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Verizon doubles down on fixed wireless bet

Verizon appears to be getting more serious about fixed wireless Internet services. And that's noteworthy considering such a move will position Verizon to compete more aggressively with wired Internet service providers like Comcast, Frontier and Charter Communications.

The most direct evidence of Verizon's expanded interest in fixed wireless access (FWA) services over 5G comes in the form of a relatively dramatic price cut. Verizon this week said customers on some of its unlimited smartphone data plans – including 5G Get More, 5G Play More and 5G Do More – will be eligible for a 50% reduction in the price of its FWA service. Verizon now offers two FWA service plans: 5G Home and 5G Home Plus. The first costs $50 per month and includes a two-year price guarantee, while the second, Plus plan costs $70 per month and includes a three-year price guarantee and cloud storage services.

Thus, a single-line Verizon smartphone customer who subscribes to the company's $80 per month 5G Do More unlimited data plan can also sign up for its 5G Home FWA service and pay just $25 per month for unlimited in-home Internet services. That brings the total cost of unlimited smartphone and home Internet services for one user to just $105 per month (though taxes and other fees would likely increase that total slightly).

In a note to investors this week, the financial analysts at Sanford C. Bernstein described Verizon's new pricing as "disruptive," adding that they "recommend more optimism about FWBB [fixed wireless broadband]."

It's also worth noting that Verizon's FWA price cut comes just a few months after T-Mobile cut the price of its own FWA service.

Growing the mobile base with FWA

Some of Verizon's top executives this week were equally positive on the company's opportunity in FWA.

"We've been thinking about this [FWA] for years and years, we just didn't have the capacity to do it," explained Verizon CTO Kyle Malady during an investor event Wednesday. He said the company simply didn't have enough network capacity in the 4G era to offer in-home Internet services. Now, with 5G technology and C-band spectrum, he said that's changed. "Now we can."

"The product quality is there now," agreed Manon Brouillette, the new CEO of Verizon's consumer business division. She said Verizon's FWA product can be easily installed by customers themselves – unlike cable and fiber Internet services that often need to be installed by a technician. "We've removed all the barriers to entry to make sure that people give it a shot."

Verizon's 5G Home Internet service router can be installed by customers. Or, more likely, their teenage children.  (Source: Verizon)

Verizon's 5G Home Internet service router can be installed by customers. Or, more likely, their teenage children.
(Source: Verizon)

Brouillette suggested that Verizon's FWA offering would be one of a handful of levers the carrier can pull to acquire more smartphone customers in an increasingly competitive market. She said that roughly half of Verizon's new FWA customers do not subscribe to the company's smartphone services, making FWA a way for Verizon to "grow the mobile base."

A long road to 150,000 subscribers

Verizon's journey in fixed wireless has been decidedly circuitous. The company launched 5G-powered fixed wireless services more than three years ago, but it quickly became apparent that the offering was more of a test than a widespread commercial effort.

Since then, Verizon has been working to tweak its service with new technologies and features, including self-install and 4G options.

But it was Verizon's acquisition of more than $50 billion worth of midband C-band spectrum licenses last year that seemed to turn the tide. Such licenses have been described as Goldilocks spectrum because they can cover wide geographic areas with speedy connections. Later this month, Verizon expects to switch on FWA services in C-band spectrum covering many of the nation's biggest cities. That launch will increase the total number of households covered by Verizon's FWA services to around 20 million, or roughly 15% of the entire US. That figure is also 5 million more than Verizon had initially anticipated.

However, the number of households covered by Verizon's FWA service isn't necessarily a suitable metric to evaluate the service. After all, Verizon's 5G network capacity is not limitless. Thus, a far more concrete measurement of Verizon's FWA progress is the actual number of customers it's supporting. Late last year, Verizon reported its FWA customer numbers for the first time: it added 55,000 FWA subscribers in the third quarter of 2021, for a grand total of 150,000.

That puts Verizon well behind T-Mobile, which counts more than 500,000 FWA customers. In fact, Verizon isn't that far away from startup Starry, which counts around 50,000 FWA customers and only offers services in a handful of US markets.

But some analysts expect Verizon to finally begin growing its FWA business this year. The analysts at Sanford C. Bernstein predicted Verizon will add 545,000 fixed wireless customers to its network in 2022 and 1 million in 2023. Last year, Verizon forecast that, by the end of 2023, it would offer FWA services to 30 million US households and that the business would generate around $1 billion in revenues.

FWA as a threat to cable

But the real question is whether Verizon's FWA ambitions could affect established ISPs like Comcast, Frontier and Charter. After all, Verizon's Fios-branded fiber Internet business represents a major competitive threat to cable operator Altice in the Northeast – and Verizon views FWA technology as a way to take its Fios business nationwide.

According to a recent report from the financial analysts at MoffettNathanson, existing cable operators ought to be wary of FWA, particularly as growth slows in the cable market and as fiber providers expand network buildouts. "While it doesn't appear that telco fiber deployments and fixed wireless access are taking many subscribers directly from cable, it does appear likely that these telco initiatives have drawn from DSL subscribers who might otherwise have gone to cable," the MoffettNathanson analysts wrote.

But the analysts noted that it's still too early to determine whether FWA offerings from the likes of Starry, Verizon and T-Mobile are currently having a direct effect on cable providers. "While fixed wireless has almost certainly played some role, it is unclear how much: many net additions are likely being drawn from geographies and/or verticals not previously served by wired broadband," they argued.

For Verizon though, it's clear the company is keenly interested in growing its FWA business, given its new, aggressive pricing. After all, Verizon's Brouillette will likely be under increasing pressure to show gains in her new job – gains made more challenging by the success of rivals like AT&T, which recently reported massive customer gains in the fourth quarter.

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

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