The latest round of corporate earnings reports has made it clear that US MNOs and cable ISPs are targeting each other’s companies, with wireless executives touting their home internet services and cable operators touting the mobile broadband subscriber gains.
T-Mobile US leads the mobile industry in fixed wireless access (FWA) home Internet subscribers, with 646,000 at the end of 2021. This represents 1% of the total number of national broadband customers reported by Comcast and Charter Communications, the two largest ISPs in the country.
By 2025, T-Mobile predicts it will have between 7 and 8 million home Internet subscribers. It’s not expected to be exclusively rural customers with no other options: CEO Mike Sievert said many of the operator’s existing FWA customers have switched from wired ISPs.
AT&T has previously told investors that fiber is central to its internet business, but analyst Jeff Moore, head of Wave7 Research, said the carrier also serves 500,000 FWA subscribers.
This is consistent with Qualcomm citing AT&T as a major customer for its FWA hardware.
Verizon lags in reported FWA subscribers, but not in technology commercialization.
Home Internet was the first 5G service introduced by Verizon and was also central to its launch of 5G using C-Band spectrum. On its latest earnings call, CEO Hans Vestberg said the operator was aiming to “be nationwide with broadband” when asked about FWA.
Verizon ended 2021 with 223,000 FWA subscribers, more than a third of which were added during the fourth quarter.
Jeff Heynen, vice president and analyst at research firm Dell’Oro Group, said Mobile world live (MWL) the consumer-to-consumer fixed wireless equipment market is currently estimated at just under $2 billion worldwide and is dominated by LTE devices.
Dell’Oro Group recently predicted the market to reach $2.8 billion by 2026, a CAGR of 7%, driven by shipments of sub-6GHz and mmWave 5G units.
Forecasts suggest that mobile operators will continue to add FWA subscribers, but will not build wireless Internet companies large enough to seriously threaten incumbent ISPs. “I think mobile operators need to carefully monitor subscriber growth to ensure they don’t exceed traffic levels that could compromise the performance of their mobile services,” Heynen said. MWL.
Mobile broadband also seems more valuable: an analysis by research firm Mobile Experts found that US consumers are willing to pay up to 20 times more per GB of data delivered over a mobile network compared to a landline.
The company noted that mobile has traditionally accounted for the lion’s share of telecommunications revenue and expects the trend to continue (see graphic, right, click to enlarge).
Senior analyst Kyung Mun does not foresee an imminent, large-scale convergence of mobile and fixed services.
If they do eventually converge, Mun predicts it will more likely happen through mergers and acquisitions than a company’s technology or business mix.
For now, a small minority of American consumers and businesses purchase Internet and mobile broadband services from a single provider, but MNOs and cable ISPs are working hard to sell this idea to customers.
The competition heats up
While MNOs are busy rolling out 5G to the homes of old and new customers, incumbent cable ISPs are marketing mobile services using spectrum leased from Verizon. Charter Communications claimed 3.6 million mobile lines at the end of 2021 and Comcast 4 million.
The pair holds less than 3% of the overall US mobile market, Mun said, noting that its analysis includes tablets and IoT devices connected to mobile networks. “I think Comcast and Charter gained mobile subscribers a lot in the prepaid/MVNO segment and in the T-Mobile-Sprint merger,” he said. MWL. “I suspect net additions will slow without significant churn or customer acquisition spending.”
If additional expenses are required, the cable can be ready. In late 2021, Charter Communications Chairman and CEO Tom Rutledge told an investor conference that mobile was “the biggest single opportunity we have and the biggest driver of growth going forward. from this year.
When asked to discuss the company’s priorities for 2022, Rutledge named mobile first.
Comcast CEO Brian Roberts said on his company’s fourth quarter earnings call “there will be a mobile component to everything we do” and, like Rutledge, described mobile as ” a very big opportunity over time.”
Roberts explained that bundling mobile with broadband can add value for customers and reduce churn.
Cable executives are also aware that mobile penetration exceeds home broadband penetration in the United States, a gap that is likely to widen.
A study conducted by the Pew Research Center in 2021 found that 85% of US citizens own a smartphone, 77% have a broadband subscription, and 15% use a smartphone as their only internet connection.
5G, spectrum and private networks
Comcast and Charter Communications customers with 5G smartphones can now connect to C-band spectrum. Verizon has spent billions to purchase and deploy. As bitter as it may be for the operator, it is not expected to drop cable from its networks anytime soon.
Its lease agreement with the cable companies has a perpetuity clause, and even if Verizon could find a way out, it might not because Comcast and Charter Communications could turn to AT&T, T-Mobile or Dish Network.
If any of them were to lease spectrum from cable companies, Verizon could face as much competition as it does now, but without any wholesale revenue.
Hosting cable MVNOs also gives Verizon some visibility into their network operations.
The battle between mobile and cable is heating up, but according to Mun, it’s not a full-fledged war. “Both sides are indeed threatened,” he acknowledged. “But the threat remains somewhat contained until we see facility-based entries that offer economic benefits to the owner.”
Even without the owner economy, Comcast and Charter Communications are already seeing profits in their mobile businesses and growing in services delivered on the spectrum they own, the two big winners of a CBRS spectrum auction.
Charter Communications has predicted that its first CBRS field trial will launch early this year and Comcast plans to use its CBRS spectrum for private networks in the near term, having already announced a deal covering the Wells Fargo Center sports stadium. in Philadelphia, through a non-exclusive contract. partnership with Nokia.
On the other side of the equation, MNOs own the infrastructure used for FWA, with AT&T and Verizon also owning fiber connections that reach millions of homes.
But most of the infrastructure and spectrum that MNOs have is dedicated to mobile, and networks are designed and architected with wireless in mind.
Ultimately, it is reasonable to expect MNOs to pursue fixed wireless internet services until these initiatives tax the infrastructure resources needed for their mobile businesses.
But cable operators may eventually try to pursue mobile, even at the expense of their traditional businesses.
Mobile offers greater service revenue potential and is becoming a primary Internet connection for a growing number of people. US MNOs are on the rise and the cable industry is hot on their heels.
The editorial opinions expressed in this article are solely those of the author and do not necessarily reflect the views of the GSMA, its members or associate members.
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