a dent in America. The analyst firm made the same observation years ago when Verizon launched FiOS and when Google created Google Fiber, which never even got to the low single digits of national market share.
“By any standard, Starry is succeeding,” Moffett wrote, noting Starry’s subscriber base is growing 10% a month and by all indications, its longer-term expectation of taking close to 30% of addressable market in cities where it has launched service is an attainable goal.
“Still, by our estimate they are the better part of a year away from reaching 1/10th of 1% national market share. No, Starry isn’t national (neither were Verizon and Google), so measuring them on a national standard might seem inappropriate. But our goal here isn’t just to assess the prospects for a company like Starry. It is also to assess the impact of companies like Starry on the broader market for broadband.”
Making a successful business offering fixed wireless services in metro areas historically has been a problem for some due to the economics, but Starry has said it figured out a way to get the equipment down to a level that makes it worth its while.
The company, which sells its service for $50 a month, is based in Boston and at one point expected to be in 16 major markets in 2018, but that didn’t happen. Its service currently is being offered in parts of Boston, Denver, Los Angeles, New York City and Washington, D.C. Moffett said it’s on the brink of launching in Reno and Las Vegas.