Tag Archives: T-Mobile

Upgrades for FWA Cellular Wireless

In the recent third quarter earnings call, Verizon CEO Hans Vestberg expressed strong support and belief in the future of the company’s FWA wireless broadband product. This product provides home and business broadband that uses the same cellular spectrum used today to provide bandwidth for cellphones.

There is good reason for the company to be optimistic about the broadband product. In only a few short years the company has added almost 2.7 million FWA customers, and most of its broadband customer growth in the third quarter of this year came from FWA. As noted by Vestberg, rapid growth has continued even after the company increased the price of the product by $10 per month.

As I have addressed in several blogs, there are some limitations on the current FWA product. The biggest downside is that the fast speeds advertised for FWA by Verizon and T-Mobile are only available for customers that live within a mile or so of a cell tower. Speeds seem to cut in half in the second mile from a tower and drop significantly by the third mile.

Another drawback is that both Verizon and T-Mobile throttle the bandwidth for FWA any time that cellphone usage gets heavy. In scouring through multiple speed tests, we have found customers who vary between fast and extremely slow speeds – which might be evidence of this throttling.

But Vestberg mentioned a big technology boost that will be coming to the Verizon FWA product. Verizon purchased a lot of C-Band spectrum in an FCC auction in 2021. This is spectrum that sits between 3.7 GHz and 3.98 GHz. The licensed spectrum provides Verizon with anywhere from 140 MHz to 200 MHz of cellular bandwidth in markets across the country.

Vestberg says the company is starting to upgrade busy urban towers with the extra C-Band spectrum. He implied that the upgrades will be coming to other urban towers and some suburban towers in 2024.

He said the C-Band spectrum will double or triple the cellular bandwidth depth in most markets. He said that using the new spectrum for FWA could result in speeds as fast as 900 Mbps to 2.4 Gbps. Like all speed claims made by ISPs, those speeds are likely faster than anybody will see in real life and probably represent theoretical maximums. However, FWA users can expect a big boost in speeds, particularly those living near towers.

I have to assume that Verizon has already built C-Band capabilities into its home FWA receivers, so speed upgrades ought to be realized immediately after an upgrade. A lot of the newest cell phones also already include C-Band capabilities. Verizon seems to have the most aggressive plan for C-Band, but AT&T has started to deploy the spectrum in a few markets. T-Mobile owns C-Band spectrum, but still seems to be hanging on the sidelines for upgrades.

Significant speed increases to FWA can make the product into a potent competitor to cable companies, at least for customers within a close distance of a cellular tower. The FWA prices are far lower than the prices charged by the big cable companies for broadband, and fast speeds can make this a viable alternative.

The first generation of FWA has delivered speeds in the 100-300 Mbps range. That has been fast enough to attract millions of customers. But the first generation product has felt more like a big upgrade to DSL rather than a direct threat to cable companies. But if the current speeds are really doubled or tripled, many households are going to be attracted by the lower prices on FWA. It’s an interesting product to market since the attractiveness for customers is in a direct relationship to the strength of the cellular signal that reaches their home –  an extremely local situation.

Labor Downsizing

I’ve been mystified for most of my career when large ISPs and carriers have significant layoffs at a time when they seem to be doing well. It’s a pattern that we’ve seen over and over during the last several decades.

The latest big layoff is coming from T-Mobile, which announced in August that it is eliminating 5,000 jobs, about 7% of its total workforce. The announcement made to employees is that the layoffs will involve corporate, backoffice, and some technology jobs. The company says this round of cuts will not impact retail and consumer care employees. The company expects to take about a $450 million one-time hit in the third quarter to reflect the cost of the workforce reduction. However, a reduction of this size will boost earnings in the future.

When John Legere purchased Sprint he promised employees that the combined company would protect existing jobs and add more jobs. Even before this current downsizing, T-Mobile was down 9,000 jobs since the merger. T-Mobile executives have been quoted in saying the current cuts are about coming efficiencies from AI, automation,  and other technology tools that will allow T-Mobile to operate more efficiently. But unless T-Mobile is onto some amazing innovations that the rest of the industry doesn’t know about, those future efficiencies are not here yet.

What mystifies me is that, from every public perspective, the company is doing great. In the last year, T-Mobile added 6.3 million postpaid cellular customers, 280,000 prepaid cellular customers, and over 2.1 million FWA broadband customers – an overall customer growth of 7.8%. Many of the employees being eliminated must have played an important part in that growth.

The company’s earnings are up, with the company announcing earnings per share for the year ending June 2023 at $5.02 per share, up significantly from $1.37 per share for the previous year. Stock prices have also been doing well, up 8.5% for the last year on the date I wrote this blog, and 15.3% for the previous year.

This has been a recurring theme in the industry. During my career, I’ve seen huge layoffs from other big carriers like AT&T and Verizon that also came when the companies were seemingly doing great. It’s easy to understand when companies have layoffs when times get tough. For example, a few of the vendors that sell 5G cell site equipment have had recent layoffs as the big carriers have cut back on equipment spending for 5G.

It doesn’t take a lot of digging to understand the real reason for the T-Mobile layoffs. In the last twelve months, T-Mobile has spent over $11 billion to buy back shares of its own stock, about 7% of all outstanding shares.

Buybacks are a huge drain on corporate earnings. The 465 companies in the S&P 500 Index spent well over $4 trillion on buybacks in the 2010s – equal to 52% of the net incomes of the businesses. The companies spent more than $3 trillion on dividends, another 39% of earnings over the period. Buybacks began in the mid-1980s when the Security and Exchange Commission adopted Rule 10b-18, that gave corporate executives a safe harbor against stock price manipulation while buying back stock.

Companies like T-Mobile are putting free cash into buying their own stock to the detriment of growth or employees. Corporations have drastically cut back on research and development at the same time as buying back stock. You have to wonder how large T-Mobile could grow in the long run if $11 billion per year was spent on R&D or expansion instead of stock buybacks.

I’m sure it’s no solace to the folks who are getting laid off that their jobs were largely sacrificed so that their corporate bosses buy back the company’s stock. While this is being explained as innovation and AI, the layoffs are all about executives valuing stock prices more than the employees that have brought them success.

FWA Cellular Speeds

One of the most interesting things about getting access to a lot of speed tests is that it provides a way to test broadband issues you always suspected but couldn’t prove. If you can collect enough speed tests, you might find proof of a lot of different things. For example, speed tests might show that a broadband network is slower in the evening than during the night – something that customers have always complained about. Speed tests might show that an ISP delivers speeds that are far slower than what an ISP claims on the FCC broadband maps.

I’ve been trying to understand the speed characteristics of FWA cellular wireless. I’ve been interviewing folks for a few years who have FWA wireless, and they all told me that speeds are fast for those living close to a tower but slower as the distance to the tower increases. For example, the first customer I talked to who was using the FWA broadband from T-Mobile is a farmer who had a T-Mobile tower on his property and got almost 300 Mbps download speeds. He was thrilled with the product compared to the much slower WISP he had been using. But when he recommended the FWA wireless to his neighbors, they received a far different bandwidth product. A neighboring farm a little over a mile away was getting speeds closer to 100 Mbps, which they also thought was good. But some farms further away said that the FWA broadband was too slow.

I heard similar stories from elsewhere, but it’s hard to make any universal statements about the FWA product based on a handful of anecdotes from different parts of the country. I recently got access to enough speed tests to understand the performance of the FWA cellular wireless product.

The map below shows a lot of speed tests from Verizon tower in a suburban county. The yellow dots on the map are the locations of actual speed tests. The colored circles on the map show the distance from a cell tower – with purple showing locations within a mile of the tower, red showing locations between 1 and 2 miles, blue/greed showing speed tests within 2 and 3 miles, and the surrounding white areas at more than 3 miles. I didn’t cherry-pick this particular tower as the best example – there are more than a dozen other Verizon towers in the same county that show similar speed test results. I must note that speed tests are not a prefect indicator of broadband performance, and there might be explanations behind some of the slower readings. But I have to think that seeing this same speed pattern around multiple tower sites is a good indication that this is how the technology works.

This map demonstrates what the farmer told me to a tee. There are some locations close to the tower getting 300 Mbps. Customers just over a mile from the tower are getting slower speeds, with the highlighted ones around 75 Mbps. By the third mile band, speeds have dropped a lot closer to 25 Mbps download, and outside the three-mile circle, speeds drop significantly. There is no easy way to tell if the customers with slower speeds are buying FWA wireless, which uses the spectrum that Verizon labels as 5G, or the older Verizon hotspots that use traditional LTE spectrum.

On the FCC map in this county, Verizon reports two speeds – 300 Mbps or 50 Mbps. It’s not easy to understand how Verizon makes the distinction, but it seems like locations for a fairly good distance around towers are claimed at 300 Mbps.

Somebody who doesn’t understand the FCC mapping rules might think that Verizon is breaking the rules by reporting 300 Mbps speeds in places where actual speeds are a lot lower. But the FCC allows ISPs to report marketing speeds for the FCC maps as long as Verizon is advertising the claimed speeds. But that doesn’t mean that the Verizon FCC reporting is ethical. Customers who might refer to the FCC map when looking for an ISP, or customers that see Verizon advertising are hoping to get something close to the 300 Mbps speed – and many will not.

I have some major concerns about cellular FWA technology related to the upcoming BEAD grants. First, any state broadband grant offices that accept the claimed Verizon speeds in the FCC mapping might not award any grants where a fast FWA speed is claimed. That would be a travesty if folks who can’t get speeds of at least 100/20 Mbps with FWA are denied another broadband option.

It’s also possible that the cellular companies will challenge grants that come close to their towers. I knew this was likely going to become an issue the day that the NTIA said that it considers wireless broadband using licensed spectrum to be broadband for purposes of the BEAD program.

It’s also possible that Verizon, T-Mobile, AT&T, and others will try to win BEAD grant funding using this technology. At least in this county, there are very few customers outside of one or two miles from a tower who can get the 100/20 Mbps required for BEAD grants.

I hope that state broadband offices take a hard look at this. Many of them have purchased detailed speed test data, and they can search around towers in the same manner done above. I don’t think it will take much investigation for them to be convinced that FWA cellular broadband can meet the speeds required for BEAD – but only for short distances from cell towers. Broadband offices should also take note that both Verizon and T-Mobile warn customers that speeds can be throttled any time there is increased demand for bandwidth from cellphones.

I am not busting on the cellular FWA technology. If I was in a rural area without a good broadband alternative, I’d buy this product in a second. But I’d be unhappy if I was hoping for 300 Mbps and got 25 Mbps. What is being deployed today is the first generation of the technology, and I assume that it will improve over time. My only concern is the timing of the rollout of this new technology and how it might negatively affect an already complicated BEAD grant process.

Outlook for FWA Cellular Wireless

Mike Dano at LightReading published a recent article looking at the future of FWA (cellular fixed wireless). For those not familiar with the technology, this is broadband delivered to homes and businesses by cellular companies using the new spectrum bands that have been labeled as 5G. This is a new product that has only been around for a little over the year and has already taken the broadband market by storm. At the end of the first quarter of this year, T-Mobile had almost 3.2 million customers and Verizon had almost 1.9 million. It’s likely that UScellular will be entering the market in a big way along with DISH. AT&T is still somewhat on the sidelines – it has an FWA product but is still making fiber a priority.

Dano talked to analysts at Wells Fargo who track the broadband industry. They are predicting that FWA will capture 10% of the residential market by 2025. To put that into perspective there are currently around 118 million homes with broadband, and FWA has quickly captured over 4% of households with FWA products. Wells Fargo analysts are predicting an additional 6.8 million FWA customers by 2025.

Interestingly, these same analysts predict that the cable company share of the residential market will drop from 67% today to 62% by 2025, a drop of 5.9 million customers. I’m not sure how the explosion of fiber construction plays into that math.

These analysts and others foresee the FWA wireless hitting a natural plateau as the technology starts hitting a saturation point in neighborhoods. The FWA technology is not able to serve all homes in an area due to several issues. First, while this product is nice for the bottom line of big cellular companies, their bread-and-butter product is serving cell phones. Since FWA shares the same spectrum, there is a natural limit on how many FWA customers they are willing to serve in any neighborhood. Additionally, both T-Mobile and Verizon tell FWA customers in the fine print that they will throttle the bandwidth anytime cellphone usage gets too busy. When that starts happening, I predict a lot of households will lose interest in the FWA product.

We got a deeper glimpse into the plans for FWA when CEO Mike Sievert of T-Mobile talked about the product at the J.P Morgan Global Technology, Media, and Communications Conference. He says that T-Mobile’s overall market penetration in small and rural markets is now at 16%, and the company’s target is to reach 20% by 2025. He says in prime small markets the company is targeting penetration rates in the mid-30s.

I have my own speculations about FWA. FWA is currently seeing big success because it is filling several market niches. In rural areas, the product delivers speeds from 50 Mbps to 200 Mbps depending on how far a customer lives from a tower. In markets where the alternatives are slower technologies like satellite, DSL, or WISP broadband, customers are happy to have relatively fast broadband for the first time. FWA is also the product for the price-conscious consumer, priced between $50 and $65 when most other broadband technologies cost more. In towns and cities, this product delivers a faster alternative to DSL.

But I have a hard time seeing FWA dominating any market in the long run. Many of the rural markets where it will have gained significant market shares will eventually get fiber from the many rural broadband grant programs. Will households stick with FWA when there is a much faster product?

I’ve already been reading online reviews that talk about the unpredictable bandwidth, which is inherent in a network that shares bandwidth with cellphone customers. Cellular bandwidth already varies throughout the day for a wide variety of reasons – something that anybody who watches the bars on their cell phone understands. FWA is not going to deliver the guaranteed speed performance as a wired technology – quality will vary according to local conditions.

Finally, within a decade, a 100 Mbps connection is going to feel as obsolete as 25/3 Mbps broadband feels today. At the end of the first quarter of this year, Openvault said that only 9.5% of all broadband households are still subscribed to a broadband product of 100 Mbps or less. The public has already abandoned 100 Mbps broadband, and the vast majority of households already have something faster. My prediction is that FWA will have a spectacular market share for the next five years, but a decade from now, the only households still using it will be the same ones that stick with DSL today – homes for whom price is far more important than performance.

FWA Mapping and BEAD Grants

There is one mapping issue that unfortunately messed up the NTIA’s count of eligible passings for BEAD, grants and that is going to be a real concern for folks who file BEAD grants. Over the last year, both T-Mobile and Verizon have activated rural cell sites that can deliver home broadband using licensed cellular spectrum that can be 100/20 Mbps or a little faster. According to the way that the NTIA and the BEAD grants determine grant eligibility, these locations are considered as served.

There are several reasons why this is going to be a practical problem in the BEAD grant process. First, the claimed areas claimed by the cellular carriers on the FCC maps are not accurate. Cellular broadband signal strength decreases with the distance between the cell tower and a customer. The easiest way to explain that is with an example. I talked to a farmer in Illinois who has the T-Mobile FWA broadband and is thrilled with it. The T-Mobile tower is on his farm and he’s getting over 200 Mbps download speed. He bragged about the technology to his neighboring farmers. One of his neighbors over a mile away is getting download speeds over 100 Mbps. But another neighbor over two miles away is getting speeds closer to 50 Mbps and doesn’t like the product.

At some future point, the FCC is supposed to require heat maps around each cell site to more accurately show the actual speeds that can be delivered, But for now, T-Mobile and Verizon are typically claiming speeds of 100/20 Mbps or faster for a sizable area around each cell site. This speed is true for the folks close to the tower, but at the outer fringe of each claimed circle are customers who are not able to receive 100/20 Mbps broadband. Those areas should be eligible for BEAD grant funding. I have no idea how State Broadband offices are going to deal with this. Any Grant office that decides to stick with the FCC maps will be condemning small pockets of folks to have worse broadband than everybody around them.

This is also another problem to deal with for an ISP seeking BEAD grants. I’ve described in the past how RDOF carved up the unserved and underserved areas in many counties into a jumbled mess, and FWA cellular coverage makes it that much harder to put together a BEAD serving area that makes both engineering and financial sense.

There is a more subtle issue that is even more troubling. The cellular carriers have no intention of serving everybody within the range of a cell site. There are constraints on the number of people they are willing to serve. This is similar to the constraints that Starlink has with serving too many people in a given small geographic area. This makes it hard to understand why NTIA rushed to define this technology as qualifying as served broadband. The willingness and ability to serve everybody ought to be one of the most prominent factors when declaring a technology to be creating served areas.

Even worse, T-Mobile says in the terms of service that it reserves the right to throttle usage on the FWA service. The bread and butter product for cellular companies is people with cell phones, and they are giving those customers priority access to the bandwidth at each tower. Any time cellular traffic demand gets too high, the usage to FWA customers will be restricted. That may not be a problem for low-population cell towers – but customers at any tower that has this restriction are going to be unhappy if broadband slows to a crawl in the evening.

My final issue with FWA cellular technology is that is expanding rapidly. Soon, it won’t just be Verizon and T-Mobile deploying the technology. UScellular, DISH, and AT&T are likely to start popping up in rural areas. I’ve been scratching my head wondering how State Grant offices and ISPs are going to deal with the technology if it’s activated during the grant review process. Cellular companies have every motivation in the world to intervene in grant applications and declare that areas are served and ineligible for grants. If the FWA carriers are allowed to make this claim for new cell sites, I can foresee numerous ISPs walking away from BEAD applications if the serving areas get carved up too badly.

This is a new technology, and, in my opinion, the NTIA rushed to accept these areas as served. The technology is so new that there was almost nobody served with cellular FWA back when the IIJA legislation enabled the BEAD grants. For the reasons I’ve discussed, it makes no sense to give cellular companies little broadband monopolies around their cell sites.

2022 Was a Year of Change for the Big ISPs

There was a sea change among the big ISPs in 2022. The big news is that most of the growth in the industry came from the T-Mobile and Verizon cellular FWA broadband product. Cable company growth crawled to a halt after a robust 2021, and the sector only grew by 55,000 net broadband customers in the fourth quarter. The big telcos still had small losses for the year, but the big news is that they added 2.4 million customers to fiber during the year.

The following list of ISPs represents about 95% of the U.S. broadband market. The large ISPs, in aggregate, added just over 3.5 million net customers in 2022. The two cellular FWA companies added 3,171,000 of those additions. Cable companies added 517,103 customers for the year, with most of the growth coming at the beginning of the year. The big telcos had a net loss of 181,276 customers but continued to furiously replace DSL with fiber.

The following statistics were compiled by the Leichtman Research Group, which tracks the broadband performance of the largest ISPs in the country. Following are the customers counts for the fourth quarter and the end of year 2022:

% 4Q Annual
4Q 2022 4Q Change Change Change
Comcast 32,151,000 (26,000) -0.1% 250,000
Charter 30,433,000 105,000 0.3% 344,000
AT&T 15,386,000 (66,000) -0.4% (118,000)
Verizon 7,484,000 37,000 0.5% 119,000
Cox 5,560,000 0 0.0% 30,000
Altice 4,282,900 (7,700) -0.2% (103,300)
Lumen 3,037,000 (63,250) -2.0% (253,000)
Frontier 2,839,000 8,000 0.3% 40,000
T-Mobile FWA 2,646,000 524,000 24.7% 2,000,000
Mediacom 1,468,000 0 0.0% 5,000
Verizon FWA 1,452,000 389,000 36.6% 1,171,000
Windstream 1,175,000 0 0.0% 10,300
Cable ONE 1,060,400 (1,600) -0.2% 14,400
Breezeline 693,781 (14,173) -2.0% (22,997)
TDS 510,000 3,500 0.7% 19,700
Consolidated 367,458 (14,454) -3.8% 724
Total 110,545,539 873,323 0.8% 3,506,827
Cable 75,649,081 55,527 0.1% 517,103
Telco 30,798,458 (95,204) -0.3% (181,276)
FWA 4,098,000 913,000 28.7% 3,171,000

There are a lot of interesting trends withing these numbers:

  • T-Mobile is now the 9th largest ISP, and the Verizon FWA product comes in at eleventh. T-Mobile is poised to pass Frontier and Lumen soon at the current growth rate.
  • While all of the landline ISPs on the list are feeling pressure from the cellular FWA product, the bigger and more permanent challenge for the cable companies is the 2.4 million telco customers added to fiber to the year. That statistic shows why cable companies are scrambling to improve upload speeds.
  • The biggest loser on the list continues to be Lumen, which lost 7.7% of its broadband customers for the year. It’s worth noting that the above numbers represent the smaller Lumen after the spinoff of Brightspeed in 2022. Breezeline (Formerly Atlantic Broadband) was the biggest percentage loser among cable companies, having lost 3.3% of broadband customers during the year.
  • TDS continues to be the fastest-growing landline ISP at 4.0% growth for the year. Next is Verizon FiOS, having grown by 1.6% for the year.

Will Cellular Companies Pursue BEAD Grants?

Several people have asked me recently if cellular companies will be pursuing BEAD grants. It’s an interesting question that I don’t think anybody other than the cellular carriers know the answer. But it’s an intriguing question since it’s a possibility.

Until recently, cellular companies didn’t have a product that would have qualified for broadband grants. BEAD and other grants are awarded to ISPs that serve homes an businesses, not cell phones. But the introduction of the FWA product line has created a broadband product that might qualify for grants.

Cellular companies pass the first sniff for BEAD grants since the wireless technology uses licensed spectrum. The NTIA says it does not consider wireless broadband using public spectrum to be reliable.

The next hurdle to winning grant funding would be for cellular companies to convince state grant offices that they can deliver broadband speeds greater than 100/20 Mbps. That’s an interesting challenge for a cellular carrier. From what I’ve seen, customers living close to a cell site can easily exceed those speeds. I’ve talked to a few people getting over 200 Mbps download on FWA – but each happened to live close to a cell site.

But speeds on FWA decrease rapidly with distance. I’ve talked to customers who are less than two miles from a cell site and aren’t seeing download speeds of 100 Mbps. But that doesn’t disqualify a cellular carrier from pursuing grants. BEAD allows for grants that cover small areas, theoretically as small as a single home.

More interestingly, there is no reason that a cellular company couldn’t propose a grant to build new towers to expand the faster coverage and also the fiber lines to feed the towers. It’s not hard to picture a network in rural areas where this might be the lowest cost solution. One has to wonder if a cellular company would ever want such a network – that’s a lot of cell sites to maintain that likely each only serve a small number of customers.

Another issue to consider is that cellular carriers are currently providing priority to cell phones over FWA customers. If the network gets busy, cell phones customers get the requested broadband, and FWA customers get throttled. Broadband offices might deem this to be disqualifying in areas with any significant population – but this seems like far less of a concern in a rural setting where cell sites probably rarely get overstressed.

Yet another issue is the ability of a grant winner to serve everybody in the footprint. Unless a grant area has extremely low density, it’s likely that the cell site doesn’t have the capacity to give everybody unlimited home broadband.

Another interesting issue to consider is how mapping plays into this. I’ve heard a lot of comments from folks who are claiming that T-Mobile and Verizon are already claiming fast speeds in a lot of places. Folks are saying the coverage areas claimed in the FCC maps seem a lot larger than the reality. It’s not hard to understand the motivations for cellular companies to claim fast speeds since it helps with marketing. This is particularly important for T-Mobile, which reached an agreement with the government as a condition of the Sprint merger to cover a large percentage of the country with faster speeds.

But claiming high speeds and claiming coverage areas that are larger than reality are counterproductive to seeking grants. An ISP can’t ask for grant funding for a place it says already has fast broadband.

The more important question for the industry is how the FWA claims of current speeds and coverage might hurt other grants. Will broadband offices not award grants in places the cellular companies claim to already have fast broadband? The emergence of the FWA technology is so new that I suspect most state broadband offices haven’t come to grips with that question. Many states have been creating their own broadband maps in recent years, and FWA technology has not been factored into those maps. This is just one more complication for broadband offices – as if they needed another issue.

Final 2022 Statistics from Ookla

As a numbers guy, I’m always intrigued by the Ookla Speedtest Global Index since it provides an interesting look at broadband speeds in the U.S. and around the world. This report shows the median and mean upload speeds, download speeds, and latency for both mobile and fixed broadband by country.

The median download speeds for fixed broadband in the U.S. at the end of 2022 was 193.7 Mbps download, 22.6 Mbps upload, and 14 milliseconds of latency. As a reminder of statistics, the median means that half of all speed tests showed faster results and half slower results than those numbers. Ookla thinks that median speeds are the best way to track the overall market and the difference between carriers.

The fastest median download speeds for landline ISPs at the end of 2022 comes from Comcast at 226.1 Mbps. Charter was at 225.3 Mbps, Cox at 212.3 Mbps, Altice at 190.8 Mbps, AT&T Internet at 187.1 Mbps, and Verizon at 183.2 Mbps. Median upload speeds were obviously faster for ISPs using fiber, with the fourth quarter median upload speeds showing AT&T Internet at 142.8 Mbps, Verizon at 104.9 Mbps, Altice at 29.8 Mbps, Comcast at 20.4 Mbps, Charter at 11.8 Mbps, and Cox at 10.7 Mbps. Missing from these numbers are smaller fiber-only ISPs that have much faster median speeds than all of these large companies.

Those are interesting upload speeds for some of the cable companies during a year of upcoming giant BEAD grants since a large percentage of customers of the cable companies are clearly not achieving the 20 Mbps upload speeds that is being used by the grants to define an underserved customer. We’ve already seen some state broadband grants awarded in cable company service areas – will folks apply for BEAD grants to compete with underperforming cable companies?

The median download speeds for cellular broadband in the U.S. at the end of 2022 was 78.9 Mbps download, 9.3 Mbps upload, and 31 milliseconds of latency. For the fourth quarter of 2022, Ookla says that T-Mobile has the fastest download speeds – on the modern chipsets – of 151.4 Mbps, up significantly higher than the third quarter 2022 median speed of 116.1 Mbps. Ookla not only measures mobile speed tests, but records the type of device being used. Old flip phones still using 3G will have lower speeds based on the capacity of the device. At least for now, the median download speeds for T-Mobile are far faster than Verizon (69.0 Mbps) and AT&T (65.6 Mbps). This likely means to some extent that the Verizon and AT&T are still supporting a greater number of older and slower devices. Median upload speeds were closer with T-Mobile at 12.5 Mbps, Verizon at 9.3 Mbps, and AT&T at 8.0 Mbps.

Ookla shows mobile latencies are about the same between the carriers, with T-Mobile at 56 ms, Verizon at 58 ms, and AT&T at 60 ms. Ookla calculates what it calls a multi-server latency, which represents the latency that should be expected by the average user at times when the local network is not under heavy load.

I looked back at an old blog I wrote in 2017, and the differences in mobile broadband speeds between then and now are astonishing. For example, in a 2017 report, Ookla showed median cellular download speeds nationwide at 22.7 Mbps, which was up 19% over 2016. I took a speed test on AT&T when I wrote the 2017 blog and got a download speed test of 13 Mbps. I took a test this morning on my AT&T cell phone and got a download speed of 141 Mbps. That’s more than a tenfold increase in speed in just five years.

Back in that same time frame, I was writing about how the cellular data networks were getting badly clogged and overloaded. It didn’t strike me until I wrote this blog that one of the ways that cellular companies have stretched their network capacity is by increasing speeds. A tenfold increase in speed means that the time required to handle the data requirement for a given customer is reduced by that same magnitude. Upgrading to a faster network means increasing the capacity to serve a lot more customers without a major network upgrade.

Price-for-Life

I recently noticed in the T-Mobile pricing for FWA cellular broadband that the company is claiming that the price is locked-in and will never be raised. In the pricing world, that kind of offer is referred to as a price-for-life, although T-Mobile didn’t use that term.

I’ve had clients ask me about this over the years, and I hopefully talked most of them out of the idea. This is the kind of idea that comes from marketing folks because it’s a gimmick that makes it easier to sell. But there are some long-term consequences of offering a guaranteed price forever.

There are some ugly stories of when price-for-life went sour. Back in 2016, Comcast door-to-door salespeople offered residents some price-for-life packages in Salt Lake City that were rolled out in anticipation of Google Fiber coming to the market. For example, residents were offered a triple play bundle at $120 per month that included broadband, cable TV, and a telephone line. The Comcast doorknockers promised customers a lifetime price, backed up in writing that their price would be good for as long as the customer kept the plan. Customers were assured at each step of the sales process that they were buying a lifeline plan and that rates would never be increased. For example, Comcast customer service reps on the phone repeated the assurance that the prices would be good forever.

It got ugly when the Comcast corporate folks raised rates in 2018. There was a class action lawsuit that alleged that as many as 20% of the 200,000 upgrades sold during the sales campaign were sold as lifetime plans. To nobody’s surprise, Comcast customer service denied any knowledge of selling a lifetime plan it had marketed just two years earlier. Comcast enforced the rate increase, which was substantial for some customers.

Most ISPs who market a lifetime rate would not be dumb enough to raise the rates only two years later. But there is a risk for T-Mobile to repeat the Comcast gaffe. It’s not hard to imagine five years from now that somebody at T-Mobile headquarters will be searching around for extra margin and notice this pile of underpriced customers.

It’s even more likely that T-Mobile can offer this product for life since it already knows the product won’t be around five years from now. As the company introduces future 5G features, at some point it could declare the current product to be technically obsolete and discontinue it.

That tactic would be impossible for a fiber provider, but the average customer doesn’t understand cellular networks well enough to dispute that kind of maneuver. But for my clients who have a fiber network, I can picture some households keeping a product-for-life for twenty or thirty years. I think a lot of people would sign up for a price-for-life for gigabit service.

But there are other reasons why price-for-life is a bad idea. The number one issue is inflation. We just went through a period where we saw steep inflation that would quickly eat away at the margin on a lifetime product. This is particularly true when offering a price-for-life for a product that has already been priced at introductory rates. Even if we return to a long-term inflation rate of 3% annually, the margins on a price-for-life product will drop steadily each year.

The main problem I have with the price-for-life concept is that it provides an easy path for the marketing department to make sales and earn sales bonuses today while pushing lower margins into somebody else’s lap in future years. Sales departments never heard of a sales gimmick they don’t like, and this is clearly a gimmick. A more sensible approach would be to offer a fixed price for some reasonable term, like three to five years. That’s enough to be a sales hook without killing the bottom line in future years.

My main objection to price-for-life is that it conveys a message to consumers that runs against the philosophy of most small ISPs. Most small ISPs pride themselves on offering fair rates all of the time, which makes it easy to favorably contrast themselves with the big ISPs that constantly run special pricing promotions. Once a small ISP runs a price-for-life promotion it loses that message and marketing advantage because it has created a pile of customers that year-over-year have lower rates than their neighbors – and those neighbors will notice.

As odd as it sounds, a price-for-life also creates an administrative burden on an ISP. Having a pile of customers that are different than everybody else is something that will have to be explained to every new customer service rep for decades to come. Getting everybody at an ISP to remember the nuances of the products and prices sold in the past is one more complication that makes it harder on future staff. This was one of the major issues when Charter purchased Time Warner Cable. Time Warner had hundreds of different old grandfathered price plans that confused Charter employees. Charter resolved this by killing off the old rate plans – effectively voiding old price-for-life promises.

There is one counterargument to be made in favor of price-for-life. There is value in a customer that never churns. Even if a customer delivers less margin every year by hanging on to a price-for-life product, that customer is delivering a huge accumulated return by paying for a product for a decade or two. But this argument just sounds like a justification, because an ISP likely would have made more profits over time by not locking in rates, even after considering future churn. In my opinion, the long-term downsides and complications of price-for-life outweigh this economic argument.

How Good is FWA Wireless?

T-Mobile got some bad news recently when the the National Advertising Division (NAD) of BBB National Programs informed T-Mobile that it could not use the words “fast” and “reliable” when advertising for its FWA fixed wireless product that it brands as T-Mobile Home Internet. This ruling came as a result of a complaint from Comcast that T-Mobile is overstating the capabilities of the FWA product in advertising.

Most large carriers belong to the BBB National Programs as a lower cost way of mitigating advertising disputes than lawsuits. ISPS agree to go along with the rulings issued by the group as a condition of joining. However, in this case, T-Mobile is appealing the decision. The news wasn’t all bad for T-Mobile since it was ruled that T-Mobile could continue to advertise that the price of FWA is ‘locked-in” since the company hasn’t raised its rates.

Anybody who has looked closely at the performance of FWA wireless from T-Mobile or Verizon would agree with this ruling. The main reason for the ruling is that the performance of FWA can vary widely. It’s a broadband product that connects to customers from a cell site, and the distance between a customer and the cell site makes a big difference in the speed being delivered. I talked to one customer located near to a T-Mobile tower who was consistently getting over 200 Mbps download and was really pleased with the product. But in this same community, customers only a mile or so away from that same cell tower were getting speeds closer to 50-100 Mbps and were not as happy with the product. A mile further away and speeds were not good at all, and I talked to a farmer who sent the receiver back. In a rural area, a mile isn’t very far, and unless there are a lot of towers, most folks are not getting the advertised fast speeds.

The one consistent feedback I’ve gotten in talking to FWA customers is that speeds vary. This is true for all cellular broadband, and cell phone customers are used to seeing a different number of bars of broadband speed over time from the same location such as home or the office. Cellular data speeds vary for a wide variety of reasons like temperature and weather.

But the biggest reason for the variability is the overall volume of data being demanded from a given cell site at a given moment. Like most broadband products, cellular broadband is a shared data product where the broadband is divvied up among the users at any given time. But unlike landline broadband networks, a cellular company cannot control the number of users at a cell site. Since cell phones are mobile, there is no telling how many people might be demanding a cellular data connection at any given time.

FWA has one more limitation in that the cellular carriers have elected to give first priority to cell phones over FWA customers. This means that when a cell site gets busy, the carrier will choke the delivered data speeds to FWA customers in order to deliver the most speed possible to cellular customers. This makes sense since each big T-Mobile and Verizon have roughly 100 million cellular customers compared to a few million FWA customers. They do not want to make cellular customers unhappy with broadband speeds, and so they throttle FWA when a cell site gets busy.

T-Mobile doesn’t hide this, and the throttling is discussed in the fine print when the product is advertised. But that throttling is part of the reason that T-Mobile can’t describe it’s product as reliable – because at busy times it isn’t.

The big selling point for FWA is the low price and I’m sure the price is what attracted urban customers. The speeds are going to be liked in rural areas where there are no alternatives, but there is definitely a severe distance limitation – in a rural area a 50 Mbps connection might be a big leap up in performance. But the FWA product is a lot slower than cable company broadband. Households who are heavy broadband users might not like the slower speeds and the variability. This ruling is telling T-Mobile that it can’t advertise in a way that makes FWA sound like an equivalent alternative to cable or fiber broadband, because it isn’t. It’s going to be interesting to see how T-Mobile adjusts it’s advertising after this ruling.