Nokia’s FastMile Gateway blends into the home environment with a beautiful design, pictured on far ... [+]
America’s 5G revolution is well underway. More than 310 million Americans can access 5G and more than 20% of all mobile subscribers have upgraded their mobile service to 5G. Moreover, many are cutting the cord and getting their home broadband through the air connecting with new fixed wireless access (FWA) technology. Who deserves the credit for spurring this technological innovation? Central planners who knew the optimal broadband technology in advance or consumers who prefer the ease, flexibility, and security of a cellular mobile connection? To unpack these questions, let’s do a quick review of FWA technology, competition, price, and policy.
Technology
Cellular mobile networks consist of a series of cells over land (a system of towers, antennas, and transmission stations) which transmit information wirelessly to the user’s device on pre-determined frequencies. In urban areas, 5G travels through low-power, small cells attached to streetlights, masts, and other structures. In less dense areas in which cells are few miles apart, FWA provides ultra-fast 300 Mbps home or office broadband by connecting to the network’s transmission with a router. No wires to the premises are needed, installation is fast , and without the need for technical support.
In fact, the growth of 5G has driven a boom in domestic fiber production, creating jobs and improving supply chain resilience.
Competition
Traditional broadband networks bring a wire – whether copper, cable, or fiber – to the user’s location. Mobile cellular networks like 5G are disruptive because they can, in many cases, deliver the same data at high speeds without the need of wire to the premises. This cuts the time and cost of deployment by a huge margin. Moreover 5G transmissions have enhanced security protocols over Wi-Fi.
This is not to say that fixed line technologies are obsolete—on the contrary. The rise in competition driven by wireless technology has forced providers of fixed line broadband technologies to be more competitive, lower prices, and invest in innovation. Increasingly, landline providers are extending their networks with FWA, as it offers a quick way to add subscribers without the additional cost and difficulty that comes with bringing a wire to the home.
A new report from Strand Consult suggests that this hybrid technology may allow wireline providers to earn additional revenue in the short term and invest further. There are already some 2800 providers of FWA in the US today.
LightShed Partners expects, “Verizon and T-Mobile will add 1.8 million wireless home broadband customers in 2022, more than doubling the 750,000 added in 2021. . . Comcast, Charter and Altice combined added 2.4 million broadband subscribers in 2021.” However as Sanford C. Bernstein & Co. notes, “Fixed wireless probably cost Comcast and Charter, in aggregate, about 180,000 subscribers in the second half of 2021… The great risk seems to lie in late 2022 and 2023. As Verizon, T-Mobile and AT&T deploy initial and subsequent blocks of C-band spectrum and as T-Mobile expands its 2.5GHz coverage to the last 1/3rd of US households, the availability of fixed wireless should expand.”
Price
However impressive the technology and competition gains are from 5G, the price of FWA will likely motivate consumers most. Notably, the price of broadband has fallen in recent years and FWA will only accelerate this trend. Between 2016 and 2022, prices for landline broadband dropped across all download speeds, with the fastest broadband speed plans dropping 42 percent, an average of $60 per month. Analysts agree that large scale deployments of FWA will spur a new round of broadband pricing wars as it’s clear that FWA is priced to disrupt with plans starting as low as $25 per month.
Policy Takeaways
The emergence of FWA is a significant market disruptor, and it comes in the midst of a long telecom policy debate between market and regulatory advocates, as well as those pitting the policy of US vs. EU. This debate has focused on the merits of facilities-based competition of technology versus “managed” competition in which the government regulates a state-owned incumbent to resell access to its monopoly network. Fortunately, the U.S. chose the former approach, allowing providers the flexibility to respond to their customers with choice of technology. This drives an outcome unknown in Europe today; most Americans have access to multiple sources of broadband: 5G, fiber, cable, and satellite.
A related question is whether the government must control the number of competitors in the market (for example regulating the conditions of mergers), or whether technology is sufficient to create competition. Strand Consult’s definitive report on mergers across the mobile industry globally shows that regulators needlessly get hung up on regulating the number of firms in the market, to the point of deterring valuable consolidation and its associated investment. America’s 5G success is in part predicated on the investment enabled by T-Mobile’s acquisition of Sprint. Additionally, Verizon’s acquisition of TracFone, the leading U.S. pre-paid mobile operator, allows 20 million value-conscious customers access to 5G.
A market-led broadband policy means that regulators play a limited, though significant, role to license of spectrum, conduct auctions, and establish national deployment policy. Thereafter market forces should drive outcome. The last five years of light-touch regulatory policy in the US has show a decrease in broadband prices, an increase in competition, and record-level investment in auction bidding and new technologies.
