Industry Voices—Madden: Fixed wireless access is not LMDS 2.0

kids mobile phones (pixabay)
Today, there's a whole generation of young people that will never pay a cable bill.
Joe Madden Industry Voices

Recently, many smart people have been telling me that fixed wireless access is simply LMDS all over again. During 1998 through 2002, LMDS was viewed as a great way to bring dial-up internet service to the next level, with 30 Mbps service to homes and apartments in urban areas of the U.S.   

At least 104 service providers launched initiatives to provide LMDS services. All of them failed to achieve the growth expected at the time, and almost all of them disappeared a few years later. Despite higher speeds, LMDS simply could not compete with DSL and cable alternatives that provided about 2 Mbps or so at competitive prices. People didn’t want to deal with the CPE when they already had a cable set-top box.

Today, mobile operators are grabbing the spectrum at 28 GHz (and 39 GHz), to offer fixed wireless access in many of the same areas. What has changed? What makes us think that fixed wireless at 28 GHz is different today?

Engineers will tell you that the data speed is much better now. FWA at 28 GHz can provide peak speeds in excess of 1 Gbps, with real everyday speed in the range of a few hundred Mbps. The peak rate sounds about the same, but the true average speed should be about 8X higher than we achieved in 1998. But this is not a compelling argument, because cable operators can provide similar speeds as they upgrade to DOCSIS 3.1. In this way, it’s still LMDS all over again with a more expensive wireless service competing with a cheap cable technology.

Don’t stop reading. This is where it gets good.

People have changed. In 2001, very few consumers considered “cutting the cord” with their cable operator. Everybody subscribed to cable packages to watch Showtime and HBO and sports content. Hey, if there was something good on HBO, there was no need to drive down to Blockbuster to rent a video.

Today, we have a whole generation of young people that will never pay a cable bill. My 20-something kids want Wi-Fi at home, but they would never dream of paying for a cable TV bundle. They pay for Netflix and Amazon Prime.

Even more importantly, they’ve been trained to watch video on demand. Try to tie a 25-year-old to the couch and force her to watch a TV show with commercials every 10 minutes. You’ll need thick rope because she will chew through it. The entire business model of content supported by linear advertising is coming apart. Sporting events are one exception, but the days of linear ads are nearing an end.

So, LMDS really failed because it was ahead of its time. People were not so dependent on the Internet in 1998 that they would add another monthly service to the household budget. In the '90s, nobody considered dropping their TV service, so LMDS was viewed as an “extra.” Today, FWA is a viable replacement for Cable, and a large percentage of the US population won’t miss HBO.

Sports and local news are still the reasons that people cite for keeping the TV service going. This too will change. The number of Americans that leave broadcast TV behind will continue to grow, and the NFL, NBA, and MLB will get on board. Then it will be “game over” for the Cable TV subscription.

Another reason that LMDS failed: 93 of the 104 licensees were small, disadvantaged businesses. Nobody put an overwhelming push into marketing LMDS as a major-league consumer service. Verizon is not a small company that you’ve never heard of. When Verizon offers FiOS to the market, they will use fiber to the home in many cases and use wireless in other cases. As a part of a nationwide offering, the marketing will be a lot more effective.   

In our forecast, we don’t have huge numbers for FWA deployment, but we do see FWA as an important tool for Mobile to steal the broadband market from Cable—by filling in areas where fiber and LTE are not enough.

Joe Madden is Principal Analyst at Mobile Experts LLC, a network of market and technology experts that analyze wireless markets. The team provides detailed research on Small Cell, Base Station, Carrier Wi-Fi, and IoT markets. Mr. Madden currently focuses on trends in 5G, IoT, and Enterprise markets for wireless infrastructure. Over 26 years in mobile communications, he accurately predicted the rise of Digital Predistortion, Remote Radio Heads, Small Cells, and the rise of a Mobile IT market. He validates his ideas with mobile and cable operators, as well as semiconductor suppliers to find the match between business models and technology. Mr. Madden holds a Physics degree from UCLA. Despite learning about economics at Stanford, he still obeys the laws of physics.