Verizon’s fixed-wireless access (FWA) business continues to be a 5G connection driver for the operator despite ongoing questions about the service’s impact on network performance. That drive sets a competitive stage for rivals looking to remain at the forefront of this “killer application.”

Verizon said it added 384,000 FWA connections during the second quarter, which was down slightly from what it reported during Q1, but a 50% increase from what it added during the second quarter of 2022. The carrier counted nearly 2.3 million FWA customers at mid-year, which was nearly halfway to its target of up to 5 million FWA customers at the end of 2024.

CEO Hans Vestberg told investors that this growth is allowing the carrier to raise service pricing to help monetize the service. “We now have an opportunity to segment the fixed-wireless access market based on price and speed tiers so that our customers can choose the service that best suit them,” he explained.

Verizon CFO Tony Skiadas added that the operator was looking for similar FWA connection growth for the operator’s current third quarter.

Verizon’s FWA growth has so far also been limited to 70 larger markets where the operator has put its C-band spectrum assets to work. Vestberg said the operator would look to expand the reach of that service to new markets as it gains broader access to that spectrum.

“The next step is going to be much more suburban and rural, and that's a great opportunity because usually there are even less options for customers in those areas,” Vestberg said.

Vestberg had previously highlighted FWA as a significant 5G connection driver for the operator, telling an investor conference earlier this year that FWA is “the killer application today.”

“We talked about this being one of the most important 5G applications,” Vestberg added during today’s earnings call. “And now you can see what it means to us and how important it’s going to be over time.”

Verizon’s FWA growth also puts pressure on rivals that have attacked that market with differing levels of enthusiasm.

T-Mobile US added an industry leading 600,000 FWA connections during the first quarter of this year, pushing its connection base to 3.2 million FWA connections. The carrier has stated that it plans to have more than 7 million FWA connections by 2025.

AT&T has been more subdued with its FWA plans, though it’s starting to inject more enthusiasm into the market.

However, investors remain concerned over the financial implications of Verizon’s FWA growth. Vestberg repeatedly stated that the operator was managing usage and capacity, and “we don’t have any capacity problem.”

Vestberg referenced work Verizon has been doing in driving FWA usage removed from its 4G LTE and 5G core, noting, “we now are doing some great work on how we can address [multi-dwelling unit] use in a very efficient way.” This work involved a recent test that tapped into Verizon’s vast millimeter-wave (mmWave) spectrum holdings, owned fiber assets and its Intelligent Edge network architecture to power broadband services.

The carrier is also looking to squeeze more revenues from its FWA business by using those assets to support enterprise-focused services.

Verizon recently updated its Business Internet Portal with a new management portal and security features that provide IT departments with more control and access to the 4G LTE and 5G-powered service. Vestberg also stated that its ongoing network updates are bolstering its private 5G network business.

“What we have found out during the work we've been doing is that private 5G networks is something really valuable for enterprises and [small- to mid-sized businesses] and the main reason is that they keep the capacity, the speed and the security,” Vestberg said. “It basically starts as a Wi-Fi replacement on the licensed spectrum, and then you start adding on it. It usually start with one factory and if you see it working there, they do it in all the factories. We have a growing list of new customers coming in the first phase. I would say this is a new business for us that is building on the same investment, the same Verizon edge network.”

Vestberg did note that he does not expect private 5G to be a “billion-dollar-business this year, but definitely over time.”

Despite investor capacity concerns, Verizon management remains confident in its capex guidance through at least the end of next year. The carrier said it remains on track to spend up to $19.25 billion this year, but that next year’s spend will be closer to $17.5 billion.

“There's a lot of things that my team has done over the years in order to be as efficient as possible [with] capex, that's why I feel really good on our on our sort of [business as usual] around [$17 billion to $17.5 billion], I feel really good about that,” Vestberg said.

That longer-term guidance could be bad news for vendors, which have hinted at the need for operators to start growing their network investments in order to meet growing capacity demands.

“If simply the data traffic continues to grow, operators — if they want to stay in the business — will have to continue to invest,” Nokia CEO Pekka Lundmark said during the vendor’s most recent earnings call. “And this is the reason why we believe that this slowdown in investments in some parts of the world, especially in North America, has to be primarily a question of timing because if one particular operator would not continue to invest, their competitors would.”

Nokia also noted “new funding opportunities” in the United States that will help pay for operators to fund needed network investments.

Dell’Oro Group recently predicted the global radio access network (RAN) will decline at a 1% compound annual growth rate (CAGR) over the next five years, noting “the [RAN] market is done expanding for now.” This slowdown is being driven by more advanced countries countering growth in developing nations.

“Even if it is early days in the broader 5G journey, the challenge now is the comparisons are becoming more challenging in the more mature 5G markets and the upside with the slower-to-adopt 5G regions is not enough to extend the growth streak,” Stefan Pongratz, VP at Dell’Oro Group, noted in a statement. “Meanwhile, growth from new revenue streams including fixed-wireless access and enterprise LTE/5G is not ramping fast enough to change the trajectory. With 5G-Advanced not expected to trigger a new capex cycle, the question now is no longer whether RAN will grow. The question now is, rather, how much will the RAN market decline before 6G comes along?”