Tag Archives: cable broadband

Why Customers Choose FWA

It’s been interesting to watch cable companies downplaying FWA cellular wireless. For example, in September, Comcast President Mike Cavanaugh said that FWA wireless is a ‘near term’ issue that is competing for the lower end of the market. CEO Brian Roberts was quoted this year about competing against FWA saying, “Three companies are all simultaneously within a short period of time are all offering a home connectivity product by their own admission a lower speed, more easily congested network.”

And yet, the carriers selling FWA continue to sell at astounding numbers. AT&T, T-Mobile, and Verizon have consistently added 900,000 customers per quarter since the second quarter of 2022. The big cable companies have been fighting back by significantly lowering the prices of their slowest bandwidth products, and this seems to be stemming the losses due to FWA. But those lower prices come with a cost with lower margins and average revenues per customer.

I think that what has been missing from the discussion of FWA of how the technology compares to the alternatives. Consider the following table that shows average speed tests for a 12-month period in three rural counties for all broadband technologies. There is nothing unusual about these counties – they are just three places where I happened to recently do some analysis. Each county has a county seat and a few towns with cable broadband and some fiber, but rural areas are largely still not served with any fast broadband.   It’s not hard to understand why FWA is so competitive in rural counties. It’s generally faster than fixed wireless and Starlink, and with generally a lower prices. FWA is being priced at roughly the same level as DSL in many markets.

The big limiting factor for FWA in rural markets is the broadband footprint and good speeds like those shown in the above table are only available within a few miles of cell towers. In all three counties, the FWA providers cover only roughly one fourth of the geographic footprint of the county.

Comparative speed tests are always interesting. Each county is served by a different cable company, and yet each is delivering almost the same average speeds – likely because each is operating similar DOCSIS 3.1 networks.

There are some noticeable difference in these counties that require local knowledge to explain. For example, fiber speed tests are lower in County 2 due to a fiber provider that offers a very affordable 100 Mbps fiber product that pulls down the average speed. FWA speeds are also slower in County 2 due to households still using cellular hotspots from cell sites that haven’t been upgraded to FWA.

Starlink speeds are consistent with the national average numbers I’ve been seeing – but Starlink has the most erratic variance in speed tests with a range of tests between a few Mbps and several hundred Mbps. In the three counties, the speeds on fixed wireless (from WISPs) are relatively slow since the WISPs have not upgraded to faster radios. There are counties where WISP speeds are much faster. The speed that might surprise some folks is DSL. As the copper networks have emptied of customers, the remaining customers are seeing faster speeds than just a few years earlier.

The Trajectory of the Broadband Industry

For well over a decade, it was fairly easy to understand the trajectory of the broadband industry. In the residential market, cable companies snagged all of the growth while telcos shrank as customers abandoned DSL. Other technologies like fiber or fixed wireless gained customers but were a blip on the national scale. In the business market, a dozen large companies competed fiercely for large business customers while smaller businesses were stuck with the same technologies used to deliver home broadband. There was no suspense in predicting where the industry was headed from year to year.

But the broadband industry is now in total turmoil. Within a short time, cable companies have stopped growing. Currently, all of the industry growth among big ISPs is coming from FWA cellular wireless. Last-mile fiber networks are being built across the country. WISPs finally have the radios and enough spectrum to be serious competitors.

When I talk about trajectory, I’m not talking about predicting 2024. The challenge is to guess where the industry is headed over the next five years. Who will be the winners and losers over that time? The easiest way for me to think about this is to look at each industry segment.

Let me start with the cable companies. You can’t have this conversation without first acknowledging that Comcast and Charter together have over 50% of all broadband customers today. That puts a big target on their backs because they have the customers that everybody else is chasing. The cable companies have clearly lost the perception war – the general public seems to have accepted that fiber is better than coax. The cable companies got blindsided by the pandemic when millions of people suddenly cared about upload bandwidth, and a lot of people got a bad taste for the cable companies. The companies are now scrambling to implement mid-split technology to boost upload speeds to 100-200 Mbps. Most are talking about implementing DOCSIS 4.0 much earlier than they had originally planned. The big unknown is if these two upgrades will be enough to turn public perception. Cable companies don’t help their case by having the highest broadband rates in most markets that continue to increase each year. The one advantage the big cable companies have is aggressive bundling with low-price cellular.

Fiber overbuilders are now everywhere. Big fiber overbuilders like AT&T talk about achieving a 30% penetration rate in a few years and reaching 40% after 4-5 years. But the telcos also have to overcome a public perception problem since they did such a poor job of customer service over the last decade while pushing the clearly obsolete DSL. Smaller fiber overbuilders don’t have this history and are aiming higher, and have penetration rate goals of 50% and beyond. Fiber gains don’t only come from cable customers, and a lot of fiber gains are from converting the remaining DSL customers. In five years it’s not hard to believe that fiber will have half of the customers in neighborhoods with fiber.

The big unknown is FWA cellular wireless. Already today, this product has picked up all of the industry growth over the last 18 months, and that trend looks to continue for a while. It’s a real mystery where the carriers are getting most of the growth. I can tell by looking at detailed speed test data that a lot of the growth is coming in rural areas where customers within two miles of a cell tower finally have a solid and fast broadband product faster than 100 Mbps. Any gains in cities are probably coming from customers who care most about price – FWA is much cheaper than cable broadband. But over the long run, this technology faces challenges. In rural markets, FWA will compete against faster WISPs and with fiber networks that will be built by BEAD grants. The wildcard for the industry will be the impact of using C-Band spectrum. That is supposedly going to at least triple the speeds – again within relatively short distances from towers. But FWA technology has a big long-term constraint in that cellular networks were never designed to deliver steady-use home broadband. While carriers might love this new income, one would think they are not going to be dumb enough to endanger their cellular customer satisfaction, which is their real source of revenue.

WISPs have a rosier future through the combination of better radios that minimize interference and the use of new spectrum, particularly 6 GHz, which can mean gigabit speeds in ideal circumstances. It’s really hard to predict the trajectory of this sector. In many rural areas, WISPs will be competing against fiber networks funded by grants and operated by highly popular ILECs and cooperatives. But in other markets, WISPs might become the virtual monopoly provider if they can win the broadband grants. That makes it hard to judge the overall trajectory in rural markets. WISPs will always face challenges in urban markets where they can’t serve more than a small percentage of homes and where frequency interference is rampant.

We can’t forget satellite broadband. Starlink has done well by bringing broadband where nobody else would – but that is also going to change due to the rural grants. Starlink’s prices are already a barrier for many potential users. The big unknown in the industry is what Jeff Bezos and Amazon will do. The company finally launched test satellites and might be aggressive with non-traditional bundling and affordable prices.

All of this competition will be happening in an environment where households will use 20% more bandwidth each year. Any technology that has overall bandwidth constraints will eventually feel this pinch. This will affect FWA cellular and satellite broadband the most but can hit any ISP that hasn’t built a robust enough network.

What does all of this mean in five years?

  • Fiber will continue to eat away at cable companies, and in five years, the cable companies might not have a choice and will have to bite the bullet and convert to fiber to compete. It’s hard to envision a future where cable companies don’t lose customers annually for the next five years.
  • DSL will finally die, and its market share will be absorbed by FWA and fiber.
  • FWA companies will continue to grow at a rapid pace for the next couple of years. Low prices will always find a market. But if the carriers can’t find a way to guarantee bandwidth at peak times, a lot of homes will lose faith in the product. FWA will see a lot of competition in rural markets. I think the industry will eventually reach a market equilibrium – at some level higher than today’s DSL penetration.
  • WISP’s success will be market by market and will depend upon the other competition and local conditions – the technology will always struggle in places with rough terrain like Appalachia.
  • Satellite broadband will still be the technology of choice for the most remote places. Satellite’s real long-term markets are in the parts of the world that don’t have other good rural ISPs. But Amazon might find a bundling option that will still make the company a serious player in the U.S.

The Fiber Land-Grab

It’s becoming clear that we are now deep into a fiber land-grab. By that, I mean that companies that overbuild fiber are moving as quickly as possible into markets to build fiber. The biggest ISPs have publicly discussed their plans for building a lot of fiber in 2023. Following are some of the latest projections for 2023:

  • AT&T plans to build past 2 – 2.5 million new passings.
  • Frontier plans to pass 1.3 million new homes.
  • Altice is aimed for 900,000 new fiber passings.
  • Brightspeed is planning on 600,000 new passings.
  • Verizon hasn’t announced a number, but built 550,000 new passings in 2022.
  • MetroNet is aiming for 500,000 new passings.
  • Lumen plans to build 500,000 passings.
  • Consolidated Communications is planning on 350,000 passings.
  • Charter announced plans for 300,000 passings.
  • Comcast announced plans to pass more than 200,000 homes.
  • TDS plans on 175,000 new passings.

This list doesn’t include the numerous smaller companies that are building fiber. The largest among the rest include fiber builders like Bluespeak, Clearwave, Omni Fiber, Surf Internet, WOW!, and Ziply Fiber. I would guess that there are a few hundred other companies with aggressive fiber plans. This also doesn’t even count the fiber being built by over 200 electric cooperatives.

I call it a land grab because these ISPs are all hoping to get to towns and neighborhoods first in order to dissuade anybody else from building fiber. Since most places getting fiber are already served by a cable company, most of this land grab is not going to create monopolies – but these fiber builders all think they can win a significant share of the market away from the cable competitor.

It doesn’t always work out the way that the fiber overbuilders hope. I talked to somebody in Lansing, Michigan who was amazed that there were three different fiber providers in their alley offering fiber broadband. As somebody who builds fiber business plans, I have to wonder about the third company that constructed fiber when there were already two other competitive fiber providers on the poles. Will any of the three ISPs get enough customers to be successful? But most markets are not seeing that kind of competition, although some of the announced plans on the list above must be in markets where somebody else has already built fiber.

This level of fiber construction bodes poorly for cable companies. Every one of these fiber providers will tell you that they will get at least a 30% market share, and most are hoping for 50%. They are all banking on the current public sentiment that fiber is the superior technology compared to cable company coaxial networks. These ISPs almost all have lower broadband prices than the big cable companies.

Of course, cable companies are rushing to fight back by upgrading upload speeds to become symmetrical. You can expect when that happens to see a huge blitz everywhere talking about symmetrical gigabit speeds. Cable companies also compete by offering very low introductory rates intended to win or keep customers from leaving for fiber. But much of the public has gotten tired of that cycle of having to renegotiate rates every few years.

Only time will tell if cable companies will be successful with this strategy. If enough of the public believes fiber is superior, then any cable marketing plan is going to fall on deaf ears for some portion of every market.

Rural fiber land grabs are different because anybody building fiber in a rural market probably will have a monopoly for fast landline broadband. It’s hard to think that many companies will consider building a second fiber network in places with low housing density. The rural fiber builders will likely face competition from WISPs deploying the latest radios. Just like with competition with cable companies in cities, it’s going to be interesting to see who wins that battle. It’s likely going to be a neighborhood-by-neighborhood battle. I suspect local WISPs with good local reputations will fare well against fiber built by the giant telcos or cable companies. On the flip side, local cooperatives and other local fiber builders will likely do extremely well against the giant WISPs. It’s going to be an interesting battle to watch.

I have no idea how Starlink and FWA cellular wireless fit into this battle. Fiber and fixed wireless with the newest radios will both be faster than these two technologies, and the market battle might come down to prices. The next decade is going to be an epic battle for broadband customers, and a boon to ISP marketers.

A Disturbing View of Future Cable Broadband

There was a recent article in FierceTelecom that quotes a leading cable company consultant as saying that cable companies are not likely to universally upgrade broadband networks in the future. The consultant is Sean McDevitt, a partner at Arthur D. Little, a consulting firm that largely works for the giant ISPs.

In the past, when a cable company migrated from DOCSIS 1.0, to 2.0, and to 3.0 everybody in a community was upgraded to the latest technology. He says going forward that it’s almost certain that there will not be across-the-board upgrades. He says there will be neighborhoods upgraded to fiber, neighborhoods migrated to the next-generation DOCSIS 4.0, and neighborhoods that will see no upgrades at all.

I label this as disturbing because it raises the possibility of digital redlining in communities if cable companies start upgrading selectively. The upgrades to fiber or DOCSIS 4.0 will bring faster upload speeds to match fast download speeds. Any neighborhood left on the current DOCSIS 3.1 platform will be stuck with inadequate upload speeds, which was the predominant problem with cable broadband during the pandemic and continues to be a problem for the millions who want to work from home.

I suspect his statement was made to point out that companies will be prudent with capital spending – something that sounds like smart business. Both technology upgrades will be expensive, and a cable company could save a lot of capital spending by not upgrading everywhere. Perhaps he didn’t realize that he was outlining a plan for future discrimination against lower-income neighborhoods. Selective upgrading is also a scary possibility for towns outside the major metropolitan areas, and markets like county seats might get left behind.

In the past, all discussions of digital redlining were leveled against the big telcos, which often clearly upgraded to faster DSL in neighborhoods with higher household incomes. McDevitt outlines a future in which the cable company would likely be making those same kinds of selective upgrade decisions.

To be fair, cable company broadband networks are rarely the same today across larger communities. When we’ve helped communities take speed tests, we’ve often seen that performance on cable networks varies from neighborhood to neighborhood. This seems to mostly be due to varying conditions of the [hiscal plant. Some of the neighborhoods that got cable in the 1970s have much older coaxial cables than neighborhoods built more recently. Many cable companies have been loath to rip and replace wires for whole neighborhoods. It’s also likely that cable companies have taken shortcuts during upgrades, which require replacing all repeaters and power taps if done right. We also see cable markets are configured in what is called cascading, where neighborhoods are daisy-chained together – something that was probably done to save money in the past but which contributes to degraded broadband performance today.

It will be ironic if a decade from now, we’ll be talking about digital redlining from the cable companies while the telcos will have upgraded to symmetrical fiber. That would be a complete reversal of past history.