Mobile telecommunication operators looking to better monetize their 5G network investments need to tread lightly into the fixed-wireless access (FWA) space as that upfront fiscal boost could come with a big bill on the back end, according to a recent report from PwC.

The PwC report starts ominously with results of a survey that found 46% of global telecommunication CEOs believe their company will not be economically viable in 10 years if they continue down their current operating path.

As such, the consulting firm’s analysis showed FWA services could cost more than 22-times as much as mobile connectivity services. This comes from costs associated with delivering data tied to specific latency or QoS service-level agreements (SLAs).

The report also found that FWA services could have up to 40-times less revenue potential. This is due to FWA services being price limited by competing fiber or cable internet options.

“Most FWA subscribers are willing to pay only as much as wireline plans cost, yet they expect a similar quality of service for internet connectivity,” the report notes.

PwC Partner Dan Hays explained during an interview at the MWC Barcelona 2023 event that operators should approach FWA and other alternative 5G connection services like IoT with reasonable financial and operational expectations.

“Fixed-wireless access is a great way to fill out excess capacity, if you have it,” Hays said. “You see some of the carriers making that play.”

He also stated that FWA could be pursued as a “great way to make some economic tradeoffs between building out fiber or building out cable plans and being able to access new customers,” Hays said, adding “it might be in some situations a less expensive means to access them.”

“It’s not a cure all by any means,” Hays said, explaining, “we look at it as not a business model but really a technology. It’s a technology choice that you can use.”

Hays said that operators are indeed being “really thoughtful” in managing capacity to serve FWA customers, but that can potentially run into a problem down the road where a particular site can no longer support a high-bandwidth FWA connection. “Do they fire you as a customer at some point,” he said.

Hays did note that operators are getting better at managing their network resources.

“I talked with one of the carriers, and they said they're actually analyzing down to the sector,” Hays said. “They're looking at network loading to assess whether they can serve a fixed-wireless access customer in just that sector, so when you call up and you say, I want connectivity, they will tell you yes or no based on the physical location where you live and whether that sector typically has excess capacity.”

Domestic operators continue to approach the fixed-wireless access market from different angles.

AT&T has taken a cautious route, relying on fiber as a more cost-effective solution to broadband expansion. Similar to PwC’s conclusion, AT&T executives have expressed financial concerns with FWA technology.

“I don’t see its place long term in dense metropolitan areas, and I don’t see it in reasonably well-populated suburban areas. I don’t see the dynamic of that product, and I’ve been pretty clear about this. If I start to think about consumer behavior and demand of consumption, and I start to take those curves out over three years, I don’t see that as the optimal way to service a customer in the near term,” AT&T CEO John Stankey told investors during the carrier’s most recent earnings call.

Stankey also specifically cited the high cost of supporting mobile broadband using a wireless connection.

“Mobile bits are going to be higher-value bits. They’re going to need to be engineered differently. They should sell at a premium because of the supply-and-demand dynamics on it,” Stankey said. “And I want to ensure that my mobile network is, in fact, delivering that premium solution on those mobile bets when they need to be provided. And it’s absolutely 100% there to do that.”

As such, AT&T’s FWA approach is likely to take an upscale tact compared to rival offerings from T-Mobile US and Verizon. Those operators are promoting 5G-based, unlimited-usage FWA services at around $50 per month, and in some cases half of that for current customers as part of a service bundle.

AT&T noted during its earnings call that its current fiber-based broadband service was generating between $65 and $70 per month in average revenue per user.

Verizon and T-Mobile US, on the other hand have both been aggressive in their approaches, aided by the relatively limited reach of their current fiber-based broadband services in the case of Verizon (FiOS) and no fiber ties in the case of T-Mobile US.

“We’ve had critics of fixed wireless since the day we started talking about it,” Verizon CFO Matt Ellis said during an investor conference this week. “Like it’s a niche case product; won’t be able to work at scale; it’s only for customers who don’t have access to anything apart from DSL, or are in a rural area, or on the business side of a food truck. … Every single time that those items have been put out we’ve knocked them down. It operates at scale; we’ve got over a million customers and growing. It’s not just customers who were underserved before, we’re taking customers from existing providers. I hear that people say we’re gonna run against the wall here, but they’re arguing with the best engineering team in the industry when they make those claims. We feel very good about the runway we have with fixed wireless on 5G technology with the amount of spectrum we have – that we’ll have in place by the end of this year. There is there’s still significant opportunity there.”

Hays also pointed to network APIs as a way for operators to drive “technical hooks” into the revenue stream.

“They have the opportunity to move up the stack and create innovative services that can harness the power of the network, because who knows the network better than the carriers,” Hays said. “What we're advocating for is let's make the investment in that innovation and let's put the hooks into the network.”

GlobalData in a post-MWC report pointed to APIs and network-as-a-service (NaaS) options as avenues for operators to monetize their 5G investments.

“Telecom service providers have largely been excluded from the revenue benefits of investment in 4G and fiber broadband by the rise of over-the-top (OTT) services such as public cloud and software-as-a-service (SaaS),” Gary Barton, research director for enterprise technology and services at GlobalData, wrote. “APIs offer the opportunity for telcos to directly monetize access to their networks by making users pay at the point of contact.”

PwC recommends operators do a better job in conveying the value of their 5G networks. This can in turn allow operators to justify charging more for a particular service.