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April 25, 2023
Verizon CEO Hans Vestberg expressed confidence that the company's wireless networks will supply ample capacity for fixed wireless access (FWA) services as Verizon's grand total of FWA subs nears the 2 million mark.
"We have so much more capacity coming," Vestberg said Tuesday on Verizon's first quarter 2023 earnings call, citing the company's ongoing deployment and expansion of critical C-band spectrum that delivers a one-two punch of reach and capacity. He said Verizon's ability to scale up FWA will also be aided by new, more powerful chipsets and devices that can handle a range of spectrum bands.
Figure 1: Verizon added 393,000 FWA subs in the quarter, extending its total to 1.86 million. Pictured is a Verizon FWA home router.
"I feel really confident that we'll manage this capacity without any problems to the levels that are talked about, and way beyond that," Vestberg said.
Verizon, he added, also has an opportunity, over time, to add capacity through cell-splitting. "We are not even close to [needing] that today," Vestberg explained. "I feel really good about how the guys are managing the network and opportunities where we're building on our C-band."
Verizon has deployed C-band to about 70 US markets (out of about 400), and is awaiting clearance to gain access to more spectrum in the band late this year and extend beyond the 60MHz it's been using today. Verizon will have an average of 160MHz of C-band spectrum available, and up to 200MHz in some cases.
"That's going to enhance the capacity for us," Vestberg said.
That will help Verizon enhance and expand its C-band coverage primarily in urban and suburban areas, and start to put more focus on rural areas, he added. That is taking shape as Verizon takes a more decentralized approach, attacking with FWA on a more localized basis as services are opened up in individual markets.
Analysts believe Verizon's C-band expansion will give its FWA business a jolt later this year. "We expect higher FWB [fixed wireless broadband] net adds from Verizon in 4Q23 when they get access to more C-Band spectrum and open more markets," New Street Research analyst Jonathan Chaplin explained in a note issued after Verizon issued Q1 2023 results.
T-Mobile also believes it has ample capacity to keep its FWA services humming along.
But not everyone shares that confidence. For example, a recent study from Brattle Group commissioned by the CTIA found that 5G FWA networks could begin to run out of steam within the next five years.
FWA base nears 2 million
Verizon's comments about wireless network capacity enter the picture as the company continues to expand its FWA subscriber base.
Verizon added 393,000 FWA subs in the quarter – including 256,000 consumer subs and 137,000 business customers – extending its grand total to 1.86 million (1.14 million residential and 726,000 business). Verizon added 194,000 residential and business FWA subs in the year-ago quarter and 379,000 in the prior quarter.
"FWA remains Verizon's most promising growth area. Indeed, it remains the most tangible revenue stream from 5G," Craig Moffett, analyst with MoffettNathanson (a unit of SVB Securities), explained in a research note. "Even here, however, Verizon's net additions are leveling off faster than might have been expected."
Turning to consumer wireline broadband, Verizon added 63,000 Fios Internet subs in Q1 2023, better than the +35,000 expected by analysts. Verizon ended the period with 6.80 million residential Fios Internet subs, up 3.1% year over year. With DSL losses accounted for, Verizon added 46,000 wireline broadband customers in the quarter, up from +37,000 in the year-ago quarter. Verizon ended the quarter with 7.06 million residential wireline subs.
Figure 2: (Source: Verizon Q1 2023 earnings presentation)
With wireline and FWA combined, Verizon added 302,000 consumer broadband subs in Q1 2023, up from +149,000 a year earlier. Verizon added 437,000 consolidated broadband subs (residential and business) in the quarter, the highest in more than a decade.
Update: Slower FWA sub pace 'good news for the fixed providers'
Verizon's FWA subscriber growth slowed down on a sequential basis – up 14,000 overall as gains on the business side offset a down quarter for residential FWA.
"If it wasn't for new C-Band markets in 4Q23, we would guess that consumer adds are close to a peak and may have peaked already," New Street's Chaplin explained in a note issued after Verizon's earnings call.
Meanwhile, New Street Research is still predicting that FWA will peak in the second half of 2023. But is is keeping an eye on how AT&T's recent, more aggressive moves into the fixed wireless market might alter that view.
While the world awaits T-Mobile's Q1 results later this week, Verizon's slower growth rate for FWA subs "is obviously good new for the fixed providers," Chaplin wrote.
An eye on BEAD
Verizon plans to expand its fiber networks by about 500,000 locations this year, about the same as 2022. But the company is also sizing up opportunities to expand via the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) program.
Verizon isn't making any firm commitments to BEAD. But the company will explore BEAD participation "where it makes the most sense," Matt Ellis, Verizon's outgoing CFO, said.
Verizon lost 74,000 consumer Fios video customers, ending Q1 2023 with 3.16 million.
— Jeff Baumgartner, Senior Editor, Light Reading
Senior Editor, Light Reading
Baumgartner also served as Site Editor for Light Reading Cable from 2007-2013. In between his two stints at Light Reading, he led tech coverage for Multichannel News and was a regular contributor to Broadcasting + Cable. Baumgartner was named to the 2018 class of the Cable TV Pioneers.
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