5G FWA networks in the US could be overloaded by 2027 – study

According to a new study commissioned by the US wireless industry's main trade association, 5G networks may begin to run out of capacity within the next five years. And fixed wireless access (FWA) providers like T-Mobile and Verizon may be among the first to suffer the effects.

"Recent growth in popularity of fixed wireless access, which provides home broadband over licensed mobile spectrum, will increase the capacity load on licensed networks," wrote the Brattle Group in a new report for CTIA, a lobbying association that primarily represents the nation's big wireless network operators. The Brattle Group is a consulting firm that "answers complex economic, finance, and regulatory questions for corporations, law firms, and governments around the world," according to its website.

"Fixed wireless access would likely be the first service to be impacted [by network overloads]," according to the Brattle Group report. "Already today home broadband over 5G is only offered in locations where operators have available capacity in the network to provide sufficient quality of service for a home connection. Without additional spectrum, fixed wireless access will not be able to reach its potential scale, limiting the opportunity for additional competition to be injected into the home broadband market."

Figure 1: (Source: Wirestock, Inc./Alamy Stock Photo)

The report is noteworthy considering it is indirectly financed by 5G wireless network operators themselves, through their main trade association. And it argues that 5G networks broadly will run out of capacity in just a few short years – even if wireless network operators employ capacity-expanding tricks and techniques.

"Our analysis indicates that, given the pace of the demand growth, technological solutions and deploying more cell sites are insufficient to ease the capacity constraint currently facing the US cellular networks," the report concludes.

The report's findings appear to stand in stark contrast to FWA capacity assurances from the likes of Verizon and T-Mobile.

"We're adding far more capacity to our network than the peak usage increase we're expecting in the fixed wireless market," Verizon CEO Hans Vestberg proclaimed earlier this year.

"We're not seeing any issues with capacity," T-Mobile CEO Mike Sievert said last year.

Political machinations

To be clear, the Brattle Group report is intended as a lever against the politicians who might allocate more spectrum to 5G network operators. CTIA's primary objective is to convince federal regulators to allocate more licensed spectrum to 5G network operators. In that effort, it's battling against big tech companies like Amazon, cable companies like Comcast and US government agencies like the Department of Defense (DoD), which generally are pushing for regulators to release more unlicensed or shared spectrum.

"The report's findings underscore the growing risk to America's 5G and innovation leadership," the CTIA warned, citing the Brattle Group report. "Currently the United States has no plan to allocate more midband spectrum for 5G and Congress allowed the FCC's ability to auction spectrum for licensed, commercial use, to lapse for the first time in its 30-year history. This inaction in the face of a looming spectrum deficit contrasts with other countries: Today the United States trails other countries in 5G spectrum by 378 megahertz on average – a deficit expected to grow to 518 megahertz in five years."

One of CTIA's top goals this year is to generate support among lawmakers for rules that would take the 3.1-3.45GHz band from the DoD and reallocate it to 5G network operators. The battle over that band may have played a role in the FCC's loss of its auction authority.

The core argument

Aside from the political bickering in Washington, DC, the Brattle Group's report helps to shine a clear light on the factors affecting 5G networks in general and FWA specifically. Across the report's 37 pages, the Brattle Group explains how wireless network capacity can be affected by new applications, the addition of more transmission sites, and the inclusion of more spectrum.

"Two historically effective avenues for increasing mobile network capacity include improvements in spectral efficiency and adding more physical infrastructure such as base stations or cell towers," according to the report. It also noted that Cisco, Ericsson and others continue to predict dramatic increases in wireless network traffic over the coming years – traffic that will likely be exacerbated by new applications ranging from virtual reality to FWA.

"Despite the fact wireless technology has seen great advancements in the last 50 years, there is a hard mathematical limit to how much spectral efficiency can improve," the report argued. Indeed, T-Mobile has already begun deploying new MIMO technology aimed at increasing its network capacity.

Another mechanism to increase wireless network capacity involves building more cell sites, including small cells. In its report, the Brattle Group estimated a total of 298,001 macro cell sites in the US in 2022 alongside 150,399 small cells. (Those figures don't quite dovetail with the 209,500 macrocell sites and 452,200 outdoor small cell nodes counted in a study commissioned by the Wireless Infrastructure Association, the main trade association for the US cell tower industry.) Regardless, the Brattle Group predicts those figures will grow to 324,943 macro cell sites and 364,428 small cells by 2027.

But the report argues that cell site growth won't keep pace with user's data demands. "Therefore, if historical technology trends hold and forecasted traffic patterns are realized, these solutions are unlikely to be sufficient to meet rapidly growing traffic," according to the report.

Thus, the report concludes that the only way to prevent network overloads is to release more licensed spectrum to 5G network operators – which is CTIA's main political goal.

The FWA factor

To be clear, there's nothing groundbreaking in the new Brattle Group report. But it does provide some very clear guidance – backed by the 5G industry itself – on the future of FWA in the US. And that's critical for a variety of players considering fixed wireless services accounted for 90% of all net broadband customer additions in the US during 2022. Indeed, the cable industry suffered a historic downturn last year in part due to the massive success of T-Mobile and Verizon in the FWA arena.

Further, most analysts expect the momentum around FWA to continue into 2023. "We estimate US fixed wireless providers (primarily Verizon and T-Mobile) added ~600k residential FWA subs in 1Q23, taking >100% of total industry net adds for the fourth quarter running," wrote the financial analysts at Evercore in a recent report to investors. "For 2023, we expect FWA share to grow to 5.6% ... and to add similar subs as 2022."

But since its breakout, FWA has been dogged by questions of capacity. "Capacity remains the central debate with respect to FWA, both for investors in T-Mobile (and Verizon) who are attempting to estimate longer term revenue potential, and for investors in competing fixed line broadband services who are attempting to assess competitive risks," wrote the financial analysts at MoffettNathanson in a recent report.

"FWA will slow, eventually," agreed the analysts at New Street Research in a report of their own.

The question, though, is when 5G networks might run out of runway for FWA. And the Brattle Group provides a clear answer: In the firm's most conservative estimates, networks will become overloaded by 2027. But it could happen sooner.

The Brattle Group calculates network capacity by a "spectrum deficit," or the point where operators will need more spectrum to continue to keep pace with users' data demands. The firm offers several different models, each based on slightly different traffic assumptions. For example, in one scenario the firm assumes wireless network traffic will grow 20% below most assumptions. In that scenario, the report states that US network operators will collectively face a 10% "spectrum deficit" by 2027.

However, in a scenario that assumes traffic growth 20% above assumptions, the report states that US operators' "spectrum deficit" will reach 83% by 2027.

Meaning, network operators like T-Mobile and Verizon may not have any more network capacity to allocate to FWA – or anything else – in the next few years. That's clearly how AT&T executives view the situation: "The curve is moving away from the scalability of wireless," said AT&T CEO John Stankey in explaining his company's decision to largely avoid a major FWA play.

T-Mobile, for its part, predicts it will gain up to 8 million FWA customers by 2025. By that time, Verizon hopes to count up to 5 million FWA customers. The companies haven't offered FWA projections beyond 2025. And both are investing in fiber network buildouts.

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