Fixed Wireless Access (FWA)
Verizon Q2-2024: strong wireless service revenue and broadband subscriber growth, but consumer FWA lags
Verizon Communications wireless and wireline subscriber growth expectations in the second quarter beat estimates with 148K postpaid phone net additions vs. 118K expected. There were 391,000 total broadband wireline net additions. The company ended the quarter with 11.5 million broadband subscribers, up 17.2% year over year. However, the telecom company posted lower operating revenue that was below expectations. Earnings mostly matched expectations, but were below the year ago level.
“Demand for the service is strengthening as small businesses and enterprises continue to trust the reliability of the product and the speed and east of deployment,” Verizon CFO Tony Skiadas said on Monday’s earnings call.
- Verizon added 160,000 business Fixed Wireless Access (FWA) subs in 2Q-2024 – a record quarterly gain in the category that was better than the 138,000 expected by analysts. That quarterly intake was up from a gain of 133,000 in the year-ago quarter and improved from a gain of 151,000 in the prior quarter. Verizon ended Q2 with 1.52 million business FWA subs.
- The company added 218,000 residential FWA subs in Q2 2024, down from a gain of 251,000 in the year-ago quarter, but ahead of the 208,000 residential FWA subs added in the prior quarter. Verizon ended the period with 2.29 million residential FWA subs.
A recent OpenSignal study revealed that Verizon’s 5G customers are rarely connected to the 5G network – in range just 7.7% of the time compared to AT&T (11.8%) and T-Mobile (67.9%). Verizon has not come close to adding as many FWA subs as T-Mobile has each quarter, particularly in the residential market.
New Street Research expects Verizon to cross the 4 million FWA subscriber mark in mid-August. In New Street’s follow-up note, analyst Jonathan Chaplin points to a recent estimate from the firm that data consumption among consumer FWA subs could be four to five time greater than business subscribers. On that basis, an estimate of FWA capacity for 4.1 million Verizon subs would really equate to 6.1 million total customers, he wrote.
2Q 2024 Highlights:
Wireless: Accelerated growth in wireless service revenue
- Total wireless service revenue1 of $19.8 billion, a 3.5 percent increase year over year.
- Retail postpaid phone net additions of 148,000, and retail postpaid net additions of 340,000.
- Retail postpaid phone churn of 0.85 percent, and retail postpaid churn of 1.11 percent.
Broadband: Double-digit broadband subscriber growth
- Total broadband net additions of 391,000. This was the eighth consecutive quarter with more than 375,000 broadband net additions.
- Total fixed wireless net additions of 378,000. At the end of second-quarter 2024, the company had a base of more than 3.8 million fixed wireless subscribers, representing an increase of nearly 69 percent year over year.
- 11.5 million total broadband subscribers as of the end of second-quarter 2024, representing a 17.2 percent increase year over year.
- Fixed wireless revenue for second-quarter 2024 was $514 million, up more than $200 million year over year.
Other results and FY 2024 forecast:
- Verizon reported adjusted earnings of $1.15 a share for the quarter, in line with analyst expectations, but a slowdown from last year’s adjusted earnings of $1.21 a share. This was also the lowest earnings per share for a second quarter since 2017.
- Total operating revenue came in at $32.8 billion, 0.6% higher than a year ago, but below estimates of $33.8 billion.
- Total wireless service revenue was $19.8 billion, up 3.5% year over year, driven primarily by growth in Consumer wireless service revenue.
- FY-2024 Outlook: Verizon reiterated a 2.0% – 3.5% wireless service revenue growth. It maintained an adjusted EPS of $4.50 – $4.70 versus consensus of $4.58.
References:
5G Advanced offers opportunities for new revenue streams; 3GPP specs for 5G FWA?
A Mobile World Live webinar on 5G-advanced upgrades identified new opportunities for network operator revenue streams, mostly due to improved network efficiencies and reduced costs. 5G Advanced, the next step in 5G evolution, will be specified in 3GPP Release 18 and 19. There is no work on it in ITU-R which is now focused on IMT-2030 (6G).
Egil Gronstad, T-Mobile senior director-technology development and strategy, said 5G Advanced will present opportunities for new revenue streams: 5G IoT will have lower cost and lower power consumption of endpoint devices (Redcap). Another 5G Advanced capability will be Ambient IoT (coming in Rel 19) which has a lot of opportunities via lower cost and no battery required in IoT devices. A bit further out is Integrated sensing and communications -using the network as a radar system to detect objects of interest. Improved spectrum efficiency will be improved using AI/ML for beam management.
Egil said 3GPP should develop specs for fixed wireless access (FWA). He’s disappointed with 3GPP not pursuing 5G FWA. “We haven’t really done anything in the 3GPP specs to specifically address fixed wireless,” he said. Neither has ITU-R WP 5D, which is responsible for developing all ITU-R recommendations for IMT (3G, 4G, 5G, 6G). FWA was not identified as an ITU use case for 5G and that hasn’t changed with 5G Advanced.
References:
https://www.nokia.com/about-us/newsroom/articles/5g-advanced-explained/
What is 5G Advanced and is it ready for deployment any time soon?
Huawei pushes 5.5G (aka 5G Advanced) but there are no completed 3GPP specs or ITU-R standards!
China Mobile & ZTE use digital twin technology with 5G-Advanced on high-speed railway in China
ZTE and China Telecom unveil 5G-Advanced solution for B2B and B2C services
ABI Research: 5G-Advanced (not yet defined by ITU-R) will include AI/ML and network energy savings
Point Topic: FTTP broadband subs to reach 1.12bn by 2030 in 29 largest markets
Point Topic forecasts 1.39 billion fixed broadband connections by the end of the decade in the 29 largest broadband markets in the world. Fiber to the Premises (FTTP) is already dominating most of the markets and it will be the preferred option for most consumers, where it is available.
Between 2023 and 2030 Point Topic projects a 15% growth in total fixed broadband subscribers in the top 29 markets. The growth will come mainly from FTTP – although the increase in the total fiber lines will be lower than that in Fixed Wireless Access lines – 25% and 61% respectively, the sheer number of already existing and new FTTP connections will drive the total growth.
Figure 1. Fixed broadband lines by technology (Top 29 markets)
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Split by technology we estimate that by 2030 there will be 1.12 billion FTTP, 149 million cable, 79 million FTTX, 16 million FWA[1] and only 28 million DSL lines in these markets.
Figure 2. Change in fixed broadband lines, 2023-2030 (Top 29 markets)Cable is a term used as a proxy for those legacy MSOs/cablecos (e.g. Charter, VMO2, Comcast, etc.) that still have significant networks based on coaxial cable, mainly DOCSIS 3.0 and 3.1. We forecast some decline (-6%) in cable broadband lines by the end of the decade as these networks are being replaced with full fibre. The new generation DOCSIS4, which is in development, will match the capabilities of FTTH with XGPON, so markets with established cable networks will see a slight growth or stable take-up figures for ‘cable’ broadband lines.
FTTX (where fibre is present in the local loop with copper, mainly fiber to the cabinet) will decline over the next seven years (-19%). Some modest growth from new subscribers will remain in a few markets where legacy infrastructure is still widespread. Also, it will remain a cheaper option even where other technologies are available as it still offers enough bandwidth for some users.
DSL will see the largest decline at -44%. However, while being a slower and less reliable solution, it can provide enough bandwidth at a low price to some single or older households that are reluctant to upgrade. Besides, some of them will not have a choice of other technologies, especially in certain regions and markets.
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Figure 3. Fixed broadband penetration, 2023 and 2030 (top 29 markets)
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Point Topic only included FWA in its data in significant markets and where it was able to source reliable figures, such at the U.S., Canada, and Italy. Therefore, the total number of FWA subscribers could end up higher if FWA takes off in other markets.
In the U.S., T-Mobile US and Verizon are the FWA leaders with 8.6 million connections between them as of March 2024. T-Mobile recently added a new FWA service offer to its portfolio aimed at customers who might need a back-up for unreliable fiber or cable connections.
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China will be among the 16 markets with 90%-plus broadband penetration in seven years time. The potential for signing up new customers in those markets will shrink, leaving broadband providers with the task of converting existing customers to higher bandwidths and more advanced technologies for growth.
At the other end of the scale, there is still lots of room for broadband growth. India will have the lowest percentage of premises with a fixed broadband connection by 2030 at 33%, up from just 11% last year.
“There is significant growth to come in the ‘youthful’ markets with low fixed broadband penetration, with plenty of consumers in India, Indonesia and other fast-growing economies hungry for the advantages offered by fixed broadband and full fibre in particular,” Point Topic said.
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References:
https://www.point-topic.com/post/fttp-broadband-subscriber-forecasts-q4-2023
https://www.telecoms.com/fibre/fibre-to-drive-15-broadband-growth-by-2030
U.S. broadband subscriber growth slowed in 1Q-2024 after net adds in 2023
Dell’Oro: Broadband access equipment sales to increase in 2025 led by XGS-PON deployments
Altice USA transition to fiber access; MoffettNathanson analysis of low population growth on cablecos broadband growth
FWA a bright spot in otherwise gloomy Internet access market
Parks Associates’ newly launched Broadband Market Tracker, states that U.S. Fixed Wireless Access (FWA) adoption from a mobile network operator hit 7.8 million U.S. residential home internet connections in Q1-2024. That’s in comparison to 106.3 million U.S. households that had home internet service at the end of 2023.
Kristen Hanich, director of research at Parks Associates, told Fierce Network FWA and satellite internet are the “fastest growing” segments of the broadband market, “attracting consumers who were previously unserved or underserved by traditional providers.” She noted for the past several years, the FWA base has grown by 700,000 to 900,000 subscribers per quarter while cable connections have declined.
T-Mobile in Q1-2024 passed the 5 million mark for FWA subscribers and Verizon reported a total FWA tally of 3.4 million subscribers. These figures include both residential and business FWA customers.
Key FWA Findings from OpenSignal:
- 5G FWA has reshaped the U.S. broadband market. It has allowed U.S. mobile operators to rapidly expand their broadband footprints for minimal incremental network investment. This has seen 5G FWA absorb all broadband subscriber growth in the market since mid-2022.
- FWA is the secret sauce for 5G monetization. FWA benefits from lower prices compared to wireline competition, access to existing mobile retail channels and subscribers, and the ability to deliver a “good enough” broadband service.
- U.S. mobile networks have proven to be resilient. Despite adding millions of 5G FWA subs since 2021, 5G speeds on T-Mobile and Verizon’s mobile networks have continued to improve. Their success in managing FWA traffic is due to a variety of factors, including plentiful access to mid-band spectrum, localized load management, and differences in peak usage time of day patterns between mobile and FBB usage.
- Elsewhere, there are mixed results. In India, Jio is seeing no discernible impact from FWA on the mobile experience of its users, while in Saudi Arabia Zain is seeing the additional load on its network from FWA having a greater influence on mobile users’ experience, depending on the time of day or the level of FWA penetration.
“Despite adding more than eight million 5G FWA subs using 400+ GB per month of data since Q1 2021, the overall mobile network experience on T-Mobile and Verizon’s mobile networks has not been compromised,” Opensignal analyst Robert Wyrzykowski wrote in the firm’s new assessment of FWA technology.
In its new report, Opensignal found that areas in the U.S. with a larger number of FWA customers actually showed better networking performance than areas with fewer FWA customers. Meaning, Verizon and T-Mobile offered increasingly speedy connections even in geographic locations with higher concentrations of FWA users.
“We would expect low-FWA penetration areas to see better mobile and FWA performance because of less load on the network. However, our data demonstrates the opposite trend,” Wyrzykowski explained.
Other Opensignal findings:
- Around 6% of urban Internet customers subscribe to FWA; in rural areas that figure is 7%.
- Some 74% of FWA customers pay less than $75 per month for their services.
- 35% of FWA customers are between 18-34 years old, whereas that age range is 25% for cable.
Opensignal’s findings provide an important view into the FWA industry in the US as its subscriber growth begins to slow. For example, T-Mobile added 405,000 FWA customers during the first quarter, far less than the 541,000 FWA customers it added during the fourth quarter of 2023.
“5G FWA services have been on a dramatic growth trajectory in the U.S., absorbing all broadband subscriber growth in the market since mid-2022 and amassing more than 600-700 thousand net adds per quarter,” wrote Opensignal’s Wyrzykowski. “This is despite the USA being a mature broadband market with nearly 97% broadband adoption and modest household growth.”
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U.S. cable companies have recorded historic declines in their core Internet businesses amid the growth of FWA in the U.S. Financial analysts at TD Cowen predict the U.S. cable industry will collectively lose more than half a million customers in the second quarter of this year. They attribute that decline to FWA competition as well as other factors including the end of the U.S. government’s Affordable Connectivity Program (ACP).
The situation for cable might get even worse if FWA providers like T-Mobile and Verizon decide to invest further into their fixed wireless businesses.
“The pain for cable may continue for longer than expected as the ability for cable to return to broadband subscriber growth may take longer (if ever),” wrote the TD Cowen analysts in a recent note to investors.
Others agree. For example, the analysts at S&P Global wrote that cable service providers in general have been losing value to wireless network operators despite cable’s efforts to bundle mobile services into cable offerings.
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Parks’ Hanich said fiber optic access technology is on an upswing and Parks is seeing “excellent growth in the markets where it is available and high customer satisfaction with the customers who have it.”
“But the numbers are not quite as dramatic as what’s been going on with T-Mobile, Verizon and Starlink,” she said, noting the “growing convergence” of satellite and mobile networks is something else to keep an eye on.
Asked whether the demise of the Affordable Connectivity Program has had any impact on Parks’ findings, Hanich said, “we are concerned that the end of the program will result in households and families needing to disconnect from the internet for financial reasons.”
“For a good percentage of Americans, household budgets have been hit by rising inflation and lower-income families especially are having to cut back,” she said. “Thankfully we are seeing ISPs step up, try and transition people onto other plans and initiatives.”
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Separately, Parks found adoption of mobile virtual network operator (MVNO) services reached over 15 million residential customer mobile lines in the quarter. In an MVNO model, broadband operators lease spectrum capacity from a wireless network to stand up their own mobile offering.
NTIA published some findings from its latest Internet Use Survey. Unsurprisingly, internet usage in the U.S. has gone up, with 13 million more people using the internet in 2023 compared to 2021. However, a lot of that usage is coming from lower-income households. Specifically, internet adoption among households making less than $25,000 per year increased from 69% in 2021 to 73% in 2023.
References:
https://www.fierce-network.com/broadband/fixed-wireless-continues-its-climb-among-us-homes-parks
https://www.lightreading.com/fixed-wireless-access/fwa-in-the-usa-getting-ready-for-phase-2
Fiber and Fixed Wireless Access are the fastest growing fixed broadband technologies in the OECD
Summary of Verizon Consumer, FWA & Business Segment 1Q-2024 results
Verizon’s 2023 broadband net additions led by FWA at 375K
AT&T’s fiber business grows along with FWA “Internet Air” in Q4-2023
Ericsson: Over 300 million Fixed Wireless Access (FWA) connections by 2028
Fiber and Fixed Wireless Access are the fastest growing fixed broadband technologies in the OECD
The latest OECD statistics show that Fiber and Fixed Wireless Access (FWA) have seen the strongest growth in fixed broadband technologies in three years. Fibre subscriptions have increased by 56% between June 2020 to June 2023, and FWA subscriptions have increased by 64%. The United States (252%), Estonia (153%), Norway (139%) and Spain (118%) led this FWA growth. The dynamism of fiber and FWA stands in stark contrasts to the decline in DSL (-24%).
Nine OECD countries have more than 70% of fibre connections over total broadband, with Korea, Japan, Iceland, Spain leading the way with the highest fibre penetration rates of 89%, 86%, 85% , and 84%, respectively. The highest fibre growth rates are in Europe, with Austria and Belgium having growth rates of 75% and 73% over the last year, closely followed by Mexico with a growth in fibre of 68%. Two other Latin American countries are in the top 7: Costa Rica and Colombia with fibre growth rates of 42% and 34%, respectively.
Mobile data usage per subscription grew substantially by 28% in one year passing from 10.2 GB to 13 GB per subscription per month in OECD countries as of June 2023. The amount of data consumed in countries vary greatly from 6 GB to 46 GB, with Latvia being the OECD leader.
Despite an already very high mobile broadband penetration in the OECD area, overall mobile subscriptions continue to grow by 4.6% over the last year, which totalled 1.8 billion as of June 2023, up from 1.74 billion a year earlier. Mobile broadband penetration is highest in Japan, Estonia, the United States and Finland, with subscriptions per 100 inhabitants at 200%, 192%, 183% and 161%, respectively.
Eighteen countries were able to provide the number of their 5G subscriptions separately from mobile broadband subscriptions. The share of 5G in total mobile broadband subscriptions is 23% on average for the OECD countries that provided this data.
Machine-to-machine (M2M) SIM cards grew 14% increase in one year. The two leading countries are Sweden with 238 M2M SIM cards per 100 inhabitants and Iceland (203), followed by Austria (179), the Netherlands (93) and Norway (76). Both Sweden and Iceland issue M2M SIM cards for international use.
Total number of fixed broadband subscriptions, by country, millions, June 2023:
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Kuwait stc/Huawei deploy 5G Redcap FWA in Kuwait; Huawei’s 5G core wins
Kuwait Telecommunications Company – stc [1.], which provides innovative services and platforms to customers that enable digital transformation in Kuwait, announced the Middle East’s first commercial deployment of 5G RedCap Fixed Wireless Access (FWA) using Huawei network equipment. The announcement was made at the second forum of the ELITE FWA Club, held on the sidelines of MWC 2024.
Note 1. stc is Saudi Telecom Group, Kuwait Telecoms parent organization.
The service represents a transformative advancement in high-speed, reliable internet access for both residential and commercial clientele. The forum attracted founding members alongside an array of global telecom leaders and ecosystem stakeholders.
5G RedCap FWA heralds a new era in broadband services, offering users unparalleled, seamless connectivity. It stands out for its ability to provide stable, reliable speeds while ensuring cost-effectiveness. This innovation is achieved through optimized hardware design, which includes extended battery life, reduced power consumption, and improved spectrum efficiency on 5G CPE routers, making high-quality 5G technology accessible at significantly lower costs. Consequently, it not only enhances customer experience but also lowers the barriers to 5G adoption, encouraging the transition from 4G to 5G.
Key features of 5G RedCap FWA service include:
- High-Speed Connectivity: Delivers robust and consistent internet speeds, catering to the digital needs of today’s lifestyle.
- Unmatched Reliability: Ensures a stable and dependable home broadband connection, providing uninterrupted access to online services.
- Innovation Leadership: Demonstrates stc’s dedication to leading innovation in the region, introducing the latest technological breakthroughs to its customers.
Eng. Amer Atoui, Chief Consumer Officer of stc Kuwait, stated, “Launching 5G RedCap FWA ushers in a groundbreaking chapter for internet connectivity in the Middle East. We take pride in being the region’s pioneer, reaffirming our commitment to delivering innovative solutions that enrich our customers’ lives.”
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Separately, GlobalData’s “5G Mobile Core: Competitive Landscape Assessment report” rated Huawei 5G Core as a “Leader” in the 5G mobile core network field for the sixth consecutive year. Huawei’s 5G Core was also awarded full scores in all dimensions for the first time. Since the inception of this report in 2018, Huawei is the only vendor to ever get perfect scores in all dimensions.
Source: 5G Mobile Core: Competitive Landscape Assessment, by GlobalData
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The GlobalData report highlights the competitive advantages of Huawei 5G Core products. By leveraging Cloud Native architecture, Huawei 5G Core converges full-range services across the 2G to 5G spectrum, marking an industry first. The solution also stands out with an innovative disaster recovery (DR) architecture for high reliability. And on top of this, Huawei provides professional integration and O&M services with extensive experience. All of the above capabilities have made Huawei 5G Core a market leader in terms of the in-depth and broad commercial use.
References:
Nokia and du (UAE) complete 5G-Advanced RedCap trial; future or RedCap?
Ericsson, Vodafone and Qualcomm: 1st Reduced Capability (RedCap) 5G data call in Europe
https://www.huawei.com/en/news/2024/3/leader-5g-core
Verizon’s 2023 broadband net additions led by FWA at 375K
At the end of 2023, Verizon’s total broadband base was 10.7 million, with fixed wireless access (FWA) customers making up the bulk of quarterly net additions. For all of 2023, Verizon posted 375,000 net FWA additions, bringing its total fixed wireless subscriber base to over 3 million.
Total broadband net additions were 413,000, compared to 416,000 in Q4 2022. Although Verizon doesn’t post metrics for its DSL customers, overall wireline net adds were 38,000, implying the company lost 17,000 DSL subscribers in the quarter.
In the 4th quarter of 2023, Verizon added 55,000 Fios Internet customers, marking a year-on-year decline of 4,000. Consumer Fios revenue of $2.9 billion increased 1% from Q4 2022, but for the full year was relatively flat at $11.6 billion. Business Fios revenue for the quarter increased 2.6% to $312 million, while jumping 2.8% to $1.2 million for full-year 2023.
CEO Hans Vestberg noted on the earnings call broadband net adds for full-year 2023 totaled more than 1.7 million, “with more than one and a half million from fixed wireless access.” Fios net additions for the year came to 248,000.
Total Broadband:
- Total broadband net additions of 413,000, represented the fifth consecutive quarter that Verizon reported more than 400,000 broadband net additions. Total broadband net additions included 375,000 fixed wireless net additions, bringing the subscriber base to over 3 million. In fourth-quarter 2023, more than 80 percent of Consumer fixed wireless gross additions were in Verizon’s first 76 C-Band markets. Verizon is ahead of schedule to achieve its goal of 4 to 5 million subscribers by the end of 2025.
- 55,000 Fios Internet net additions, down 4,000 from the fourth-quarter 2022.
- 10.7 million total broadband subscribers as of the end of fourth-quarter 2023.
Total Wireless:
- Total wireless postpaid net additions for full-year 2023 increased 26 percent compared to 2022.
- Total wireless service revenue of $19.4 billion, a 3.2 percent increase year over year.
- Retail postpaid phone net additions of 449,000, and retail postpaid net additions of 1,460,000.
- Retail postpaid churn of 1.18 percent, and retail postpaid phone churn of 0.93 percent.
“After delivering continuous improvement throughout 2023, we ended the year strong and continue to pursue the right balance of growth and profitability,” CEO Hans Vestberg said in the 4th quarter earnings statement.
References:
https://www.verizon.com/about/investors/quarterly-reports/4q-2023-earnings-conference-call-webcast
Ookla: T-Mobile and Verizon lead in U.S. 5G FWA
Verizon once again delays 5G Standalone (SA) commercial service
Where Have You Gone 5G? Midband spectrum, FWA, 2024 decline in CAPEX and RAN revenue
The “5G Train Wreck” we predicted five years ago has come to pass. With the possible exception of China and South Korea, 5G has been an unmitigated failure- for carriers, network equipment companies, and subscribers/customers. And there haven’t been any significant performance advantages over 4G. I’ve had a 5G Samsung phone for almost 2 years and I don’t notice any difference in performance from my previous 4G Samsung phone.
Jennifer Fritzsche, managing director at investment bank Greenhill & Company wrote on January 16th:“As carriers pulled back on capex and focused on Free Cash Flow, “5G” mentions saw a precipitous decline on almost every carrier earnings call last year.” However, she is somewhat optimistic for 2024, “2024 will be the year when carriers will need to justify the spectrum spend they paid billions of dollars for only a few short years ago. Although the 5G consumer killer app may already be here (FWA [1.]), the key trend to watch is the development of enterprise solutions for 5G. If carriers can tap into their deep enterprise relationships to play ball here – this 5G thing becomes a lot more real.”
Note 1. It’s quite surprising that Fixed Wireless Access (FWA) has emerged as the most popular 5G deployment, especially from T-Mobile US and Verizon. That’s because it was NOT one of the three 5G use cases defined by ITU-R (Enhanced Mobile Broadband, Machine to Machine Communications and URLLC).
Midband spectrum is a key element supporting the fixed wireless access (FWA) services from all of the big US wireless network operators. FWA promises to supplant wired Internet connections inside homes and offices with 5G connections. Yet network operators aren’t boasting about their midband network buildouts like they were a few years ago. Instead, they’re talking about plans to reduce spending (CAPEX) on their networks in order to boost revenues.
“We’ve been telling you [in 2024] our capital intensity was going to tail off from kind of the peak levels we’ve been at the last couple of years,” AT&T CEO John Stankey said at a recent UBS investor conference. “I expect that’s going to be the case,” he added. AT&T officials have said the company will spend between $21 billion and $22 billion on capital expenses (capex) during 2024, down from $24 billion in 2023. Other operators are signaling similar drawdowns.
“We’ve spent a lot of money over the past five years, a lot of money building the world’s best 5G plant, and it’s time to be able to enjoy having that in the ground and be able to realize the benefits of that,” Sievert, T-Mobile’s CEO, explained.
Financial analysts at Evercore recently wrote that they expect U.S. capex to decline “as the 5G investment cycle tapers off. There should not be another capex cycle for the next few years adding some comfort to the FCF [free cash flow] outlook in a world of fundamental uncertainty.”
RAN revenue continues to decline Year-over-Year. Dell’Oro’s preliminary findings from 1Q23-3Q23 data reveal that the North America RAN market is declining at a much steeper rate than anticipated. Interestingly, the capex decline in the U.S. aligns with operators’ communications, but the North America wireless RAN/capex ratio is on track to reach the sub-15% range, highlighting the disconnect lies not in capex decline but in the proportion allocated to the RAN. Yet RAN excluding North America is actually coming in stronger than what we outlined going into 2023, in part because of the incredible 5G ascent in India. Putting things together, it appears that the surprise on the downside in the U.S. is more than enough to offset the stronger-than expected showing in the Asia Pacific region.
Looking ahead, Dell’Oro is forecasting global RAN to record a second consecutive year of RAN contractions in 2024, though the pace of the decline should be more moderate. The regional dynamics will change as the pendulum swings towards the negative in India. Wireless capex in the US is still on track to decline. Yet we are forecasting the North America RAN market to grow, implying a greater portion of the capex will be allocated towards the RAN segment in 2024
Dell’Oro’s Stefan Pongratz concludes:
In summary, 2024 is unlikely to emerge as the most exhilarating year from a broader RAN revenue growth perspective. Even so, within the market, there will be pockets undergoing significant changes. While some of the upcoming growth areas will remain relatively small, 2024 is poised to be an important transition year for various wireless sub-segments. As always, the competitive RAN landscape will continue to be fierce. Despite the anticipated decline in certain aspects of the RAN market, it should be an eventful year.
References:
https://www.igr-inc.com/communications-infrastructure/fritzsches-forum/240116/
https://www.lightreading.com/5g/america-s-5g-buildouts-move-into-unknown-territory
https://www.sdxcentral.com/articles/contributed/what-to-expect-from-ran-in-2024/2024/01/
Dell’Oro: RAN revenues declined sharply in 2023 and remain challenging in 2024
U.S. Network Operators and Equipment Companies Agree: 5G CAPEX slowing more than expected
MTN Consulting: Generative AI hype grips telecom industry; telco CAPEX decreases while vendor revenue plummets
U.S. 5G spending slowdown continues; RAN revenues set to decline for years!
https://www.delloro.com/news/worldwide-telecom-capex-to-drop-7-percent-by-2025/
Dell’Oro: Telecom Capex Growth to Slow in calendar years 2022-2024
https://www.sdxcentral.com/articles/contributed/what-to-expect-from-ran-in-2024/2024/01/
https://www.lightreading.com/fixed-wireless-access/fwa-to-remain-biggest-disruptor-through-2024
https://www.lightreading.com/5g/what-they-re-saying-about-5g-capex-in-2023-and-2024
Ookla: T-Mobile and Verizon lead in U.S. 5G FWA
The U.S. is at the forefront of fixed wireless access (FWA) deployments, with many major wireless carriers, including T-Mobile, Verizon, AT&T and UScellular targeting expansion.
T-Mobile has built up a lead in terms of 5G fixed-wireless market share, with Verizon following closely, and AT&T recently launching a new FWA service – AT&T Internet Air. We examined Ookla Speedtest data to understand how FWA performance is evolving in the U.S., and how it is impacting churn in the market.
Key Points:
- T-Mobile & Verizon 5G FWA performance holding up well nationally. Despite strong customer growth, both T-Mobile and Verizon have maintained performance levels over the past year according to Speedtest data. Both ISPs recorded similar median download speeds in Q3 2023, although T-Mobile maintains an edge on median upload performance. Despite this, there are significant differences in performance at a State-level, and for urban versus rural locations.
- Cable & DSL providers bear the brunt of user churn. The FWA value proposition is clearly resonating most with existing cable and DSL customers, which make up the vast bulk of churners to both T-Mobile’s and Verizon’s FWA services. It’s not one-way traffic however, with T-Mobile’s larger user base in particular showing some attrition to cable providers. In rural locations where options are more limited, FWA services are increasingly going head to head, with over 10% of users joining Verizon’s FWA service coming from T-Mobile.
- Clear signs that download performance could be a key contributor to churn in the market. Our analysis of the customers of major ISPs in the US that have churned to T-Mobile’s FWA service shows that their median download performance before churning was below the median performance of all customers of these ISPs, indicating a performance short-fall that is likely contributing towards churn.
- Further C-band spectrum will serve to strengthen FWA’s case. The release and deployment of additional C-band spectrum for all three national cellular carriers, and AT&T’s new FWA service will drive further performance gains, and further competitive pressure in 2024.
T-Mobile and Verizon FWA scaling strongly and national performance holding up well:
Launched during the COVID-19 pandemic, FWA services from T-Mobile and Verizon have seen strong growth over the past three years. Aided by disruptive pricing strategies, no annual contracts, and ease of installation (self-install), net additions remain strong for both ISPs. T-Mobile’s current FWA plan retails for $50/month, but that falls to $30/month for customers subscribing to its Magenta MAX mobile plan. Verizon prices at a slight premium to T-Mobile, with its FWA service currently retailing for $60/month, but falling to $35/month with select 5G mobile plans. On the back of their success we’ve also recently seen AT&T update its FWA strategy, launching AT&T Internet Air in August 2023, with a similar pricing strategy.
Utilizing the same 5G spectrum that its mobile customer base accesses, both T-Mobile and Verizon have been at pains to point out how they manage the on-boarding of new FWA customers, in order to limit any negative impact on performance for both cellular and FWA customers. The release and rollout of additional C-band spectrum for all three operators will provide extra headroom and the potential for improved 5G FWA performance, while T-Mobile has begun testing 5G Standalone mmWave, and has indicated that this could be utilized for 5G FWA in the future.
Performance on T-Mobile’s and Verizon’s 5G FWA services has held up well to date, although it lags behind median download performance of the major cable and fiber ISPs. The median download speed across the US for all fixed providers combined in Q3 2023 was 207.42 Mbps. T-Mobile has recorded consistent median download speed over the past four quarters, reaching 122.48 Mbps in Q3 2023 based on Speedtest data, but saw its median upload performance erode slightly, down from 19.76 Mbps in Q4 2022, to 17.09 Mbps in Q3 2023. Verizon on the other hand improved its median download performance when compared to Q4 2022, reaching a similar level to T-Mobile, of 121.23 Mbps in Q3 2023. However, its upload performance remained lower than T-Mobile’s, at 11.53 Mbps.
Ookla’s Speedtest data was used to identify the number of churned users since Q2 2022, when FWA services really started to scale and impact the rest of the market. The bulk of churn for both T-Mobile’s and Verizon’s 5G FWA services are coming from cable and DSL providers, confirming what the service providers have said.
The market research firm said that performance on T-Mobile’s and Verizon’s 5G FWA services has held up well to date, although it lags behind median download performance of the major cable and fiber ISPs.
Ookla clocked the median download speed across the U.S. for all fixed providers combined in Q3 2023 at 207.42 Mbps. T-Mobile recorded consistent median download speed over the past four quarters, reaching 122.48 Mbps in Q3 2023 based on Speedtest data, but saw its median upload performance erode slightly, from 19.76 Mbps in Q4 2022 to 17.09 Mbps in Q3 2023.
Meanwhile, Verizon improved its median download performance when compared to Q4 2022, reaching a similar level to T-Mobile, of 121.23 Mbps in Q3 2023. However, its upload performance remained lower than T-Mobile’s, at 11.53 Mbps, Ookla said.
While median performance has remained fairly steady for both operators over the past year, Ookla said it’s a different story when it comes to regional performance and between urban and rural regions.
Rural locations – predictably – fared worse than urban locations for both T-Mobile and Verizon 5G FWA service, given differences in spectrum availability and distance from cell sites, although the difference was starker for Verizon’s FWA service, Ookla said. Verizon’s FWA service recorded a median of 155.77 Mbps in urban locations during Q3 2023, but only 51.41 Mbps in rural locations.
T-Mobile increased rural FWA performance, from 82.20 Mbps in Q4 of 2022 to 91.96 Mbps in Q3 2023. Verizon’s performance in urban locations improved, with the 155.77 Mbps it achieved in Q3 2023 representing a sizable increase on the 125.55 Mbps it recorded in Q4 2022.
All of the big mobile operators, including AT&T with Internet Air, will see improved 5G FWA performance with additional C-band spectrum, and T-Mobile could potentially use millimeter wave on its 5G standalone (SA) network for FWA, Ookla noted.
References:
https://www.ookla.com/articles/fixed-wireless-access-us-q3-2023
https://www.fiercewireless.com/wireless/t-mobile-verizon-5g-fwa-performance-holds-ookla
Verizon, T-Mobile and AT&T brag about C-band 5G coverage and FWA
Verizon says it has approximtely 222 million people covered with its mid-band C-band network, [1.] a figure the company hopes to increase to 250 million by the end of next year. “C-band is a game change for our business,” CEO Hans Vestberg said on the telco’s 3rd quarter earnings call. “Our network is winning.”
Note 1. C-band sits between the two Wi-Fi bands, which are at 2.4GHz and 5GHz. It’s slightly above and very similar to the 2.6GHz band that Clearwire and then Sprint used for 4G starting in 2007, and which T-Mobile currently uses for mid-band 5G. And it adjoins CBRS, a band from 3.55 to 3.7GHz that’s currently being deployed for 4G. ITU-R divided C-band into three chunks, referred to as band n77, band n78, and band n79.
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Verizon officials said the company is using the capacity in its mid-band 5G network to pursue opportunities like fixed wireless access (FWA) and private wireless networks. “We see demand for the product continuing to grow,” Vestberg said of Verizon’s private wireless network offerings. He added that Verizon is working to transition its private wireless customers from pilots to commercial deployments. He also said the company is growing its ecosystem of suppliers for that business.
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T-Mobile announced Tuesday it now covers 300 million people with its 2.5GHz mid-band network, reaching that goal three months earlier than the company had planned. T-Mobile’s overall 5G footprint has expanded as well, now covering more than 330 million people or 98% of the population.
“We have been leaders in the 5G era from the start, deploying the largest, fastest, most awarded and most advanced 5G network in the country faster than anyone else,” said Ulf Ewaldsson, President of Technology at T-Mobile. “While the other guys are playing catch-up, finally beginning to build out their mid-band 5G networks, we are maintaining our lead and will continue offering customers the best network – paired with the best value – for years to come.”
“T-Mobile’s turnaround story is incredible, going from network underdog a decade ago to the undeniable network leader today,” said Anshel Sag, Principal Analyst at Moor Insights and Strategy. “T-Mobile has not only built out a robust 5G network with unmatched coverage and capacity, but the Un-carrier is also leading the way in rolling out new capabilities that will unlock the true promise of 5G.”
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Last week, AT&T said it ended the third quarter covering 190 million subscribers for its mid-band 5G network, and said it remains on track to cover 200 million by the end of the year. On the telco’s 3-2023 earnings call, CEO John Stankey said, “we continue to enhance the largest wireless network in North America and expand the nation’s most reliable 5G network. It’s no surprise that when you combine our high-value customer growth and rising revenues per user, we continue to grow profits in our wireless business.”
Regarding FWA, Stankey touted the company’s Internet Air offering. “We have no issues selling Internet Air into the business segment. It’s a really attractive thing for us to do. It’s a really helpful product on a number of different fronts. It meets a particular need.
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References:
https://www.lightreading.com/private-networks/verizon-jumps-too-as-mobility-biz-surprises-in-q3
https://www.pcmag.com/news/what-is-c-band
https://www.fool.com/earnings/call-transcripts/2023/10/19/att-t-q3-2023-earnings-call-transcript/
https://www.att.com/internet/internet-air/