Tag Archives: Verizon

Verizon to Buy Frontier

There are not many telecom headlines that give me an instant smile, but the announcement of Verizon’s offer to buy Frontier Communications is one that did. What amused me was that Frontier grew to its current size by buying cast-off copper networks from Verizon.

Frontier got its start as Citizens Communications but adopted the Frontier name in 2008. Frontier paid a lot for Verizon properties. In July 2010, Frontier paid $8.6 billion for Verizon properties in 14 states that included Fort Wayne, Indiana and West Virginia. In April 2016, Frontier paid $10.5 billion for Verizon properties in Florida, Texas, and California. The company made other acquisitions over the years from GTE, Commonwealth Telephone Company, and AT&T properties in Connecticut.

The current sale is estimated to be valued at around $20 billion. That’s a little less than what Frontier paid over the years for copper networks. However, Verizon is buying Frontier for its fiber portfolio. Frontier had 6.5 million fiber passings at the end of 2023 and has announced plans to add 3.5 million more passings by 2026.

This sale raises some interesting questions. Verizon is clearly interested in having a bigger fiber portfolio. I have to wonder if Verizon will be in favor of Frontier’s remaining fiber expansion plans since much of it is in rural and less densely populated portions of the Frontier portfolio.

Frontier also seems to have a fairly aggressive plan to pursue BEAD grants, particularly in rural areas of its existing footprint. It’s going to be interesting to see if Verizon influences those plans which would come to fruition before the close of a sale.

I’ve always been fascinated seeing ISPs merge and deal with different prices. Prices usually stay the same for a while after a merger, but eventually are brought into synch. Following are the list fiber prices for the two companies. This could mean future catch-up rate increases for Frontier customers.

There must still be many employees at Frontier that came from one of the Verizon acquisitions. It’s likely going to feel really odd for them to end up back where they started.

I’ve heard a lot of folks speculating that the next few years might be full of fiber acquisitions and mergers. T-Mobile recently announced the purchase of Metronet, which followed the purchase of Lumos.

This acquisition brings Verizon close to AT&T’s and would give the company 14.5 million broadband customers, counting at the end of the second quarter of 2024. That’s 7.7 million Verizon broadband customers, 3.8 million Verizon FWA wireless customers, and another 3 million customers from Frontier. The three entities are growing quickly and added 442,000 broadband customers in the second quarter of this year.

Frontier has come a long way since the bankruptcy in filed in 2020. The company emerged from bankruptcy in 2021 with a clean balance sheet, cash to grow, and a new management team.

The Trajectory for FWA

Mike Dano, in LightReading recently quoted Sowmyanarayan Sampath, the EVP and CEO of Verizon’s consumer business, as saying that Verizon expects to have 4 to 5 million FWA customers at the end of 2024, up from 3.4 million at the end of the first quarter of 2023. Mr. Sampath says that Verizon’s current network can support 4 to 5 million customers, but that the company is assessing how to grow beyond that point – a decision they will make later this year.

Verizon says its FWA growth was a little sluggish at the beginning of 2024, but that sales have picked in March after the company started offering new customers a free Nintendo Switch, the game console that retails for $200 to $300.

Dano also quotes financial analysts at TD Cowen who predict that Verizon will add 888,000 new net subscribers this year while T-Mobile will add 1.3 million more customers this year to add to the 4.8 million customers at the end of 2023. We also can’t forget that AT&T has entered the fray. The financial analysts at New Street Research recently predicted that AT&T will hit a peak of 180,000 new FWA customer additions per quarter by late 2025.

FWA broadband has majorly disrupted the broadband industry. According to the TD Cowen estimates, FWA operators will gain 2.6 million new customers in 2023 while fiber operators will add around 600,000 new customers. They predict that the big cable companies will lose about 1.1 million customers in 2024. That’s a net market change of 2.1 million new broadband customers – down from 3.5 million new customers in 2023.

I don’t know if the TD Cowen estimates include the impact from the end of the ACP program that brought discounts to 10 million landline broadband households. While many of those customers will likely still keep a broadband connection, many of these households got free broadband after applying the discount, and it doesn’t seem unrealistic to think that at least several million households will eventually disconnect broadband without the discount.

FWA broadband has one notable weakness that might define a natural market cap for the product as currently configured. The current version of the product shares bandwidth with cellular customers. Cell sites were not designed to accommodate large numbers of broadband connections that stay connected for long periods of time – and that, according to OpenVault, now use an average of 651 gigabytes of broadband every month. FWA broadband usage has to be eating into the resources at cell sites – and the impact will only get worse as both home and cellular customers use more broadband every year.

I think I’ve already witnessed some evidence of the stresses caused by FWA. I’ve had access to detailed speed test records for entire counties, and I’ve seen FWA customers who test at speeds of 100-300 Mbps down most of the time but who occasionally test at only a few Mbps. The FWA providers all say that they throttle users any time the cell site gets too busy, and I’ve seen enough examples to think this is evidence of severe throttling. That’s a situation that will occur more often as the FWA providers add more customers. Most broadband customers today won’t tolerate occasionally losing all broadband and likely will return to their original ISP if they continue to get throttled.

Mr. Sampath touched on a possible solution to the problem. He says Verizon is exploring the use of millimeter-wave spectrum at cell sites. Both Verizon and T-Mobile are considering C-Band spectrum for FWA customers. Moving at least some FWA customers off the same spectrum used for cellphones would eliminate the biggest weakness of FWA – that it uses the same spectrum that is serving cellphones. As much as carriers like FWA, they are not going to endanger their much larger cellular business – and one has to think that the success of FWA has already degraded cellular quality to some extent.

Interestingly, both Verizon and T-Mobile had originally publicly predicted that they would eventually achieve 15 million customers on FWA. They still have a long way to go to get there. It already looks like Verizon might have tapped into a lot of the households that are choosing FWA strictly due to lower prices. Having to bribe new customers with a new video console is a sign of a market that is already maturing.

It’s clear that FWA growth is probably the most important statistic in the market today since other ISPs are competing for the customers who aren’t opting for FWA. If the overall broadband market is reaching maturity, it gets even harder to predict how any given ISP or technology will perform.

First Look at Broadband Labels

The FCC’s Broadband Labels were implemented by ISPs with more than 100,000 customers on or before April 10. Not surprisingly, many ISPs waited until the last day. I think the FCC hoped that the labels would create “clear, easy-to-understand, and accurate information about the cost and performance of high-speed internet services.” I looked at a lot of the labels this past week. As you might expect, the actual labels often fall far short of the FCC’s goal. I’m not going to use this single blog to try to rate and rank the various labels but will highlight a few of the things I found.

The first observation is that the labels are generally hard to find – they are not prominently displayed on ISP websites. This is because the FCC rules say that ISPs only have to display the labels at ‘points of sale’. ISPs have interpreted this to mean that a customer must first submit a valid address to the ISP website, and then typically navigate through several more links to find the labels. Even after entering an address, the links to broadband labels are often not clearly identified, and it was a challenge to find the labels for some ISPs. I thought one of the purposes of the labels was to make it easier for the public to comparison-shop between ISPs – but finding the labels usually takes a lot of work, especially for somebody who isn’t familiar with navigating ISP websites.

The one big benefit of the labels for most ISPs is that they make it easier to find broadband prices. Over the last few years, it’s grown increasingly difficult to find the list price for broadband on big ISP websites – the price that customers pay at the end of a special promotion rate. ISPs are now disclosing the full list price on the labels.

One exception to showing list prices is Comcast. The company is showing the promotional rates in bold for many broadband products and only shows the list price in fine print. Comcast is also deceptive about the cost of its broadband modem. All they say is that it’s optional, without mentioning that their price for a modem rental is $15. They also don’t mention that to get some features a Comcast modem is mandatory. I rate the Comcast labels as still being as deceptive as their website was before the labels. But Comcast isn’t the only one not being open and clear about the modem rental. I’m guessing that big ISPs are rationalizing that WiFi and the modem are not a broadband product as a way to keep them off the label. Any ISP not disclosing modem prices and policies is creating a hidden fee.

One of the features of the labels is that an ISP is supposed to provide a plain English description if its technology and network practices. Most ISPs failed at this, and a customer trying to understand two competing ISPs is not going to understand the technology difference using the broadband labels.

Consider Verizon. It has a network management section of the label that mixes in descriptions of its wide range of different technologies rather than describing each separately. There are a few things that a shopper for FWA service ought to be told: 1) that the FWA product is delivered over the same network delivering bandwidth to cellphones, 2) that the key factor that determines the speed for a customer at a given tower is the distance between the customer and the tower, and 3) that broadband can be throttled if the cell site gets busy. They disclose the third item, but overall, they fail at describing how FWA works.

The labels are not going to tell the public much about speeds. A few ISPs, like Verizon FWA and T-Mobile FWA, are honest and report a range of speeds. Cox is relatively honest and says that speeds are ‘up-to’ the cited marketing speed for a given product. But most big ISPs are claiming they deliver speeds in excess of advertised rates. Charter says speeds are at the advertised speed or faster. Comcast, CenturyLink, Mediacom, and Sparklight all cite ‘typical speeds’ which are all faster than the advertised speed – some significantly faster. This is the first time I’ve seen the term ‘typical speed’, and I have no idea what ISPs mean by it.

Windstream took an interesting approach to broadband labels and only created labels for fiber customers and not for older DSL. I don’t know if that meets the FCC requirements, but Windstream is reporting 100 Mbps capability for DSL in some markets on the FCC map, and this feels like something that should have a label.

All of the labels must disclose latency, and many of the latency numbers cited seem significantly low. I think that the ISPs are citing the latency between their headend and the customer, not the latency that a customer can expect in getting to the Internet. If so, this also feels deceptive to me.

Overall, the Broadband Labels do not fulfill the FCC’s goals of making it easier for customers to understand broadband products. It is a relief to see most ISPs disclose prices – but if Comcast gets away with highlighting marketing promotional rates, the labels for other ISPs might change soon to match. Disclosures on speeds are mostly a joke – and most customers are going to be surprised to find that their ISP is bringing them faster speeds than what they are paying for (sarcasm alert). For the most part, the descriptions of network practices are not written in plain English to help a potential customer understand the technology being used. The carefully crafted lawyer language in these sections makes it hard for even experienced industry folks to understand network management policies.

Are There Two Broadband Markets?

In a recent survey of 8,000 broadband customers nationwide, Parks Associates found that FWA cellular wireless customers feel better about the price they pay for broadband than subscribers of other technologies.

The survey asked broadband customers to react to the following statement: “I receive Internet service at a fair cost / good price”. The response by technology was as follows:

  • 61% of FWA cellular customers reacted positively to the question.
  • 51% of fiber customers feel they are paying a fair price.
  • 40% of DSL customers responded positively.
  • Only 35% of cable customers think they are paying a fair price.

These responses are measuring two things – the way customers feel about broadband performance of each technology combined with how they feel about the price.

These survey results have to be troubling to cable companies. Cable companies have been raising rates regularly for years. For example, Comcast already has rates far higher than FWA, and yet the company still raised rates by $3 in December 2023. There is no mystery why customers like FWA pricing more than cable company pricing. Comcast has a list price of $86 for a 200/5 Mbps broadband connection, and most customers also are charged $15 for a modem. This contrasts with Verizon FWA, which has a list price of $60 for speeds between 100 – 300 Mbps, with addition savings for using autopay or for bundling with Verizon cellular. T-Mobile FWA has a list price of $65 with a small discount for autopay.

However, the list price isn’t everything since a lot of customers are paying less than list price. Verizon had a recent promotion for FWA home broadband at $40 for new customers and $25 for existing cellular customers. T-Mobile has been advertising a price for home broadband for $30 for existing T-Mobile cellular customers. Comcast also has heavily discounted special prices. There are current web deals for buying the 200/5 Mbps plan for $30 ($45 with the modem). But every customer buying a low-price Comcast product knows the prices will eventually skyrocket when the promotion is over.

The customer reactions to fiber are more puzzling where 50% of customers don’t think they are paying a fair price. Many fiber providers have prices that aren’t that different than FWA wireless. AT&T sells 300 Mbps fiber for $65. CenturyLink sells 500 Mbps fiber for $50. Frontier sells 500 Mbps for $50.

My consulting firm conducts surveys, and we’ve been seeing similar results. I’ve recently come to the conclusion that there are two different broadband markets in the country – a market of customers who care about price and one where customers care about speed.

There has been a huge migration of customers upgrading to gigabit broadband. OpenVault reported that at the end of 2023 that one-third of all broadband customers are now subscribed to gigabit speeds. These are clearly the customers who care about speed, and these households are likely not interested in the slower speeds being delivered by FWA cellular wireless.

Eight million customers have elected to buy FWA home broadband that delivers top speeds between 100 and 300 Mbps. Some of these customers live in rural areas where this is the only fast option, but many of these customers are in towns and cities and are switching from cable companies and fiber ISPs. These are the customers for whom price is more important that broadband speeds. These customers find the FWA speeds to be good enough, at least in relation to the price they pay.

This creates a real dilemma for cable companies. They have lowered the promotional prices to the lowest level I’ve seen in many years to compete with FWA prices. At the same time, cable companies are seeing many customers migrate to the fastest speeds and higher-priced products – but these customers hate the prices. It’s easy to understand customer dissatisfaction when some customers are getting promotional prices at $30 while many other customers are pay far more than $100. It’s virtually impossible for a cable company to satisfy both sets of customers. The attempt to deal with the two drastically different market segments might be a major part of the reason why Comcast and Charter have stopped growing.

Telcos Shedding Jobs

I heard a chilling story recently. AT&T apparently notified a bunch of employees in Los Angeles that their jobs are being eliminated and that they need to report to other cities like Dallas or lose their job. Many of these employees were relocated to Los Angeles in the last five or six years, and the company paid for that past relocation. Employees now must move at their own expense. I was told the same thing was happening in other AT&T markets across the country. This is a particularly callous way to eliminate employees, and AT&T is clearly trying to induce employees to resign to avoid paying severance. This is not the kind of behavior that would normally be expected from a large corporation. It certainly tells the remaining employees of the company that they are not valued.

There is rarely a month that doesn’t go by without hearing that one of the big telcos is laying off a group of employees somewhere. The story piqued my interest, and it took only a little research to see that telcos have steadily been eliminating staff while the biggest cable companies have not.

Consider the following chart that shows employment at the biggest ISPs and carriers since 2018.

2018 2023 Change
AT&T 268,220 150,500 -44%
Verizon 144,500 105,400 -27%
Lumen 45,000 28,000 -38%
T-Mobile 80,500 67,000 -17%
Comcast 184,000 186,000    1%
Charter 98,000 101,100    3%

It’s not easy to make sense of the staffing changes at the various carriers. Consider some of the big trends at each company since 2018.

Some of the staff reductions at AT&T can be justified since the company suffered from several disastrous investments. The biggest was buying Time Warner Media and spinning it off just three years later to Discovery with a huge loss. The company had another big failure from its purchase of DirectTV. While AT&T flourished from 2018 to 2023 in adding cellular customers, competition dropped the average revenue per customer over that time period. AT&T lost only 3% of its net broadband customers over that period while it has been transitioning from copper to fiber.

Verizon has a similar story of making bad investments in AOL and Yahoo. Due to the big surge of FWA cellular broadband and good sales in FiOS, Verizon has 54% more broadband customers today than it had in 2018. Verizon also thrived and grew cellular customers during this period.

Everybody has likely heard Lumen’s story. The company has struggled since it was spun off from AT&T as US West. The company divested it’s copper assets in twenty states and recently announced more layoffs.

T-Mobile is an interesting case. Cellular customer additions have been sluggish since it merged with Sprint. It recently added 4.8 million FWA broadband customers. The layoffs at T-Mobile seem to be clearly aimed at improving the bottom line – even though one of the big promises made to employees with the Sprint merger was that it would create new jobs, not lose jobs.

Comcast has thrived in everything except cable TV. Since 2018, the company added 5 million broadband customers and 6.5 million cellular customers.

Charter also did well except with cable TV. Charter added 5.3 million broadband customers since 2018 and 7.8 million cellular customers.

The bottom line of my quick analysis is that telcos have been reducing staff at a much greater pace than can be justified by looking at the overall trends of each business. I have to wonder how Comcast and Charter are going to react to the sudden slump in broadband growth? Will they now start shedding employees like the telcos have done?

Repeating Telecom History

This is a story I’ve told before, and I repeat it from time to time since I believe we can’t ignore the history of our industry if we want to avoid the worst of it from happening again.

We let the big telcos walk away from their responsibility to maintain rural networks. That resulted in a shameful situation where rural folks were never offered working broadband, and now the telcos are even walking away from landlines. What I find saddest about this, other than the situation this has caused for rural communities across the country, is that we don’t seem to have learned any lessons from the past. It’s likely that we are again going to hand billions of dollars to giant companies to take care of rural networks.

There are a variety of factors that led to the rural mess that created the need for BEAD and other broadband grant programs. While the primary blame goes to the big companies that allowed rural networks to deteriorate, a lot of the blame also goes to regulators and government. So let me talk about them first.

I think the downward trajectory started with the divestiture of AT&T into AT&T as a long-distance company and large regional telephone companies. Regulators had an opportunity to make sure that the regional RBOC companies remained fully regulated with mandates to maintain universal service. But for some reason, regulators did the exact opposite and told each RBOC to thrive in the open market. Companies like Verizon and Bell South quickly got sucked into the Wall Street game of caring more about stock prices than running a good telephone company. I worked at AT&T pre-divestiture, and this was a huge chance after divestiture. The employees of the giant Ma Bell monopoly took pride in doing the right thing for the public. I sat near the person who took the daily calls to the executive help desk – customers could call the top guy in each state if they had a problem, and that almost always meant the problem got solved.

The newly-formed telco lobbied hard to be able to make profits over and above the low, but steady profits that could be earned by a regulated utility. Unfortunately, lobbying works when it’s done right, and the Baby Bells lobbied everybody from city councils to federal legislators. Within a few years after divestiture, the process of deregulating the big telcos began. By promising to keep residential telephone rates low, regulators across the country deregulated the big telcos from their many obligations.

The big telcos ran with the power that came from deregulation. For example, Bell South grew a cellular business that grew to rival the telco business. All the Baby Bells except US West thrived under the relaxed regulatory regime.

I hesitate to say that the folks running the Baby Bells were bad people, but from the perspective of customers, they were. Telcos that once had always put customers first were suddenly obsessed with stock prices and the bottom line. They became just another set of corporations operated by MBAs that valued the stockholder over the customer.

The changes were mostly, but not always, gradual. Verizon was the abruptest of the Baby Bells and decided early on to divest itself of its rural networks. Unfortunately, they weren’t able to sell all rural copper. In places like West Virginia, when they couldn’t find a buyer, Verizon ceased maintaining the network. I saw this happen firsthand, and it was not pretty.

But the other Baby Bells ended up in the same place, just not as rapidly. Year after year, and budget cycle after budget cycle, the big telcos cut back on maintenance. Open technician jobs weren’t replaced, and there were occasionally big layoffs to help maintain stock prices. Hardware wasn’t upgraded when needed, and copper networks went to hell. We finally got to the point where whole counties have no working DSL – the telcos just quietly got out of the business.

We are now poised to do it all over again. We have a gigantic broadband grant program that clearly favors big companies over small ones, companies that can use equity instead of debt for grant matching, and companies with the resources to pursue giant multi-county grants. Big cable companies are joining the big telcos to pursue rural grants. The big cable companies have a similar history to the telcos. One only has to talk to folks in small communities where the cable companies eliminated business offices and cut back on maintenance staff. Cable companies have neglected small markets by not making needed upgrades while bragging to Wall Street that all of their networks are state of the art.

I doubt there is anything that can be done to stop this, but we are on the verge of doing it all over again. Over the last decade we awarded tens of billions of subsidies to big telcos to improve rural broadband, and the money mostly got pocketed. I find it impossible to believe that the giant companies are going to care and nurture newly built grant networks any better than they have taken care of rural or small community networks in the past. A few big companies might try to do the right thing. But they will be under pressure to maintain earnings, and over time, they will cut staff, maintenance, and repairs – and the cycle will eventually repeat. It’s virtually impossible to believe that the giant ISPs will devote the needed resources for decades to come to properly support rural networks.

The ironic thing is that we know what works in rural areas  and it’s not giant ISPs. We’ve seen small telcos and cooperatives take care of rural networks while big companies let networks rot in place. But lobbying is still king, and regulators are not brave enough to do the right thing – which is to not give grants to publicly traded companies. Watching this cycle repeat itself will give me fodder to write about how we screwed it all up again – but I’d much rather be writing about rural success stories.

Will FWA Wireless Peak Soon?

This almost sounds like a silly question when looking at the recent growth of FWA wireless, where the big cellular carriers are selling home broadband using cellular spectrum. But I find myself having to ask the question after discussing this with some of my peers. Universally, every person that I put the question to dismissed FWA wireless as a temporary technology with no real long-term legs.

The observations I heard about FWA included the following:

  • The product is already oversubscribed, and customers are already getting tired of it.
  • Cell towers weren’t designed to handle all-day broadband connections, and this is going to harm the carriers more than help them in the long run.
  • The speeds aren’t fast enough, and people will tire of the broadband performance.
  • The coverage is spotty and swings from fast to slow during the day.

Interestingly, the numbers seem to be telling a different story. Consider national quarterly broadband growth over the last two years, as shown in the following table. These numbers come from Leichtman Research Group, and they say the big companies represented in these numbers represent about 95% of all broadband subscribers in the country.

FWA

 Big Cable Companies Big Telcos

Total
1Q22

532,000

 482,830 50,350

1,065,180
2Q22

816,000

 (60,289) (87,837)

667,874
3Q22

920,000

 39,035 (136,101)

822,934
4Q22

913,000

 55,527 (95,204)

873,323
1Q23

916,000

 67,472 (21,196)

962,276
2Q23

903,000

 9,566 (61,833)

850,733
3Q23

941,000

 4,777 3,392

949,169
Total

5,941,000

 598,918 (348,429)

6,191,489

Since the beginning of 2022, T-Mobile and Verizon FWA captured 96% of net new customer gains. While cable companies grew by 600,000 over that time, 80% of those gains were in the first quarter of 2022. Since then, the big cable companies have stagnated and collectively added less than 20,000 net new subscribers per quarter. Telcos have continued to bleed customers as they continue to lose DSL customers, but underneath those losses, the telcos are replacing DSL customers with fiber customers.

Some of the observations of FWA I heard ring true. Cell sites weren’t designed for the kind of connections people expect for home broadband. But after seeing this unexpected success, I’m sure that the carriers are working to bolster cell sites. I know that there are a lot of requests floating around the industry asking for faster broadband connections to cell sites. In the long run, accommodating FWA permanently means changing the way that cell sites operate.

It’s also true that the bandwidth is not guaranteed. Both carriers warn customers that FWA broadband might be curtailed any time there is a lot of demand for cellphone traffic. As much as the carriers love this new business, it’s hard to think they will endanger their cellular business. However, a few of the folks I talked to think that’s exactly what they are doing.

The one observation that nobody made to me was that FWA cellular costs less – particularly less than big cable broadband. The standalone list price for T-Mobile FWA is $65 and is $60 for Verizon. Both companies offer a discount for autopay, and Verizon offers an additional $15 discount for existing Verizon cellular customers. Both are clearly trying to grab market share. I saw an advertisement this past weekend for Verizon FWA with a price of $30 guaranteed for four years for existing Verizon cellular customers. In my experience, there are a lot of customers for whom price is the predominant factor.

While my peer group thinks FWA is a flash-in-the-pan, T-Mobile and Verizon predict they will collectively reach 15 million customers, about twice where they sit today. This is clearly the most interesting dynamic in the broadband industry, but I don’t think anybody knows for sure where these carriers are going to top out. But it doesn’t feel to me like they’ve already hit the top of the market.

What’s Up With Comcast and Charter?

The two biggest cable companies in the country have clearly bogged down. In the third quarter of 2023, Comcast lost 18,000 broadband customers while Charter gained 63,000. To contrast the extent of the slowdown, Charter gained over 1.3 million customers in 2021 while Charter gained 1.2 million. The growth during the pandemic was not extraordinary, and both companies added 1.4 million customers in 2019 before the pandemic.

The two companies are still the largest ISPs. Comcast had 32.3 million broadband customers at the end of the third quarter of 2023, while Charter had over 30.6 million. Third in size is AT&T at 15.3 million.

Charter is still slowly adding customers due to its strategy of building broadband in rural markets. In the third quarter, half of its growth came from rural areas. Charter won a significant amount of rural subsidy in the RDOF reverse auction in 2020 and has been aggressively pursuing state broadband grants since then. Comcast has also been chasing state grants, and analysts expect that both companies will pursue the upcoming BEAD grants.

There are a number of reasons for the sudden slowdown. At the top of the list is probably prices. The following are the current list prices for the most common broadband products. For both companies, the prices and speeds vary in some markets.

  Download Upload Price
Charter 300 Mbps 10 Mbps $84.99
500 Mbps 20 Mbps $104.99
1 Gbps 35 Mbps $124.99
Comcast 200 Mbps 10 Mbps $90 + $15 for router
400 Mbps 10 Mbps $105 + $15 for router
800 Mbps 20 Mbps $110 + $15 for router
1 Gbps 20 Mbps $115 + $15 for router
1.2 Gbps 35 Mbps $120 + $15 for router

These prices are significantly higher than the prices being charged by fiber competitors:

  Download Upload Price
AT&T 100 Mbps 100 Mbps $60
300 Mbps 300 Mbps $65
1 Gbps 1 Gbps $80
2 Gbps 2 Gbps $110
Frontier 500 Mbps 500 Mbps $59.99
1 Gbps 1 Gbps $79.99
2 Gbps 2 Gbps $109.99
Windstream 500 Mbps 500 Mbps $60
1 Gbps 1 Gbps $85
Verizon 300 Mbps 300 Mbps $49.99
500 Mbps 500 Mbps $69.99
1 Gbps 1 Gbps $89.99

To offset the big price difference with competitors, both companies offer substantial discounts for new customers. Charter tends to continue to renew special pricing while a customer has to work harder to get the discounts at Comcast. Both companies are pushing bundles that include discounted cellular.

As the two charts demonstrate, another big difference is the upload speeds. Both cable companies are upgrading upload speeds to speeds between 100 Mbps and 300 Mbps using mid-split technology upgrades. Both have been talking about upgrading to DOCSIS 4.0 to get symmetrical speeds.

The other new competitor is FWA Cellular Wireless from T-Mobile and Verizon. We don’t know how much traction these companies have in competing against cable companies, but the two companies have added over 7 million customers in the last two years, while Comcast and Charter have stagnated.

  Download Upload Price
T-Mobile 100 Mbps Best Effort $65
100 Mbps Best Effort $60 with Autopay
Verizon 300 Mbps Best Effort $45 with Verizon Cell Plan
300 Mbps Best Effort $60
  300 Mbps Best Effort $50 with Autopay

It’s going to be interesting to see if the two cable companies increase rates in 2024. If they don’t, then the only path to higher earnings would be to cut back on customer or slash expenses.

Both companies have thrived on the combination of customer growth and revenue growth from rate increases. Both companies face a serious earnings challenge in the next few years as competitors chip away at customers.

Where is FWA Finding Customers?

Several people have asked me where the cellular carriers are finding the millions of customers they are adding to FWA cellular broadband. T-Mobile added 550,000 customers in the third quarter to reach 4.6 million total subscribers. Verizon added 380,000 in the third quarter to reach 2.7 million customers. AT&T is late to the game but says it is now adding 2,000 a week and plans to step this up significantly. Other carriers like UScellular are poised to enter the market.

The new FWA customers have to be coming from somewhere – and there are a lot of possibilities. In urban areas, the customers would have to be coming from cable companies, telco DSL, or fiber. In rural areas, customers would be coming from DSL, fixed wireless, satellite, or cellular hot spots. I’ve not seen any discussion or announcements from T-Mobile or Verizon about where they are gaining customers.

T-Mobile and Verizon together now have almost 6% of all broadband customers using the new wireless product. I’ve seen those companies speculating about growing to a 15% market share, which would mean adding another 10 million customers. That would make FWA collectively the third largest ISP behind Comcast and Charter.

I’ve been doing some digging, but my research is far from scientific. I’ve looked in detail at half a dozen counties using detailed Ookla speed tests to see where the FWA customers live. I looked at a few rural counties with only one or two sizable towns, and I looked at two suburban counties where cable companies serve the large majority of the geography. The first thing I noticed is that speeds are only good for around two miles from a cell tower – that’s not far in a rural area, but the carriers are now passing a lot of customers.

I also noticed in this tiny sample is that there are a lot more FWA speed tests in rural areas than in towns. That makes sense. In many places the FWA product delivers speeds of between 100-300 Mbps download – and for rural customers who have had no decent broadband option, this is a spectacular upgrade option. Upgrading to FWA from a creaky 10/1 Mbps DSL probably feels like the change we remember from going from dialup to DSL. I’ve noticed that there are still a lot of rural towers that have not yet been upgraded to the product, and perhaps those upgrades will provide a lot of the path to adding another 10 million customers.

There are FWA customers in cities and dense suburbs, but the relative penetration of FWA in densely populated areas looks to be relatively miniscule. The FWA sales proposition in urban areas is price. It’s still not unusual to find a 15% market penetration of DSL in cities, and it should be easy to sell faster speeds and better reliability at the same price as DSL. CenturyLink recently said that its rapid drop in DSL is due mostly to FWA.

One place that the cellular carriers are getting the customers is from their own embedded customer base. In many rural counties, T-Mobile and Verizon already have a 2 to 4% market penetration of cellular hotspot customers. These older broadband products delivered whatever cellular speed was available on the rural 4G network – and were exceedingly expensive due to severe data caps. It’s a pretty easy sell for a cellular company to tell customers they are sending them a new receiver that will get faster speeds and that will provide unlimited broadband – but with the small print caveat that bandwidth can be throttled any time that cell phone traffic is heavy.

I know that AT&T is using the product to convert its rural DSL customers. I happened to be in an AT&T store recently and heard them tell a customer that their copper DSL and voice line was soon going to be cut dead and replaced with FWA. The sales pitch to compete against satellite is also pretty easy. The FWA product is faster and costs less than any of the satellite options. Competing against WISPs using fixed wireless is more of a local situation since the quality of WISP broadband ranges from miserable to great.

The big question everybody wants answered is the impact of FWA on cable companies. In the last quarter, the big cable companies collectively added only 8,000 customers, and only Charter grew a little. The big cable companies have made themselves vulnerable due to high prices and in many markets due to reliability. Converting to FWA can almost cut a broadband bill in half. In cities, almost everybody lives within a decent distance of a cell tower – but the big concern for urban FWA is the capacity to support the product. While the cellular carriers love the new FWA product, they still view this as a footnote product in their annual reports. They are not about to jeopardize cellphone quality by oversubscribing fixed broadband customers on networks that weren’t designed to provide continuous broadband connections.

I still have no idea of the extent to which cable companies are losing customers to FWA or fiber. They are certainly losing to both – but the cable companies and their competitors are staying mum on the topic.

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.