T-Mobile US is looking into the possibility of building a fiber network, either as part of a joint venture or a commercial partnership, according to reporting by Bloomberg.
AT&T and Verizon have significant fiber networks, both to support fiber-to-the-premise enterprise and residential services as well as backhaul for their respective mobile networks, with “ownership economics” in their favor and multiple ways to monetize those expensive fiber networks. T-Mobile US, meanwhile, has been a pureplay wireless network operator, depending on leasing fiber capacity to support its wireless network backhaul needs. When it acquired Sprint, the new depth and breadth of its spectrum holdings enabled it to move into using its wireless network to offer home broadband service (and to make extensive promises to the Federal Communications Commission about expanding rural broadband coverage) because it has excess mobile network capacity.
T-Mobile US has been seeing success in that FWA strategy; its network includes an ever-growing percentage of Fixed Wireless Access home broadband subscribers, adding another 578,000 in the third quarter for a total internet customer base of about 2.1 million. T-Mobile US has said that it anticipates a customer base of between 7-8 million FWA subscribers by the end of 2025.
The Ericsson Mobility Report expects FWA data traffic to grow by nearly 5x and reach 86 exabytes in 2027. That’s on a global basis, and North America is one of the leading FWA markets. But such growth could be tricky to navigate without impinging on the performance of the mobile network. Those FWA customers are data-hungry (a recent estimate from BCG says that FWA customers use between 20-40 times more data than a mobile customer), but represent lower revenue-per-bit than the premium paid by mobile users.
Bloomberg reported that T-Mobile US was considering getting into a fiber network by chipping in on either a joint venture or a commercial partnership worth up to $4 billion, and that it is working with Citigroup to find partners. Bloomberg had previously reported that AT&T is taking a similar tack and has turned to Morgan Stanley for help finding an infrastructure partner on a potential $10-15 billion joint venture to expand its fiber network.
T-Mobile US declined to comment on the Bloomberg report or its fiber strategy going forward.
On T-Mobile US’ most recent quarterly call on Oct. 27, CEO Mike Sievert was asked about his thoughts on fiber ownership and the potential impact that the company’s success with 5G Fixed Wireless Access is having on its backhaul needs.
Sievert responded: “We love our ability to move fast and serve customers as a wireless pure play, and it’s been a big source of strength. That said, we are very open-minded about whether our team, our ability to execute, our brand [and] our in-place 5G network could serve broader markets. … So we’re, of course, interested in adjacencies that would very smartly utilize all of those assets, including our physical and digital distribution capabilities.
He emphasized several times that the company “[hasn’t] drawn any conclusions about” fiber, and went on to add, “I really can’t answer whether 5G fixed wireless success makes us more interested or less interested. It could be a little of both for the obvious reason. So, you’ll have to stay tuned,” he concluded, before going on to note that T-Mobile is currently working on small-scale partnerships in support of the fiber-to-the-home product, T-Fiber, that it is offering only in the New York City metro area.
As T-Mobile US sees success in 5G FWA, Sievert said that the company is “learning a lot about what it takes to be a home broadband operator” and that on the question of whether the strictly mobile network operator could provide broadband services, “We’re starting to be able to answer that for ourselves, and we’re growing some confidence in that. … We like our plan. We’re confident in our plan. And if we can find accretive smart ways to augment that plan … we’ll look at those things.”
