In the US market at least, FWA seems to be leading new 5G service revenue generation
When Verizon initially launched 5G in 2018, it was a pre-standard mmWave FWA. Since then, and in line with the articulated plan to provide nationwide broadband using wireless and its fiber-based Fios footprint, Verizon has used its C-Band holdings to dramatically expand the availability of home internet service. At a 2022 investor event, the company projected that 50 million households would be covered by the end of 2025, 14 million businesses in the same timeframe, and 4 million to 5 million total subscribers by the end of 2025.
Fast forward to the latest quarterlies and Verizon reported 379,000 FWA net additions. With regard to the 4 million to 5 million goal reported at the investor event in 2022, CEO Hans Vestberg said, “We are well ahead on that plan…When it comes to our capacity, we have definitely capacity for that and much more.”
Using excess mobile network capacity to offer up cellular-based FWA is the model Verizon and competitor T-Mobile US are both using. T-Mobile US appears largely focused on customer acquisition in small and rural markets. The broader dynamic is around putting in-market a home internet service to challenge cable players, which in many cases enjoy near-monopolies in many markets, while also increasing bundling opportunities for existing mobile customers in areas also served by FWA.
T-Mobile US on fiber vs. 5G FWA
Back to T-Mo’s FWA ambitions. On Feb. 1 the operator reports fourth quarter 2022 numbers, including a break out of home broadband subs. In that quarter, there were 524,000 net customer additions for a total of 2 million in 2022, and 2.6 million total in the base. CEO Mike Sievert said on the call, “We’re moving our eligible homes from 40 million to 50 million, and that means that there’s 50 million homes out of 140 million nationwide, where if tomorrow morning you applied for service, we’d say yes. And so that is a big footprint.”
Sievert also used a vehicular analogy to lay out his thoughts on 5G FWA versus fiber. “It’s kind of like the people at Ferrari pointing a finger at the world’s best-selling car, Toyota, saying, ‘We’re faster. We have the faster car.’ Yes, but Toyota is the world’s best-selling car, and that’s because–and if you look in the case of T-Mobile 5G home broadband–because it’s perfectly suited to what people want. And although it has less overall potential for capacity than a strand of fiber, which is patently obvious, it’s radically simple. It’s low cost. It’s transparent. It’s portable within tens of millions of households. And it has the speed and capacity that allows people to do what they want.”
He continued: “When we launched this product, we talked about 7 million to 8 million homes. And as you can see from our numbers, we’re tracking beautifully to that. And the question now is where do we go from here. And I gave comments before about whether or not we’re looking at ways that could augment that strategy. Of course, we are. But that’s because we have a winning product and massively expanding capacity to support it. One of the things to keep in mind is that economically, this, unlike fiber and cable, this product so far is not burdened by amortization of capital and the cost structure, right? So we’re able to take the capital that we deployed from mobile and find places with excess capacity and market broadband there. And those places are rapidly expanding, even though we have millions of customers on board now soaking some of it up.”
