Wireless carriers face a challenging balancing act as they seek to deliver fixed wireless access (FWA) over the same infrastructure that supports their vastly more profitable mobile service. And that has financial analysts at MoffettNathanson questioning why Verizon and T-Mobile are so bullish about FWA.
In a research note based, in part, on a conversation with T-Mobile management, the MoffettNathanson researchers note that T-Mobile took cell site capacity into account in coming up with its estimate of 30 million “addressable” homes for the company’s FWA offering.
By “addressable,” T-Mobile means homes that satisfy “the various constraints of signal quality and being within a [cellsite] sector with sufficient available capacity,” the research note explains.
The T-Mobile execs told the researchers that the carrier anticipates closing cell site sectors to FWA service after the sectors reach a certain capacity, at least until one of the customers served from that sector cancels service.
The reason for the caps on FWA is easy to understand. According to the researchers, an unlimited mobile customer generates about $4.36 per gigabyte (GB) monthly, while an FWA customer generates about 10 cents per GB.
Although pricing for both types of customers is similar ($48 per month for unlimited mobile service versus $50 a month for fixed wireless service), the FWA customer is estimated to use about 40 times more data.
The carriers undoubtedly have understood this simple math for some time, the researchers note. They then go on to ask, “Why have the same operators who once viewed FWA with, at best, skepticism, now begun to show genuine enthusiasm?”
The researchers speculate that perhaps other anticipated 5G revenue streams now look less promising. As an example, they point to Amazon, Google and Microsoft Azure ambitions in the edge computing and private wireless network market.
“With tens of billions of dollars of investment in spectrum already sunk, and with tens of billions more to come for network densification, one might imagine that carriers are desperate to find a more tangible revenue opportunity than one that depends on beating Amazon AWS at what is essentially just a next iteration of cloud services,” the research note argues.
The researchers acknowledge that FWA is a real, although relatively low value opportunity for the carriers, but close by noting several questions with which they are struggling, including why Verizon and T-Mobile “suddenly see this relatively low-value use of network resources as attractive” and, perhaps most perplexingly, “why they have set such ambitious targets so publicly.”
