In recent Telecompetitor article, AT&T Chief Financial Officer Pascal Desroches was quoted as saying that fixed wireless is “not a great product and the customer ultimately is going to reject it.” By fixed wireless, Desroches was referring to the FWA product being offered by competitors Verizon and T-Mobile. The product takes advantage of excess capacity on cell towers to sell home broadband using the same spectrum used to serve cell phones. For now, the market is embracing the FWA product. In 2022, T-Mobile sold around 2 million connections on the product, while Verizon sold almost 1.2 million.
The new product has some clear advantages in two different markets. In rural areas that don’t have any good broadband connection, the FWA product is likely to be faster than what is available from competitors. I’ve talked to rural customers using the product who say speeds are between 50 and 100 Mbps, although I talked to one customer living near a tower who is getting 200 Mbps. In many of the counties I’ve worked in, these speeds are heads and tails above the existing DSL, cellular hot spots, or more traditional fixed wireless.
In more urban and suburban areas, the attraction is price. These markets have much faster broadband available from cable companies and sometimes by fiber providers. But the faster ISPs charge a lot more than the $60 price of FWA. I think this product makes a great replacement for DSL – it costs about the same but is significantly faster. But T-Mobile and Verizon are not providing any details on who is buying the FWA product. How much of the sales are rural versus urban?
There are noted downsides to the FWA product. The primary one I’ve heard from customers is that it’s not consistent and that speeds vary a lot. This is pretty understandable considering the complex nature of cellular networks, and anybody who watches the bars on their cellphones knows that speeds bounce up and down during the day.
FWA coverage is also limited by the location of cell sites since the FWA broadband doesn’t go far. In most rural counties, only a small portion of the geography is within two miles or so of a cell tower. Hopefully, the cellular carriers will be smart enough not to sell service to folks who are at the outer fringe of a coverage area.
I’m sure that Desroches is talking about the long-term legs of the FWA product. I think he is referencing the ever-increasing demand for broadband. OpenVault recently reported that the average U.S. household is now using 587 gigabytes of data each month, up from 270 gigabytes just four years ago. You don’t have to trend that growth very far into the future when it becomes reasonable to ask if cellular networks can meet that kind of demand. Cellular carriers are using excess capacity today to sell FWA. At what point in the future does the FWA demand exceed the cell phone demand at cell sites?
FWA is never going to more than an interesting footnote for cellular companies. Even if they sell to ten million FWA customers, that’s barely noticeable compared to the hundreds of millions of cell phone customers. I can’t picture any scenario where a cellular company will endanger its cellular business by trying to meet the demands of FWA. They’ll selectively cancel FWA service at overloaded cell sites before doing that.
Interestingly, AT&T will be offering some FWA service. Desroches characterizes AT&T view of FWA as a temporary product and will treat it accordingly.
I doubt that Desroches set out to be negative about his competitors. I have to imagine that AT&T is constantly being asked why it isn’t emulating the rapid deployment of FWA, and I would guess he was responding to one of these queries. But it is interesting to see his response because it sounds like an honest assessment of the FWA business case. It’s a new broadband product that fills some interesting market niches today. But it’s reasonable to ask if it be relevant a decade from now. I would tend to agree with Desroches that FWA will have a relatively short shelf life compared with faster broadband technologies.