Tag Archives: Verizon

Rural 5G

The FCC voted last year to launch the 5G Fund for Rural America to expand 5G coverage into the many parts of country with poor cell coverage. It may turn out that market forces might mean that some of that subsidy won’t be needed since the big carriers are expanding into rural areas. A recent blog from Ookla documents the rural expansion of 5G. Ookla concludes that fierce nationwide competitive pressure is driving the carriers to look harder at rural areas to gain every possible customer.

Ookla, which collects a huge volume of speed tests, is one of the few companies that can look at carrier expansion using its own data. When Ookla sees multiple speed tests on 5G, it has definitive proof that coverage is present in an area. Ookla looked at the recent rural expansion from each of the three primary carriers.

T-Mobile. Ookla shows that T-Mobile has the largest rural 5G footprint today. T-Mobile claims it covers 323 million people, or 98% of U.S. households with 5G using its low-band 600 MHz spectrum. This low-band spectrum carriers for a greater distance than the spectrum used by other carriers. The company was required to expand coverage to 97% of the population as part of the agreement with the FCC when it purchased Sprint. I have to wonder about the 98% coverage. If you look closely at the FCC cellular maps, T-Mobile shows coverage of very slow speeds over a lot of rural America, and you have to wonder if this coverage is real enough to even use for voice calls.

T-Mobile also is the fastest carrier in much of the country, which came from the deployment of the 2.5 GHz spectrum that the company acquired with the Sprint purchase. The company has used the 150 MHz band of the spectrum to increase speeds in the top 100 markets in the country. We know that T-Mobile has rural plans since the company announced in 2024 that it is hoping to achieve a 20% market share in rural America by the end of 2025. That claim is bolstered by the pending close of the purchase of 30% of the spectrum and all 4.5 million customers of UScellular.

AT&T. A lot of the company’s rural expansion comes from FirstNet. This is a nationally funded program to create a nationwide first responder network. AT&T was awarded $6.5 billion to build the network and also given 20 MHz of 700 MHz spectrum. FirstNet brought AT&T a 25-year contract with the government. There is an expected $2 billion additional investment to upgrade the network to 5G everywhere.

One of the key requirements for FirstNet is that it must be made available to first responders in rural areas. This led AT&T to install FirstNet on all of its own towers and to build over 1,000 rural towers. AT&T announced in October 2024 that it has 6.4 million connections and 29,000 public safety agencies on the network. AT&T has also invested heavily in spectrum auctions and spent $37 billion the FCC’s C-band and 3.45 GHz auctions.

Verizon. Verizon doesn’t own much low-band spectrum that would give it coverage in rural areas. Instead, the company relied on a technology called Dynamic Spectrum Sharing (DSS) that allows one spectrum band to toggle between 4G LTE and 5G  in 1 millisecond increments. While it works, this didn’t give the company the boost it was hoping for.

Verizon’s rural strategy seems to be through acquisition, and the company has bought cell carriers operating in Kentucky, Iowa, New York, Pennsylvania, Missouri, and Montana. Verizon is also buying $1 billion of 850 MHz, AWS and PCS spectrum from UScellular.

Verizon is betting on the C-Band spectrum that it purchased in 2021 for $52 billion. It’s hoping that the 161 MHz band of spectrum will carry it into the future. The company has announced it intends to deploy more rural spectrum,

None of the carriers are likely to expand into sparely populated rural areas where coverage is often nonexistent. But the current expansion plans likely will bring cellular relief to a lot of rural areas, long before any solution might come from the FCC.

How Low Can They Go?

AT&T and Verizon continue to aggressively eliminate staff. You have to wonder where the bottom will be in staffing levels.

In September 2024, Verizon announced that it would cut 5,000 positions. As of January 1 of this year, the company had 99,600 employees, down 5,000 from the beginning of 2024. As of January 1 of this year, AT&T had 140,990 employees, down 8,910 people during 2024. At the beginning of 2000, the two companies employed over 475,000 people, and since that time have shed a little over half of their employees.

The following graph shows the employees of the two companies since 2000.Verizon has steadily cut full-time employees during this century. The graph doesn’t show any disruption from Verizon’s purchase of AOL in 2015 and Yahoo in 2017. The graph also doesn’t tell the whole story since Verizon has also outsourced positions during this time. I recall a controversy at the end of 2018 when the company outsourced 2,500 IT jobs to India.

AT&T employee counts are a lot more complicated since AT&T acquired a lot of companies this century, including BellSouth in 2006, Leap Wireless in 2013, DirectTV in 2015, and Time Warner in 2018. AT&T subsequently shed both DirecTV and Tim Warner. Even with the turmoil caused by purchasing and ditching subsidiaries, AT&T has steadily been eliminating staff.

Both companies are currently actively striving to eliminate copper networks, with Verizon is much further along with this effort than AT&T. However, Verizon is slated to merge with Frontier sometime this year, which will bring new employees and a return of a lot of copper networks that Verizon had ditched to Frontier in the past.

Both companies also say they are considering how AI might streamline operations, which probably means even further cuts in staffing over the next few years.

This is all a far cry from the time when AT&T was the telephone monopoly and had over 1 million employees, making it the biggest employer outside the U.S. military. It’s anybody’s guess how much more these companies can slash staff and remain viable.

What Does Unlimited Mean?

It’s always entertaining and informative when the big ISPs fight with each other. One recent battle comes from Verizon filing a complaint with the National Advertising Division (NAD) of the Better Business Bureau.

Verizon complained about Charter advertising that touted its cellular service as unlimited. Charter has been marketing both an Unlimited and Unlimited Plus cellular plan, and the advertisement for these plans implies that customers can use as much voice, data and texts as they want. The very name Unlimited implies to the average customer that there is no cap on usage.

As you would expect, this isn’t exactly true, and none of the cellular carriers, including Verizon, has a truly unlimited cellular data plan. In Charter’s case, data speeds are severely restricted once a customer reaches a monthly cap. There are also other limitations on data usage, such as the amount that can be used for tethering during a month.

The dispute went to NAD since the big carriers have all agreed to use NAD as the arbiter of disputes about advertising claims. This saves the carriers from taking each other to court, and the carriers all accept decisions made by NAD.

Interestingly, NAD decided that the Charter plans are unlimited since customers never get cut off entirely from using data. However, NAD asked Charter to fix its advertising to disclose that there are limitations placed on data usage after reaching a cap.

This particular tussle between Verizon and Charter is typical of the disputes that have been forwarded to NAD over the years. The telcos and cable companies keep a close watch on each other, and complaints are lodged when a carrier makes exaggerated marketing claims.

I predict we’ll see an uptick in advertising disputes as carriers react to being freed from regulation. The FCC clearly no longer regulates broadband as a result of the Sixth Circuit ruling that killed Title II regulation. My guess is this will embolden ISPs and cellular carriers to push the envelope in their advertising to the public.

There are some regulations that will stay on the books. For example, the Infrastructure Investment and Jobs Act created broadband labels, and the FCC can’t kill that requirement without action from Congress. But most ISPs have already buried these where customers can’t easily find them.

The Ability of the FCC to Issue Fines

We are definitely entering into a new era in regulation. Verizon, AT&T, and T-Mobile are disputing the FCC’s ability to levy fines on them. The fines in question all stem from an FCC action to penalize the carriers for selling customer location data to aggregators. This data allows marketers to become intimately knowledgeable about where people spend their time every day. In the majority of cases, the carriers did not get permission from customers to share their data.

The carriers have all appealed the FCC action, and as is becoming a normal practice, each carrier filed an appeal in a different court. Verizon was fined $46.9 million and filed a brief in the appeal suit in the U.S. Second Court of Appeals. AT&T was fined $57.3 million and filed a brief in the Fifth Circuit. T-Mobile (including a fine against Sprint) was fined $80.1 million and is appealing in the DC Circuit Court of Appeals.

The FCC started the process of assessing the fines under Chairman Ajit Pai, who proposed the fines and said the carriers’ actions are a violation of customer privacy. The FCC under Chairperson Jessica Rosenworcel finalized the fines. Sharing customer data came to light when a sheriff in Missouri was openly using a location-finding service to track the people’s location. The sheriff obtained the data from Securus, a telecom provider that specializes in telecom services for jails and prisons. The FCC said that even after the carriers were made aware of the violation of customer privacy, they continued to sell the location information. The facts in the cases are a bit messy due to Securus’s role in the transactions and statute of limitations.

The three carriers are making roughly the same basic arguments. Verizon claims that the FCC overstepped its authority to enforce issues related to consumer data privacy. Of more interest is that AT&T and Verizon are both arguing that the Supreme Court’s ruling in Securities and Exchange Commission v. Jarkesy means that the FCC has no ability to levy fines and that the companies are entitled to a jury trial. It’s going to take lawsuits like this to define the limit on administrative agencies like the FCC to impose fines on anybody.

There is also a chance that the FCC could stop fighting for the fines. Proposed FCC Chairman Brendon Carr originally dissented against issuing the fines. It’s possible that the FCC could drop its opposition to the suits, which could stop the legal process.

The carriers must be hoping the suits get dropped. This does not seem an issue that the carriers would ever want to take to a jury. It’s not hard to picture a jury – on which every member likely has a cellphone – imposing much larger penalties on the carriers. I suspect most people are uncomfortable with the idea of their cellular carrier selling details of their daily movements to companies they never heard of. It’s not hard to imagine numerous ways that companies could misuse location data to harm people.

If these cases don’t make it to fruition, the courts are going to have to further test the idea in other suits that administrative agencies can’t impose fines. For now, the ability for the FCC to impose fines is in hanging in limbo.

Merger Mania

The industry is suddenly awash with talks of acquisitions and mergers.

In September, Verizon announced the acquisition of Frontier Communications in an all-cash deal valued at $20 billion. The deal was touted for adding Frontier’s fiber customers to Verizon’s base of FiOS customers – which would grow Verizon to approximately 10 million customers.

T-Mobile has announced two acquisitions of fiber overbuilders. The first was the acquisition of Lumos, which has been building fiber in North Carolina, South Carolina, and Virginia. Lumos currently has over 300,000 customers, but T-Mobile said it would continue to invest for the company to grow pass 3.5 million homes by the end of 2028. T-Mobile also announced the purchase of Metronet, a fiber overbuilder from the Midwest that has expanded into 17 states. Metronet currently passes 2 million homes, and T-Mobile says it will invest to grow to 6.5 million fiber passings by the end of 2030.

T-Mobile is also buying Uscellular from TDS for $4.4 billion. This purchase has drawn attention from six Senators who disapprove of the sale.

As I was writing this blog, Bell Canada, a subsidiary of giant BCE, announced it wants to buy Ziply for $3.6 billion. Ziply was formed in 2020 by buying properties in the Pacific Northwest from Frontier.

DirecTV announced recently that it will acquire all of the video assets of EchoStar, which had just merged with Dish at the beginning of this year. This means that DirecTV will take on all of the Dish video customers along with Sling TV. As part of the merger, DirectTV is also taking on all of EchoStar’s debt.

Will not directly broadband, but highly related, Qualcomm has made overtures to buy Intel. This is a particularly interesting offer since a decade ago Intel had looked at buying Qualcomm.

Fierce Network published an article in September that said that 400 fiber ISPs are ripe for acquisition. Assuming that even just fraction of those ISPs are interested, this foretells a lot more coming announcements of industry consolidation. There is an interesting quote in the article. Andrej Danis of AlixPartners said that many fiber overbuilders “will never reach critical mass.”

This is an interesting observation that highlights the difference between how the financial world and investors look at the fiber business compared to many of the ISPs who have built fiber.

Many fiber businesses clearly have the goal of growing large enough to flip to somebody larger. The investors in these businesses are largely venture capitalists who hope to sell companies at a premium multiple of what they paid to build the business. For example, the Lumos deal is reported to be valued at over $9,000 per existing broadband customer – a lot more than what the company spent to build the existing networks.

Almost anybody who owns a fiber ISP is going to be tempted to sell at those kinds of valuations. But there are still a lot of ISPs with a different motivation. Once a broadband network is mature, it turns into cash cow and spins off a lot of cash annually. I know ISPs that have expanded fiber networks strictly for the permanent cash flow that builds long-term family wealth. Such ISPs envision operating networks for many decades to come.

The Trajectory of FWA

In what is bad news for many other ISPs, both T-Mobile and Verizon have plans to continue their aggressive growth of FWA cellular broadband. As a reminder, this is home broadband delivered from cell towers that mostly uses the same spectrum already being used at cell towers for cell service.

AT&T, T-Mobile, and Verizon have had unprecedented success with this new broadband product since it first launched in 2021. The following table shows the growth in FWA so far this year.In the first two quarters of this year, the three carriers added almost 1.8 million customers, while big cable companies lost almost 500,000 customers, and big telcos saw a net gain of under 50,000 net new customers.

AT&T is the newest provider of FWA service and just getting serious about selling the service in 2023. AT&T does not provide FWA everywhere it has cell customers, and strategically uses FWA, mostly in rural markets, as a replacement technology when discontinuing copper service. AT&T continues to be focused on fiber expansion and has passed far more new locations with fiber in recent years than anybody else.

T-Mobile has been the most aggressive in deploying FWA broadband and now has over 6 million customers. T-Mobile says it’s goal is to reach 8 million customers by the end of 2026, which would require a continued growth of 400,000 new customers per quarter. T-Mobile recently announced longer-term plans to reach 12 million customers by the end of 2028 – which would mean stepping up customer acquisition to an average of 500,000 net new customers per quarter.

Verizon recently announced plans for aggressive FWA growth. The company says it will set a goal somewhere between 8 and 9 million customers by the end of 2027. This would mean average growth in the range of 275,000 to 350,000 customers per quarter – slower than the current rate of growth.

T-Mobile currently has over 1 million customers on a waiting list for FWA. Like Verizon, T-Mobile uses excess spectrum capacity at cell sites for FWA. Each company likely has an algorithm for each cell site to calculate the safe number of FWA customers that can be added without degrading cellular broadband service. Both carriers have said that they can’t justify building cell sites strictly for FWA service and only plan to deploy it at current or new cellular cell sites.

Verizon has been increasing FWA speeds in some markets by layering on C-band or millimeter wave spectrum for FWA. The advantage FWA has today is lower prices, but the product become formidable if download speeds can compete with fiber and cable companies.

If the three companies meet their growth goals, they will collectively have almost 20 million broadband customers in 2028 – almost as big as Charter or Comcast today. This growth is by far the biggest disruption of the traditional broadband industry, with FWA growth taking customers away from all other ISPs.

The real key to these growth plans is waiting to see if the public likes the FWA product and doesn’t go back to faster broadband alternatives. Reaching 10 million customers so quickly is impressive and unprecedented in the industry. But it’s no guarantee that they can grow at the same pace to reach 20 million customers.

 

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.