Can fixed wireless leverage rural successes into urban expansions?Can fixed wireless leverage rural successes into urban expansions?
Already around 7 million Americans use fixed wireless Internet services. But they're mainly in rural areas. Can providers expand into suburban and urban areas to capture a $20 billion opportunity?
February 4, 2021
Fixed wireless access (FWA) technologies, including those built on the 4G standard, have proven successful in some rural markets. After all, a fixed wireless network can sometimes be constructed for a fraction of the cost of a wired network.
Indeed, according to the Wireless Internet Service Provider Association (WISPA), there are thousands of small fixed wireless operators around the US serving a total of around 7 million Americans, mostly in rural areas.
However, the jury is still out on whether fixed wireless technologies, including those running on the 5G standard, can be successful in suburban or urban areas. Wired networks are often widely available in such locations, and wired providers are typically keen to swat down competition from wireless upstarts with aggressive pricing promotions and speed upgrades.
Nonetheless, a significant and growing number of companies are making efforts to tackle this urban fixed wireless conundrum. Verizon is perhaps the most notable entrant, but others involved in the space include Starry, WeLink, Google's Webpass, Common Networks and, potentially, T-Mobile.
Whether they will be successful remains to be seen.
Moving to the big city
"We do get a strong contingent from a number of urban providers," WISPA's Mike Wendy told Light Reading. "We're building our association around this growth."
Wendy said WISPA, a trade association for fixed wireless providers, had been primarily focused on operators in rural areas, but is now seeing growth among members tackling suburban and urban areas. "We're becoming a more ecumentical association," he said.
For example, Wendy pointed to DC Access, a fixed wireless Internet provider in his home city of Washington, DC, that provides service to around 50,000 people, according to BroadbandNow.
"They're working hard to break that [urban market] open. It's not an easy job. You've got to give it to them," Wendy said. Fixed wireless technologies and business models have been maturing to the point where such offerings can be competitive in urban markets where typical Internet speeds can reach up to 1Gbit/s, explained Wendy. However, he noted that incumbent wired providers like Comcast and Charter Communications can put up a stiff fight.
There have been some noteworthy setbacks among the fixed wireless players targeting urban customers. For example, smart home provider Vivint shuttered its fixed wireless business last year after facing stiff competition from entrenched wireless players. Common Networks – a California startup that raised tens of millions of dollars in funding – recently offloaded its network in San Francisco's East Bay to rival Monkeybrains. Light Reading's attempts to get an update from Common's executives were not successful. And Starry – a prominent fixed wireless startup that had planned to launch service across roughly two dozen markets by the end of 2019 – today only offers service in a handful. A company executive declined to respond to questions from Light Reading about Starry's current coverage area and buildout goals.
And then there's Verizon. The service provider made a splash with the 2018 launch of its 5G-powered fixed wireless service running in its millimeter wave (mmWave) spectrum in a handful of big US cities, but Verizon paused that buildout as it waited for the arrival of new hardware from Qualcomm and a new self-install process for customers.
Late last year, Verizon restarted its 5G Home efforts, and plans to scale up the operation across a number of new markets during 2021. However, "fixed wireless as an opportunity has been largely dismissed by investors" in part due to Verizon's stumbles, according to the financial analysts at Morgan Stanley, who recently issued a report on fixed wireless.
"The economics are a lot more challenging" in suburban and urban areas, analyst Roger Entner of Recon Analytics explained to Light Reading. Such services often require line-of-sight connections between transmission stations and customers in order to provide speedy, reliable connections, which makes it difficult for providers to reach enough customers to turn a profit, explained Entner.
More importantly, most Internet customers in urban areas already subscribe to a wired Internet connection, and shaking them loose from their existing provider sometimes requires steep pricing discounts or more competitive services, including faster connections. And there's often little to stop wired providers – which often enjoy deep financial pockets – from responding in kind.
As a result, Entner doesn't expect standalone providers like Starry to be successful. Providers like Verizon – which can run their fixed wireless ambitions through their already-profitable mobile networks – are the only ones that have a chance of succeeding, he added.
Changes on the horizon?
"The big picture is that WISPs [wireless Internet service providers] are growing by 15% per year in terms of subscribers," analyst Jeff Moore of Wave7 Research – which now tracks the fixed wireless industry in the US – told Light Reading. "The WISPs have wind in their sails thanks to federal funding, spectrum acquisitions and demand for more Internet in more places due to the pandemic. That said, good business plans and good execution are key."
One of the factors helping to drive the development of fixed wireless in the US is programs like the FCC's recent Rural Digital Opportunity Fund auction. The event delivered hundreds of millions of dollars to a variety of telecom companies, including those used fixed wireless technologies. For example, Etheric Communications netted around $249 million from the event, and plans to use the money to construct a hybrid network using 5G fixed wireless, fiber and other connections to meet its buildout obligations across portions of the Sierra Nevadas.
Meantime, the FCC also recently completed its record-setting auction of midband C-band spectrum licenses; the agency is expected to release the identities of the auction's winners by early March. The Morgan Stanley analysts wrote that such spectrum will help grow the overall fixed wireless opportunity in the US to a total of $20 billion.
"We believe deployments of FWA with midband spectrum can have a meaningful larger opportunity than the millimeter wave deployed solutions to date, given decreased cost and increased quality of service," the analysts wrote. Transmissions in midband C-band spectrum are expected to travel much further than transmissions in mmWave spectrum while still supporting speedy Internet connections.
T-Mobile will likely be the first operator to test out the potential of FWA in midband spectrum. The company is widely expected to disclose the details of its planned 5G fixed wireless Internet service in the coming months. That offering played a central role in T-Mobile's efforts to convince regulators to approve its merger with Sprint, which closed last year and provided T-Mobile with Sprint's vast midband spectrum holdings. Prior to the close of the merger, T-Mobile promised it would use Sprint's spectrum and 5G to offer in-home broadband Internet services to almost 10 million households by 2024, covering 52% of all US zip codes, as a way to help cross the digital divide.
"If there's ever been an industry more in need of disruption than wireless, it's the cableopoly," the operator's former CEO, John Legere, boasted in 2019, prior to the close of T-Mobile's merger with Sprint. "So we are going to change it the same way we changed wireless! Aggressive prices, rapid innovation, listening to customers and fixing what's broken."
However, the majority of T-Mobile's fixed wireless tests to date have focused on mostly rural or suburban areas. It's unclear whether the operator will follow Verizon's lead and expand its 5G-powered fixed wireless services into dense, urban areas.
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