How Important is 5G Fixed Wireless, and for Whom?

As easy as it might be to dismiss fixed wireless, it might be equally easy to overstate its impact. At the end of 2021 there might have been about 70 million fixed wireless connections in service globally, according to Deloitte.

Ericsson believes there were as many as 90 million fixed wireless connections in service in 2021.  

source: Deloitte 

By the end of 2021 there were about one billion fixed network internet access subscriptions, according to Point Topic. So fixed wireless represented possible seven percent to nine percent of fixed network internet access connections globally. 

source: Point Topic 

So fixed wireless clearly is incremental to use of other platforms. On the other hand, fixed wireless can be incrementally important. For some service providers it might represent a business case that other platforms cannot match. That might especially be true in geographies where the cost of building cabled networks is not feasible. 

Use of 5G as the fixed wireless platform might be important for some service providers for additional reasons. 

Mobile-only firms formerly unable to compete in the home broadband market, or unable to compete for much of that market, might find 5G fixed wireless viable. 

5G fixed wireless connections could--in many cases--provide significant incremental revenue growth, allowing mobile operators to compete for home broadband accounts now largely the province of fixed network operators. 

Assume global  gross national income per capita of about $11,600 and a monthly home broadband cost of five percent of GNI per capita. That is about $580 in annual revenue per line. 

So 75 million new fixed wireless accounts represents perhaps $43.5 billion in new annual revenue for mobile service providers. That can take the form of new accounts or market share taken from other suppliers. 

Fixed wireless using 5G will by 2026 support 180 million connections globally and generate US$70 billion in revenue, accounting for 40 percent  of the total fixed wireless access market, according to ABI Research. 

Adoption likely will be highest in markets where the cost of deploying fiber to home or hybrid fiber coax remains unworkable, and where demand for moderate-speed internet access is high. Some might argue that 5G fixed wireless is most directly the successor for 4G fixed wireless and digital subscriber line. In some markets that opportunity might last for a substantial amount of time.

5G fixed wireless might be especially important for firms that have not yet been able to compete in all of most of the home broadband market. For T-Mobile in the U.S. market, that represents a huge opportunity, since T-Mobile has had zero percent share of the home broadband market. 

And Verizon expects that fixed wireless will underpin as much as 71 percent of the potential locations it will reach for home broadband service by about 2025. 

Some will counter that 5G fixed wireless speeds will not generally match those of fiber to home or cable modem services. That is likely to be true.

But 5G fixed wireless is likely to be attractive to a substantial portion of the market. In rural areas, where service might only be available in the 50 Mbps range, that still could be competitive.

Overall, about 20 percent of U.S. home broadband buyers purchase services operating no faster than 100 Mbps. So the issue is general availability of fixed wireless services offering speeds of 100 Mbps to  200 Mbps. 

source: Openvault

Nearly half the market presently buys service operating between 100 Mbps and 200 Mbps. And nearly 68 percent of the U.S. market buys service operating no faster than 200 Mbps. 

Also, the U.S. home broadband market is big enough that gaining just a couple of points of the installed base and market share generates substantial revenue. By 2023, fixed wireless might represent about 4.5 percent of all home broadband accounts , some estimate.  

To put that into perspective, consider projected revenue for other new services. In 2024, it is conceivable that  IoT connectivity revenues for mobile operators globally could  be in the low millions to tens of millions of dollars, according to Machina Research. Millions, not billions. 

In 2026 the global multi-access edge computing market might generate $1.72 billion. Even if one assumes all that revenue is connectivity revenue booked by mobile operators, it still is a far smaller new revenue stream than fixed wireless represents. 

In 2020 there were perhaps 80 million fixed wireless subscriptions in service. Researchers at Mobile Experts see that number growing to almost 200 million by 2026. 

Ericsson notes that more than 70 percent of all service providers now offer fixed wireless access   services. Ericsson also predicts that fixed wireless connections will exceed 180 million by the end of 2026.

By 2026, assuming these forecasts are accurate, fixed wireless will represent about 12 percent of fixed network broadband connections, Ericsson estimates.  

Keep in mind that the incremental revenue from 75 million 5G fixed wireless connections does not include the revenue from 4G fixed wireless connections, which might represent another 110 million connections. 

That represents an additional $104.3 billion in annual revenue, assuming a global average of $48 per month, per line. 

The point is that incremental revenue from 5G fixed wireless might dwarf new revenues earned by mobile operators from edge computing and internet of things.

Private Network, VPN or Edge Compute?

There always are multiple ways--in computing or communications--to solve a particular problem. Ask any engineer: there always are tradeoffs for any proposed solution.

To the extent that network slicing (virtual private networks) is a solution for some latency, bandwidth or availability issues, both private networks and edge computing provide possible substitutes. 

So some might theorize that private networks and edge computing will minimize the market for network slicing or virtual private networks. 

In the end, this likely will shape up to be another “both and” outcome. As we once debated the extent to which Wi-Fi could be a substitute for mobile connectivity, the likely outcome is that we will use virtual private networks, edge computing and private networks, for different use cases.

As often is the case in the communications and computing businesses, there is no one size fits all solution. Wide area private networks can optimize latency, bandwidth,  support for low-power devices and apps or availability and reliability. 

source: STL Partners 

  

But edge computing can address those same problems. So can private networks. Both network slicing and edge computing are suitable for mass deployment apps. Private networks are better for single-enterprise apps. 

Private networks and edge computing arguably are better for supporting compute-intensive apps that also have very low latency requirements as well. Network slicing arguably is better suited for mass market, high-scale, highly-distributed apps. 

In the end, private networks will not be a complete substitute for network slicing, any more than edge computing will be a universal substitute for network slicing or private networks.

Will Unlimited 5G Data Plans Reduce Wi-Fi Usage?

T-Mobile believes customers of its unlimited usage  5G service are starting to rely on the 5G network and not shifting access to Wi-Fi. 

In mid-December 2021, T-Mobile said “13 percent fewer MAX users are connecting to Wi-Fi, 80 percent more are hosting a Wi-Fi hotspot and their hotspot usage is up 20 percent on average during the weekends.”

That is not unexpected, as the leading mobile service providers shift users to higher-priced unlimited usage plans that eliminate the financial incentive to switch to Wi-Fi. 

In 2021, Wi-Fi represented as much as 46 percent of total global end user IP traffic, according to Cisco. Mobile networks supported about 17 percent of total end user IPtraffic in 2021. Fixed networks delivered nearly 53 percent of internet traffic in 2021, compared to the share delivered by mobile networks, at about 21 percent, Cisco says. 

Usage varies by market. In India, about 98 percent of total internet access uses a mobile device. Globally, mobile users consume as much as 60 percent of total data on fixed networks (Wi-Fi).

In recent years, U.S. mobile customers have spent about half their connected time on Wi-Fi (fixed network), not the mobile network . 

By 2023, U.S. mobile users might offload as much as 75 percent of data consumption to fixed networks, some in the Wi-Fi community believe. But much hinges on how consumers behave when they have unlimited usage plans, which might reduce Wi-Fi consumption. 

source: Cisco, WiFiForward 

It might also matter how mobile tariffs are shaped. Home broadband allows multiple users and devices to share a single account. As mobile plans move towards unlimited usage, and if multi-user plans create incentives for smartphones to remain on the mobile network all the time, and if indoor reception is not an issue, then more users might remain connected to the mobile network all the time. 

An Ericsson study found that 5G customers on unlimited-usage plans reduced their reliance on Wi-Fi. In markets such as the United States, Taiwan, Switzerland, Finland and South Korea, where a higher proportion of 5G users are on unlimited plans, 22 percent have decreased their home Wi-Fi usage, while 14 percent have stopped using Wi-Fi after upgrading to 5G, Ericsson found.

Older data (from 2016) shows the same pattern. A 2018 analysis suggested that unlimited-usage mobile data plans decreased use of Wi-Fi by about eight percent. 

source: Nielsen 

Motivations can change over time. In the 3G era, users switched to Wi-Fi because Wi-Fi was faster than 3G. In the 4G era, when 4G was generally faster than Wi-Fi, the switch to Wi-Fi made sense because it reduced mobile data plan usage. 

The 5G pattern is not so clear, at least not yet. Assuming the financial benefit of switching to Wi-Fi is not present, then speed, signal stability or other advantages could be decisive. 

Why 5G Value for Many Buyers is Not "Speed" or "Latency" Performance

Even if the 5G networks could magically spring up fully-deployed, with no construction obstacles, there would still be a lag between availability and customer acceptance. The reason is that not all customers are early adopters.

Early on, innovators and early adopters drive take rates. For them, the value of better performance is enough to create demand, even in the absence of compelling new use cases or applications. 

source: Researchgate 

Novelty does not create demand for mainstream customers, who need a value proposition oriented around some practical value beyond bragging rights. Mainstream customers must see a solution to some existing problem.

So cumulative adoption looks like an S curve. Innovators need little beyond the promise of performance to buy. Mainstream consumers need more than raw performance enhancements. They need perceived value beyond speed or latency improvements.

In some cases, that problem might be “predictability of service charges” more than “speed” as such. “No overage charges” is a value people understand. In other cases the lure might be “no additional cost video streaming subscriptions.” In yet other cases the value might be the ability to “use all the features of my new phone.”

The point is that mainstream consumers need tangible benefits, and those benefits might not flow directly from “faster speed” claims. 

The concept of the S curve describes consumer adoption behavior,  product life cycles, suggests how business strategy changes depending on where on any single S curve a product happens to be, and has implications for innovation and start-up strategy as well. 

source: Semantic Scholar 

Some say S curves explain overall market development, customer adoption, product usage by individual customers, sales productivity, developer productivity and sometimes investor interest. 

It often is used to describe adoption rates of new services and technologies, including the notion of non-linear change rates and inflection points in the adoption of consumer products and technologies.

In mathematics, the S curve is a sigmoid function. It is the basis for the Gompertz function which can be used to predict new technology adoption and is related to the Bass Model.

I’ve seen Gompertz used to describe the adoption of internet access, fiber to the home or mobile phone usage. It is often used in economic modeling and management consulting as well. 

The S curve also fits and explains consumer adoption of new technologies.

Why the Perception of "Little 5G Value?"

5G value is an issue for some users who have bought it. It remains an issue for many who have not yet done so. But if 4G provides any evidence, 5G value is going to change over the lifespan of the network. 

The initial value will be “speed,” even if user experience is less changed than some will expect. The value after a decade will be “new use cases” and apps. The betting early on is that many--perhaps most--of the new use cases will come from enterprise, not consumer uses. 

After a decade or so, we are likely to have discovered new consumer apps as well. It just is hard to say what those mass deployed use cases will be. Perhaps nobody predicted the emergence of ride sharing as an important 4G use case. 

Few predicted turn-by-turn navigation would be important. And though streaming video and audio were foreseen, even those apps do not rely so much on “speed” as the creation of easy-to-use and popular streaming apps.

In fact, the rise of “mobile-first” apps does not depend, strictly speaking, on bandwidth improvements brought by 4G, though faster speeds are an enabler. 

That would not be unusual for a next-generation mobile network, up to a point. If nothing else, coverage is an issue, early on. Even a better network does not help if it is not “generally available.”

Complicating matters is the rollout of 5G during the Covid pandemic and many restrictions on “out of home” and “on the go” usage. Working or learning remotely, many users likely spend most of their time connected to home Wi-Fi. So even if 5G is faster, the amount of time any single user might use it is far more limited than under normal circumstances. 

Still, faster speeds should help, up to a point, with existing applications, as page loading on a 600-Mbps fixed network connection should provide some noticeable advantages compared to a 300-Mbps connection (especially in multi-user and simultaneous multi-device usage cases. 

Since 3G, the key user experience gain has been “faster mobile data access.” Sometimes that is tangible; but sometimes not so much.

An argument can be made that latency has even greater user experience impact on a mobile network. Beyond some relatively low point, additional speed might not improve user experience. We can debate what that threshold is, as it changes over time. 

If a consumer’s primary reason for buying 4G was a tethering experience closer to fixed network experience, the 4G advantage was immediately tangible. If the primary advantage sought was mobile web browsing experience similar to fixed network experience, then the advantage might well have been tangible. 

5G poses a bit of a tougher problem. When downstream 4G speeds are routinely in the 20 Mbps to 30 Mbps to 35 Mbps range, how much does experience change when 5G offers 165 Mbps? It should help, but how much?

It depends on what a user does on a phone. Web page loading will be faster, but how much faster? Ignore for the moment the authoring of a web page (optimized for mobile access or not; how well optimized). 

For fixed network access, faster access speeds have not necessarily meant that web pages are loading faster, for example. 

On mobile networks, connection speeds have improved, but mobile page load times tracked by have increased, according to the Nielsen Norman Group.

source: Nieslen Norman Group 

Of course, page and landing page loading times are not a direct function of access speed but perhaps largely an artifact of remote server performance. So access speed is not the only, or perhaps not even primary determinant of user experience. 

The build-out phase of a national next-generation network takes years, so coverage outside of urban cores will typically be an issue. In some markets, where low-band and millimeter wave frequencies have been the mainstay, users might not often find there is much mobile data performance difference.

Can Europe Catch Up in Open RAN?

Deutsche Telekom, Orange, Telecom Italia (TIM), Telefónica and Vodafone want policymakers to make Open Radio Access Networks a strategic priority, arguing that (as has been argued for decades about other areas of innovation) Europe is “falling behind” the United States and Japan in developing O-RAN. 

At stake, the telcos say, are global vendor revenues in the Open RAN value chain, with 38 percent of total revenue, followed by RAN hardware (24 percent), Cloud (18 percent), Semiconductors (11 percent) and RAN software (nine percent)

For infrastructure supplies, the global market is said to be worth EUR36.1 billion by about 2026. That includes Open RAN hardware and software (EUR13.2 billion) and revenue from the broader RAN platform as well. 

And that might be a large part of the problem. The ecosystem spans so many other areas where European suppliers are not leaders that “catching up” in a short time seems highly unlikely. 

Source: Analysys Mason 

And though legitimate questions can be asked about how soon Open RAN becomes a substantial commercial reality, it is hard to argue with the argument that--eventually--it will do so, as part of the broader move to cloud-native and virtualized telecom networks. 

“Open RAN is coming regardless of what Europe decides,” says the white paper. 

The study identified 13 major Open RAN players in Europe compared to 57 major Non-European players. However, many European players are at an early stage of development and have not yet secured commercial Open RAN contracts, while vendors from other regions are moving ahead in actual sales.

“European vendors are not even present in all Open RAN sub-categories (e.g. Cloud Hardware), and are outnumbered in almost all categories by Non-European players (e.g. 2 major European vs 9 major Non-European players in the semiconductor category),” the paper says.

That “Europe is falling behind” argument has been made for a couple to four decades, whether it is levels of research and development spending, digital technology, economic growth or innovation in general.   

source: CB Insights 

Probably few--if any--observers would be optimistic about changing Open RAN supplier capabilities in a short period of time, if it could be done at all.

Cellnet Has a Near-Monopoly on U.K. Macrocell Sites

The U.K. Competition and Markets Authority says the proposed acquisition of mobile cell tower company CK Hutchison Networks Europe Investments by Cellnex UK Limited would be anti-competitive. 

It is easy to see why the CMA is concerned: Cellnex in the United Kingdom already has 80 percent to 90 percent ownership of existing macrocelll tower sites, with coverage of 90 percent to 100 percent of the population. 

To be sure, the proposed transaction involves a wide number of countries in Europe, not just in the United Kingdom. And definitions matter. By some estimates, independent tower companies have between 75 percent and 100 percent control of the market. 

The caveat is that telcos often own equity in the “independent tower companies.” The assets are moved from direct operations and fully-consolidated ownership, getting towers “off the books.” But telcos often retain investment stakes in the spun-out entities. 

source: Cellnex 

The CMA concern is that the larger deal would result in a near monopoly of macrocell tower sites in the United Kingdom, at least of tower company providers. The only other supplier with a similar presence is Cornerstone Telecommunications Infrastructure (CTIL), a joint venture between O2 and Vodafone, some would note. 

source: CMA 

BT, for example, concurs with the CMA market share analysis.  

source: Financial Times

Without some asset spinoffs, Cellnet is going to face regulator opposition to the deal, as Cellnet would have overwhelming market share in the United Kingdom, in line with the CMA estimates. 

As with other complicated deals, one way to satisfy regulators would be for Cellnet to spin off or sell some of the U.K. towers to another tower company, to reduce total U.K. market share. 

By some other analyses, mobile operators have become dependent on third party supply of macrocell capacity. In the United Kingdom, Ireland, Italy Portugal and the United Kingdom, mobile operators no longer directly own their tower assets. 

source: Financial Times  

That makes a near-monopoly by Cellnet worrisome.

Speed Tests Do Not Tell You How Well Your ISP is Doing

Does your smartphone have an Ethernet port? Do you own spare Ethernet cables? Do you own a port converter to connect Ethernet to your smartphone?

And if you do run speed tests on your PC, do you use Wi-Fi or direct connect using Ethernet? All those questions matter because they essentially invalidate all the home broadband speed test data we see so often. 

Testing your smartphone’s “speed” when connected to Wi-Fi only tells you the bandwidth you are getting from that device, at that location, for the moment, over the Wi-Fi connection. It does not tell you the actual speed delivered to your home broadband location by the internet service provider. And the home broadband speed enabled by the ISP can be as much as 10 times higher than the measured speed on your Wi-Fi device. 

Methodology matters. 

The Central Iowa Broadband Internet Study, for example, conducted in the first half of 2021,  illustrates many issues faced by rural households as well as the testing methodology issue. 

 In rural areas studied, some 27.5 percent of internet users had some form of non-cabled access--satellite, fixed wireless or mobile. 

Area wide, 42 percent of download speed tests failed to reach 25 Mbps, the study says. The number of town/city respondents failing to meet the threshold was about 32 percent. In rural areas the percentage of tests delivering less than 25 Mbps was about 64 percent. 

But the study also suggests a big methodological problem: speeds delivered by the internet service provider likely were not tested. Instead, respondents likely used their Wi-Fi connections. And that can mean underreporting the actual speed of the connection by 10 times. 

To be sure, that same problem happens with almost every consumer speed test data, as most such tests use Wi-Fi-connected devices. 

The point is that ISP delivered speeds quite often degraded by performance of the in-home Wi-Fi networks, older equipment or in-building obstructions. Actual speeds delivered by the internet service provider to a router are one matter. Actual speeds experienced by any Wi-Fi-connected device within the home are something else. 

source: CMIT Solutions 

One important caveat is that speed tests made by consumers using their Wi-Fi connections might not tell us too much that is useful about internet access speeds. In other words, consumers who say they do not get 25 Mbps on their Wi-Fi-connected devices could well be on access networks that actually are bringing speeds 10 times faster (250 Mbps) than reported. 

Of the respondents reporting they use a non-terrestrial (cabled network) for home broadband, 41 percent used a satellite provider. Some 30 percent used a fixed wireless provider and 29 percent reported using a mobile network. 

Only about 1.5 percent of survey respondents buying internet access reported they use a non-terrestrial provider for internet access. About 6.7 percent of survey respondents said “no internet service is available at their home.”

“The average download speed recorded was 80.7 Mbps, but the median download speed was just 34.0 Mbps,” the study reports. 

The median download speed for city/town respondents (101.6 Mbps) was three times higher than the median speed among rural respondents (34.0 Mbps), the study says. 

Keep in mind, however, that the speed tests likely were conducted over a local Wi-Fi connection, the study says. That matters, as speed actually delivered to the premises quite often is significantly higher--as much as an order of magnitude--than the Wi-Fi speed experienced by any single device within the home or business. 

Complain all you want about map inaccuracies. The amount of divergence from “reality” from that source of error arguably pales with testing error that only measures Wi-Fi device performance, not the actual speeds delivered to any location by an ISP.

In fact, virtually all user tests of speed are outside the margin of error by such a huge margin that the reported speeds are likely wrong--and undercounted--by as much as an order of magnitude.