There’s a good reason why cable operators dismiss the long-term threat of fixed wireless internet access: they do not believe capacity growth can keep pace with fiber to home or hybrid fiber coax, long term.
Whether a fully correct assessment or not, those long-term reasons are reasonable. In the near term, on the other hand, fixed wireless is a major weapon for shifting market share from cable to Verizon or T-Mobile platforms.
In its report on fixed wireless, T-Mobile notes that over the past year, fixed wireless accounted for 78 percent of total home broadband net account additions, counting only gains from Verizon and T-Mobile. Other independent wireless internet service providers virtually certainly made some gains as well. Those estimates used data from Leichtman Research Group and Openvault.
Some might argue that T-Mobile and Verizon are getting switchers from the price-sensitive segments of the market. T-Mobile might argue it is picking up rural market customers.But rural customers are only the second-biggest source of accounts. In fact, suburban accounts lead the account additions.
But price seems to be a driver of switching behavior, in any case. Some 58 percent of switchers cited “lower price” as the top driver of behavior.
Close to half of switchers reported that “no contract” obligation was a motivator.
“Speed” is a lesser driver of behavior.
T-Mobile and Verizon are expected to have 11 to 13 million total fixed wireless customers by the end of 2025. If total U.S. internet accounts are somewhere on the order of 111 milliion accounts, and if small business users account for 11 million of those accounts, then home users might amount to about 100 million accounts.
source: Ooma, Independence Research
If Verizon and T-Mobile hit those targets, their share of the home broadband market--counting only fixed wireless accounts-- would be about 10 percent. Significantly, most of those accounts will be gained “outside of region” for Verizon. That is significant as Verizon’s fixed network only reaches about 20 percent of U.S. households. Fixed wireless allows Verizon to grow its account base among the 80 percent of U.S. home locations that cannot buy Verizon fixed network service.
For T-Mobile, which in the past has had zero percent market share in home broadband, all of the growth is incremental new revenue. If those accounts add $600 per year in added revenue, then the 11 percent share of home broadband supplied by fixed wireless represents perhaps $6.6 billion in new revenue for the two firms.
That is a big deal, considering how hard it is for either firm to create a brand-new line of business that generates at least $1 billion in new revenue.
The other apparent takeaway is the size of the market segment that cares more about price than performance.
Segments exist in the home broadband business, as they do in many parts of the digital infrastructure and digital services businesses. In other words, even if some customers want faster speeds at the higher end of commercial availability, up to 20 percent of the market cares more about affordable service that is “good enough.”
The center of gravity of demand for 5G fixed wireless is households In the U.S. market who will not buy speeds above 300 Mbps, or pay much more than $50 a month, at least in the early going. T-Mobile targets speeds up to 200 Mbps.
During the third quarter, about 22 percent of U.S. customers bought service at speeds of 200 Mbps or below. In other words, perhaps a fifth of the home broadband market is willing to buy service at speeds supported by fixed wireless.
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