AT&T expects standards-based deployment of fixed 5G as early as late 2018. That is going to be important for one key reason: in the early going, the most-tangible new revenue upside from 5G will come from 5G fixed wireless. That largely will come in cases where fixed wireless allows gigabit per second internet access without a full fiber-to-home upgrade, dramatically lowering the cost per premises connected.
The very first standardized deployments of 5G-based FWA are expected to be commercialized as early as 2019, according to researchers at SNS Telecom.
Driven by early commercial rollouts by Verizon Communications and AT&T in the United States, 5G-based FWA subscriptions are expected to account for $1 Billion in service revenue by the end of 2019 alone.
The market is further expected to grow at a compound annual growth rate of approximately 84 percent between 2019 and 2025, eventually accounting for more than $40 Billion.
The best way to envision and dimension the size of the revenue opportunity is to look at the fixed internet access business, which 5G-based fixed wireless will attack.
In the second quarter of 2017, for example, U.S. telcos lost at least a net 233,260 such accounts, according to Leichtman Research Group. Between them, AT&T and Verizon lost about 32,000 accounts.
If AT&T and Verizon merely halted 75 percent of those fixed network internet access account losses, that would represent annual gains of about 96,000 accounts. Assuming those saved accounts represent monthly gigabit access revenue of $70, each such account represents $840 in annual revenue, or about $80.6 million in revenue.
If AT&T and Verizon did better, and actually gained 231,000 net new accounts (splitting those gains with cable TV operators), the annual revenue impact would be about 359,000 net new accounts.
That might represent $301 million in net new revenue, plus avoided losses of $80.6 million, for a total revenue swing of about $$382 million.
But there is more. Once gigabit access is available, linear and on-demand TV services can be sold to the accounts. Assume gains of 231,000 net new accounts per year, with linear video take rates of 50 percent. That might mean 115,500 net new video accounts. Assume average revenue per account of $80 per month. That implies annual incremental revenue of about $111 million.
That implies total revenue upside of perhaps $493 million per year.
For AT&T, which has a consumer internet access business generating a bit under $2 billion per quarter, $7.6 billion annually, and assuming 68 percent of all the net gains are reaped by AT&T, that firm’s gains would be perhaps $335 million. Granted, that only boosts AT&T consumer segment revenues a bit over four percent per year.
But positive revenue growth matters, in a product segment that has been going in reverse. Also, if one considers internet access the strategic product in the consumer fixed network segment, reversing share losses, and gaining perhaps half of net new additions matters just as much.
One might argue that the number of mobile phone accounts using 5G is the single-biggest bucket of 5G network, and that likely will be the case. But 5G accounts largely are a substitute for 4G, so there is little--if any--incremental new revenue.
In most cases, 5G-based fixed wireless will represent new accounts and incremental revenue. And even if internet of things eventually grows, as a new services contributor, that might take a decade or more.
That business case will especially be strong in North America, where lower population densities have proven a challenge for the fiber to home business case.
By 2021 or so, according to Ericsson, there might be 1.5 billion internet of things connections on mobile networks, with low per-connection revenue.
AT&T is expanding its fixed wireless 5G trials to business and residential customers in Waco, Texas; Kalamazoo, Michigan; and South Bend, Indiana by the end of 2017, after tests launched in Austin in June 2017.
In tests so far, AT&T has seen speeds up to 1 Gigabit per second and latency rates well under 10 milliseconds for the radio link at customer trial locations in Austin.
AT&T expects commercial equipment to be available within six months of the completion of the 5G Release 15 standard. In contrast, LTE equipment wasn’t available for a year to 18 months after the LTE standard was complete, says AT&T.
In 5G Evolution metros AT&T has upgraded cell towers with network upgrades that include LTE Advanced technologies like 256 QAM, 4x4 MIMO, and three-way carrier aggregation.
By the end of 2017, AT&T expects to deploy LTE-License Assisted Access and four-way carrier aggregation in certain areas of 5G Evolution metros.
AT&T recently tested LTE-LAA technology in San Francisco where peak speeds of more than 750 Mbps were obtained.
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