T-Mobile plans to use its existing LTE network to test fixed wireless services -- further evidence that the carrier wants to get into the market for in-home broadband internet offerings in a direct challenge to ISPs like Charter, Verizon, Comcast and AT&T.
However, T-Mobile US Inc. cautioned that its LTE fixed wireless service would only be a test, essentially an effort by the operator to set the groundwork and strategy for a similar, commercial offering that would be powered by T-Mobile's forthcoming 5G network. And T-Mobile executives clarified that much of the company's fixed wireless, in-home broadband ambitions are tied to T-Mobile successfully merging with Sprint Corp. (NYSE: S) and gaining access to Sprint's vast 2.5GHz spectrum holdings. (See T-Mobile: 5G Lets Us Take Broadband Across America.)
T-Mobile's Mike Sievert, the company's president and COO, disclosed T-Mobile's fixed wireless plans today during the company's Q4 2018 earnings call with analysts.
"It's a pilot," Sievert said of T-Mobile's LTE fixed wireless testing plans, noting that the operator would launch it sometime in the first half of this year. A T-Mobile spokesperson declined to provide details on the tests, including what spectrum the company would use, what it would cost for customers and where it would be deployed in the country. (It's worth noting that T-Mobile executive Dave Mayo is in charge of the operator's fixed wireless operations.)
Bigger broadband plans tied to Sprint deal and 5G
But Sievert said the fixed wireless tests on LTE would be conducted as a learning experience for T-Mobile as it prepares to launch 5G and merge with Sprint. The tests are "for a reason: We expect in New T-Mobile [the working name for the proposed merging of T-Mobile and Sprint] for this to be a substantial part of our growth story," Sievert said of offering in-home broadband Internet services.
When T-Mobile and Sprint first announced their plans to merge in April 2018, the companies did not disclose any plans to offer in-home broadband Internet services. But then, in June 2018, the companies said that, if they successfully merge, they expect to eventually grow into the nation's fourth-largest ISP by 2024, behind the likes of Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Charter Communications Inc. . And in September, Sievert clarified to the FCC that New T-Mobile would cover 64% of Charter’s territory and 68% of Comcast’s territory with in-home Internet offerings. Sievert also predicted New T-Mobile would gain 1.9 million in-home wireless broadband customers by 2021 and 9.5 million customers by 2024. (See T-Mobile: 5G Lets Us Take Broadband Across America.)
During the company's earnings call today, T-Mobile's Sievert boasted that New T-Mobile would offer in-home broadband Internet services to "millions" of households, covering 52% of all US zip codes, and offering a median download speed of 450 Mbit/s.
"If you look at what our competitor's doing, they're rolling out millimeter wave to some parts of some towns to compete for those households," Sievert said in an acknowledgement of Verizon Communications Inc. (NYSE: VZ)'s efforts to roll out its 5G Home fixed wireless Internet service in parts of four cities. "We see a much wider opportunity for that. We can be very disruptive in the broadband space as the New T-Mobile." (See Verizon's Home-Grown 5G Arrives Today.)
Sievert explained that New T-Mobile would make most of its money in 5G through the sale of mobile services to smartphone customers, but would have extra network capacity that it could devote to a fixed wireless, in-home broadband offering. That, he said, means T-Mobile could offer in-home broadband services at a "disruptive" price point.
"Most of our aspirations for that [fixed wireless] are in the capacity of New T-Mobile, because it's capacity-dependent and home broadband is very, very consumptive," Sievert explained. "Despite that we're going to start testing it this year, and in the first half of this year, so that we can get the learnings that are required to go to market and win."
Sievert was asked whether T-Mobile's plans to launch a video service via its 2018 acquisition of Layer3 TV would factor into its efforts to offer in-home broadband internet services via a fixed wireless service. "The integration will come, but in the early stages of those two initiatives, we'll be testing them separately," he answered. "But don't get confused by that, because the ultimate strategy is for these... -- home TV and home broadband -- to be a blended go-to-market approach." (See T-Mobile's New Home TV Service to Launch in First Half of 2019.)
Getting with the program
T-Mobile executives have offered varying viewpoints on fixed wireless Internet services over the years. For example, T-Mobile CTO Neville Ray wrote in September 2016 that "Verizon's grand vision [for 5G] is that you can cancel your fixed broadband and watch Netflix at home with wireless Verizon broadband. Double yawn. How disappointing! So little imagination from these supposed network leaders!"
However, T-Mobile is joining a large and growing list of wireless network operators that are entering the fixed wireless space, in direct challenges to existing wired internet service providers like Comcast, CenturyLink Inc. (NYSE: CTL) and others. For example, US Cellular last year launched a fixed wireless service over its existing LTE network in select locations throughout its coverage area, with pricing options ranging from 20 Gigabytes for $40 per month to 90GB for $70 per month.
AT&T now offers fixed wireless Internet services to over 660,000 locations across 18 states, with a goal of growing that number to 1.1 million locations by the end of 2020. Further, AT&T's CEO said recently that he expects 5G to be a suitable wireless replacement for fixed broadband in three to five years. (See AT&T CEO: mmWave 5G Will Be Fixed Broadband Alternative in '3 to 5 Years'.)
Others, such as startup Starry Inc. , are also entering the fixed wireless space. (See Broadband Incumbents Should Be 'a Little Bit Nervous' About Starry – Analyst .)