Is 5G Broadband Cable’s Kryptonite?

5G Home Broadband (FWA or fixed wireless access) has been a disrupting force in the US broadband industry throughout 2022. While once thought of as an uncompetitive, last-resort technology, the deployment of 5G networks have enabled Verizon and T-Mobile to bring new competition to the home broadband market, with service available in more than 30 million homes and businesses.?Entering Q4 of 2022, the two operators boasted over 3 million subscribers, with roughly 2.1 million for T-Mobile and 1 million for Verizon. Plus, based on estimates from Leichtman Research, they accounted for over 78% of US broadband net adds since Q4 of 2021 at the expense of traditional broadband providers – cable operators, who control 70% share of broadband market, satellite broadband providers, and other telcos.?For broadband operators, the win-share of FWA over the last few quarters represented the difference between hitting the “plan” or missing it, given the small number of “jump balls” in the market with sub 2% monthly churn.?As the conversation around fixed wireless continues to evolve, new insights allow us to understand what is driving 5G FWA’s success.?

5G FWA was originally thought to make the largest impact in rural America, but recent data has shown that it is performing well in suburban and urban environments as well. On December 7th, T-Mobile reported that roughly 65% of their 2 million FWA subscribers live in non-rural areas. Similarly, Verizon’s CEO confirmed a few days prior that their 1 million FWA subscriber base also skews predominantly urban and suburban. However, it is worth noting that much of the 5G buildout has been focused in urban and suburban areas so far. T-Mobile and Verizon have created 4G and data capped FWA plans for consumers in areas where their core 5G unlimited service is not yet available, so the full impact of 5G FWA has yet to be realized as buildouts continue. Nonetheless, based on the performance of 5G FWA so far, consumers across the US, regardless of living in rural or urban areas, are interested in fixed wireless.

Over half of their (T-Mobile's) FWA subscribers come from cable        

Much of that interest can be attributed to T-Mobile and Verizon’s disruptive value proposition for 5G FWA. For suburban or urban residents and businesses, who have multiple existing high-speed options, 5G FWA can provide a lower price point without contract obligations or exploding fees. In fact, T-Mobile reported that over half of their current FWA subscribers come from cable, citing price and no annual contracts as the leading reasons for switching.?For those in rural America, or relying on DSL or satellite for broadband, 5G FWA can offer higher speeds and an improved quality of service – a no-brainer.

Perhaps most importantly, 5G FWA offers a new broadband option for millions of households— a welcome change in an industry that consistently ranks last in customer satisfaction. T-Mobile and Verizon expect to have between 11 and 13 million 5G FWA subscribers by 2025 (7-8 million for T-Mobile and 4-5 million for Verizon), but that is not to say that the technology is without challenges; common concerns include long term network capacity constraints and competitiveness against the likes of fiber and DOCSIS 4.0. However, over the last year, 5G FWA has proven to be a massive area of growth within the US broadband industry, adding competitive pressure and causing other broadband providers to reevaluate their own practices.?

We are excited to see both the growth of this new broadband alternative and the responses from traditional broadband providers to combat this newly emerging threat.