There is less skepticism about 5G fixed wireless in the U.S. market than there was several years ago. Which is not to say all skepticism is gone, especially regarding the usefulness of millimeter wave spectrum.
Still, there are lots of reasons why some service providers are interested. Since fixed network access average revenue per account is higher than mobile data average revenue per user, there is revenue lift if fixed wireless can scale.
For some service providers, fixed wireless allows a chance to compete in brand-new markets for the first time, as when T-Mobile US promises to take on cable TV operators, who lead market share in fixed network broadband.
partial geographic coverage gives several service providers incentive to use fixed wireless to compete with fixed service providers out of region.
Of the more than 135 million U.S. home locations, no service provider has a fixed network that passes much more than 53 percent of those locations. That is true for Verizon and CenturyLink, which have relatively-small household coverage footprints, as well as for Sprint and T-Mobile US which have virtually zero footprint.
Stranded assets are another big driver of potential strategic advantage. Consumer propensity to pay for fixed network access is limited, and does not change much, year over year. And since consumers are using much more data, that means the revenue per bit, and the cost to supply that demand, must be reduced.
Stranded assets are a growing business model issue for large tier-one service providers. Consider that, between 2012 and 2015, U.S. fixed network switched voice connections dropped from 96 million to 64.6 million, a decline of 33 percent in just three years.
Of course, some additional lines were supplied by telcos, using voice over internet protocol platforms, so the extent of the voice services loss is less than appears, looking only at switched line loss.
The point is that nearly half of the total voice market now is supplied by attacking service providers, not telcos. Cable TV providers also dominate residential broadband. Cable has about 60 percent market share nationally and has been getting essentially all the net new additions for a decade.
In other words, a telecom fixed network built to serve “everyone” is used by about half of homes passed. That means the cost to serve each customer is twice as much as it used to be, as customers wind up paying for network investment that is stranded, and does not generate revenue.
Assume there are about 126 million U.S. households, about 98 percent of which are passed by a telco network. That implies some 123.5 million locations, of which perhaps 53 percent buy either voice service or internet access (probably an optimistic assumption).
That means a telco’s fixed network derives revenue from about 65 million homes, or perhaps 53 percent of locations.
Under such conditions, fixed wireless might be a way to keep pace with cable TV speeds, without the stranded investment fiber to the home represents, for U.S. telecom service providers.
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