Why Fixed Wireless?

The theme of “convergence” has a several-decades-long importance. In the early 1990s convergence often meant cable TV companies and telcos were going to be in the same business, even if they had been separate industries. In the mid-1990s convergence meant all media types would be carried on a single IP network.

In the first decade of the 21st century the term--though little used--has tended to be seen as mobile and fixed network lines of business are viewed as complementary assets. Many would say that recent move illustrates growth challenges in the telecom business.

And that is why 5G fixed wireless has emerged as an important potential trend. If revenue and subscriber growth in mobility is limited, growth in adjacencies becomes more important.

T-Mobile US is the latest major U.S. mobile operator to express interest in fixed wireless, joining Verizon. AT&T has been less committal until recently, when the company once again is saying fixed wireless will become a significant competitor or alternative to cabled network access.

source: ABI Research

In recent years, some have noted, telcos with both mobile and fixed network assets have done better, financially, than many mobile-only or fixed-only operators. Where mobile-only service providers have done better, it has often been in markets where the attacker can take share from the incumbent.

In many cases, however, revenue growth has been close to zero.  

But the era when revenue is lead by mobile internet access will be challenging for mobile operators, some have argued, in large part because investments in ever-greater capacity will not be matched by revenue growth sufficient to sustain such investments.

The point is that, even if both fixed and mobile revenue opportunities are strained, what is easier: mobility players attacking fixed network revenue streams, or fixed network operators attacking mobility revenue streams? Over the past three decades, mobile operators have consistently grown either by creating new markets or taking away revenue from fixed operators.

So mobile substitution for fixed network internet access (with or without entertainment video) now is getting a look, as huge expansions of capacity are coming with 5G.

T-Mobile US has no fixed network assets, whereas AT&T is the biggest fixed network provider, Verizon the second biggest. In essence, 5G fixed wireless allows Verizon to expand outside its relatively-small fixed network footprint.

For T-Mobile US, which has no fixed network footprint at all, the ability to offer fixed wireless services offers it a huge new growth opportunity.

AT&T arguably has less upside, although the ability to upgrade its fixed network base without the capital fiber-to-the-home would provide is the attraction.

One reason the move into fixed network services makes sense, beyond the ability to grow by taking market share away from cable companies and other telcos, is that T-Mobile US does not expect to charge a premium for 5G service, compared to 4G. That means incremental 5G revenues from subscriptions essentially will be zero.

“We don't have plans for the smartphone plans that you see today to charge differently for 5G enablement versus 4G LTE,” said Mike Sievert, T-Mobile US COO. “We have big aspirations for incremental revenues and growth from 5G, but not through pricing, through our current smartphone plans.”