There's no doubt that stuck-at-home Americans are generating record levels of Internet traffic while they work, learn and entertain themselves online.

However, what's not clear is whether any of that additional traffic is spilling onto the nation's 4G and 5G cellular networks, and what that will mean for operators and vendors in the space.

After all, most homebound users are presumably within range of their home Wi-Fi network, which typically routes all of their Internet traffic – be it from a cellphone or a connected TV – across the network of their wired Internet service provider. Thus, if users don't venture out at all, they may not put any traffic at all onto a 4G LTE network or a 5G network (if they're one of the few with a 5G phone).

Indeed, some research backs up this scenario. "On Xfinity Mobile, we see a 19% decline in LTE data usage and a 49% increase in mobile data usage over Wi-Fi," Comcast wrote in its COVID-19 traffic report last week. The company's Xfinity Mobile service piggybacks on Verizon's LTE network, but defaults to Comcast's Wi-Fi network when users are at home.

This important statistic is leading some Wall Street analysts to warn that cellular operators like AT&T and Verizon could actually delay some of their planned 4G and 5G network upgrades.

"Wireless network utilization in the US is actually down since COVID-19 as consumers shelter-in-place at home, where they are now predominantly connecting their wireless devices through their wireline broadband network via Wi-Fi. To this point, we'd remind investors that voice calls (using VoLTE), text messages, and the use of apps/web can all occur over Wi-Fi," wrote the analysts at Wall Street research firm Cowen in a note to investors Monday. Partly as a result, they warned that wireless network operators could delay their investments into cell towers owned by the likes of Crown Castle, SBA Communications and American Tower.

Other Wall Street analysts offered similar views.

"On the consumer front, while we don't expect large numbers of consumers to cancel their wireless service, we do believe that, on the margin, some will decide that, if they aren't mobile, then they don't need a mobile subscription. In addition, economic pressures will likely limit new line growth, as lines that might be considered a luxury ... are deferred to help lower household expenses," wrote the Wall Street analysts at Evercore in a Sunday note to investors. With that backdrop, the analysts now expect US wireless network operators like AT&T and Verizon to collectively add just 1.3 million new postpaid phone customers over the course of 2020 – that's down from their prior, pre-pandemic expectations of fully 6.1 million.

On the other hand
The notion that cellular traffic is falling flies against some of the numbers provided by the likes of T-Mobile and the CTIA, the wireless industry's trade association. For example, T-Mobile's network chief said usage of homeschooling tools like Google Classroom and Khan Academy are up 167% on the operator's network, while collaboration tools like Slack and Webex are up 137%.

Similarly, numbers from the CTIA show that data traffic across US wireless networks has been growing during COVID-19.

Figure 1: CTIA shows rising traffic on US wireless networks when compared with traffic before the pandemic. Click here for a larger version of this image.
(Source: CTIA)

However, a CTIA representative noted that the association's numbers, derived from its operator members, aren't necessarily comprehensive. "Some sources of information are using a year-over-year baseline, some sources aren't even that specific. Also important to note that our numbers highlight the range of what the four members [Verizon, AT&T, T-Mobile and U.S. Cellular] provide, highest and lowest of that change," wrote CTIA's Jilane Rodgers Petrie in response to questions from Light Reading.

At issue could be the difference between a rise in the usage of specific services, such as videoconferencing and voice calling, and an overall rise in traffic. Further, each smartphone user's connection can be handled differently: Some smartphone users with unlimited data plans may not may not have ever connected their phone to their home's Wi-Fi, while some cellular operators may not route voice calls or text messages through a home Wi-Fi network.

For its part, the FCC reported that Internet traffic in the US has risen about 20% to 35% on fixed networks and about 10% to 20% on cellular networks in recent weeks.

Getting more spectrum anyway
That said, the pandemic has clearly caused concern among mobile network operators, even if it hasn't necessarily generated huge amounts of traffic. Verizon, AT&T, U.S. Cellular and T-Mobile are among the operators that have temporarily borrowed spectrum from other companies and put it to use. The FCC touted this unprecedented development – one that requires agency approvals – as one of the ways it is working to keep Americans connected during the pandemic.

Importantly, T-Mobile recently moved to make its temporary spectrum agreement with Columbia Capital a little more permanent. As noted by the Wall Street analysts at LightShed Partners, the company inked a three-year lease agreement for Columbia Capital's 600MHz holdings. Terms of the deal were not disclosed.

Columbia, a venture capital firm, has long dabbled in FCC spectrum auctions, having purchased some of its 600MHz spectrum during the FCC's 2017 auction and the rest from AT&T in 2018.

Interestingly, T-Mobile hinted that it could use Columbia Capital's spectrum for its in-home broadband offering.

"By eliminating the speed and capacity differential between mobile and in-home wired broadband, T-Mobile US's robust, low-priced 5G network allows millions more Americans to 'cut the cord' and use their mobile wireless service for all of their broadband needs both inside and outside the home, eliminating a costly wired broadband bill each month," T-Mobile wrote in its FCC application to lease Columbia's spectrum, as noted by spectrum-tracking company AllNet Insights & Analytics.

The LightShed analysts also speculated that T-Mobile will ink a similar three-year leasing agreement with Dish Network, another major owner of 600MHz spectrum licenses.

While the exact effect of the pandemic on America's wireless networks is somewhat unclear, many analysts believe that the situation will ultimately hasten people all over the world to expand their digital lives. And that trend in turn will drive operators to invest more in their networks, whether that's a fiber network, a cable network or a 5G network.

Both AT&T and Verizon are scheduled to report their first quarter results this week, and company executives may then offer further insights into their short- and long-term networking plans. Verizon has already announced it will increase its network spending by $500 million this year, though the operator doesn't provide details on exactly how that money will be spent.

"This week we begin Q1 earnings," Wells Fargo Analyst Jennifer Fritzsche wrote in a note to investors over the weekend. "In almost 25 years of covering the Communications Services space I feel confident in saying these will be the most unusual calls we have EVER heard – as so much is unknown."

— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano