Despite their recent high-fiber diet, wireless telecommunication giants T-Mobile US and Verizon continue to crave the sugary taste of their 5G-based fixed-wireless access (FWA) dessert with both operators flatly stating or at least hinting that they will keep the FWA revenue tap open for the foreseeable future. This craving could further cloud how the market views overlapping broadband recipes.

T-Mobile US is making the most aggressive FWA push, with the carrier promising a 50% increase in its already industry-leading expectations. CEO Mike Sievert during T-Mobile US’ investor conference event said the carrier will hit its long-standing 8 million FWA connection target by next year, and further stated that the carrier now plans to have 12 million 5G-based FWA connections by 2028.

That expansion will continue to tap into what T-Mobile US has called “fallow” spectrum left over from its deep license portfolio. That pool received more water earlier this year when the carrier finally gained access to licenses it won during a 2022 auction.

Verizon is on a somewhat slower trajectory, with the carrier just now set to hit 4 million FWA connections, which was the bottom end of its initial segment growth target. However, CEO Hans Vestberg during an investor conference continued to tease that the carrier would be soon updating that guidance.

“I will come back and talk in more general terms how we continue with fixed-wireless access,” Vestberg said.

Analysts have questioned the long-term financial viability of offering broadband services on the back of expensive wireless spectrum but have also pointed to the low-hanging financial fruit of such offerings.

A recent Rethink Technology Research report noted that U.S.-based FWA services are generating around $58 per month in revenue per connection, with enterprise opportunities set to drive further penetration.

“For the larger operators, which are in the business of providing commercial and enterprise services, FWA could be used as a great upselling tool,” the research firm wrote. “For business premises in underserved locations, FWA opens the door for upselling various additional software and networking services. For those using wireless as a failover connection, a robust FWA service could help displace the ISP providing the primary connection. For business with lots of locations, FWA could help reduce the connectivity charges they face, and provide a clear motivation from this total cost of ownership perspective.”

High-fiber diet

While continuing to back 5G-based FWA growth, both T-Mobile US and Verizon have layered in fiber to support longer-term ambitions in the broadband space.

Verizon’s fiber expansion is on the back of a pending $20 billion acquisition of Frontier Communications, which will include 7.2 million fiber locations that serve 2.2 million subscribers across 25 states. Those assets will join Verizon’s approximately 7.4 million fiber connections across nine states and Washington, D.C., and combined will count approximately 10 million fiber customers across 31 states and Washington D.C., with fiber networks passing more than 25 million premises.

T-Mobile US’ plans involve the carrier striking a partnership with investment firm EQT to purchase U.S.-based fiber Lumos, which was shortly followed by T-Mobile US partnering with investment firm KKR to acquire fiber provider Metronet.

Analysts have hinted that this recent fiber binge could be operators realizing they need to better structure their broadband recipe in order to continue growing that pie.

“FWA is bound to run out of capacity eventually, with Verizon expecting to hit the bottom end of its … subscriber target [during the third quarter],” TD Cowen noted in a report. “It will likely increase its capacity target, but the company has noted that it doesn't believe it is economical to add a tower solely for the purpose of FWA. Fiber is more optimal from a migration perspective and is also the future-proof answer, as it appears to be Verizon's priority in this era of convergence.”

Competitors driving toward convergence

That convergence opportunity is what’s bringing T-Mobile US and Verizon closer to direct rivals like AT&T and cross-platform competitors like cable-based ISPs Comcast and Charter Communications.

AT&T CEO John Stankey recently told an investor conference that the carrier remains focused on “high value” connection additions.

“I kind of measure our success by looking at our share of service revenues, adjusted for fixed wireless, because I'm not playing in the same way in that space – it’s not where I am allocating capital – and then asking myself, relative to our share of service revenues, are we getting adequate returns on top of those? And that's kind of the framework I use within the business and how you work with the management team around it,” Stankey said.

Comcast is using similar talking points as it attempts to counter what it sees as 5G-based FWA services eating away at the low-end of its cable-based internet offering. This includes the launch earlier this year of its no-contract Now brand that provides a lower-cost and lower-speed broadband offering.

Comcast President Michael Cavanagh told an investor conference that the ISPs approach is to “rather than worry about repricing the whole book of business, we're trying to be deliberate and not chase the whole business down to a level that's really solving a problem that is at the value – more value conscious end of the market.”

“We fully expect for fixed wireless to take a share of the market,” Cavanagh added. “It's not the deep profitable end of the market, but it's a market we still want to serve because we want to segment and serve everyone well.”

Comcast this week did unveil a new virtualization initiative that will allow it to shift its network core, including routing, switching, and transport network function to its edge cloud platform. This will include the use of DriveNets Network Cloud software running on UfiSpace’s white-box hardware.

The scheme is similar to what AT&T did with its network-wide virtualization efforts that now supports most of that carrier’s network traffic.

Cable trying 5G FWA

Comcast is also countering the convergence trend by boosting its own cellular-based service offerings.

It’s Now offering is providing new rate plans backed by Comcast’s long-running mobile virtual network operator (MVNO) agreement that it has with Verizon. It’s also bolstering an FWA service that taps into its Consumer Broadband Radio Service (CBRS) spectrum.

Charter is marching down the same route, having deployed thousands of radio access network (RAN) antennas beaming out its own CBRS spectrum holdings to offer a FWA service.

Verizon Consumer CEO Sowmyanarayan Sampath downplayed such efforts due to technological planning constraints.

“It's very difficult to build a network when you have five megahertz to 10 megahertz of spectrum in a few select markets,” Sampath said during a recent investor conference. “We've been building wireless network for decades. There is no scenario in which I'll get excited by a few megahertz of spectrum in a few markets to build a network out.”