T-Mobile US solidified its backing of 5G-based fixed-wireless access (FWA) services despite ongoing concerns over the long-term financial viability of the technology.

Chief Marketing Officer Mike Katz during T-Mobile US’ most recent earnings call labeled the carrier’s FWA-based “home internet service” as “one of the big killer apps for 5G that you are seeing play out right now.” This was linked to the carrier adding approximately 600,000 new FWA customers during the first quarter, pushing T-Mobile US’ customer base to 3.2 million subscribers.

Katz added that those customers are using “hundreds of gigs a month on average,” including strong usage in rural areas, which he added for some was “the first high-speed option that existed and it only happened because of 5G. I don’t think we can forget about HSI being one of those big killer 5G applications.”

That label counters growing concern over the long-term financial viability of 5G-based FWA services.

ABI Research predicts 5G-based FWA connections will hit 72 million worldwide by 2027, representing 35% of the total FWA market. However, it added that operators need to use technology advances to manage network quality.

“[Mobile network operators] should launch 5G FWA to utilize their network capacity to make additional revenue,” Fei Liu, 5G and mobile network infrastructure industry analyst at ABI Research, wrote in the report. “However, they need to be vigilant on how many FWA subscribers they can support and which type of service they wish to offer (best effort or QoS). In the long term, MNOs need to apply artificial intelligence (AI) techniques such as machine learning (ML) to evaluate their network resource, network capacity, and spectrum to ensure a steady 5G FWA growth. When the 5G FWA service starts to challenge their network capacity, these MNOs may have to deploy millimeter wave (mmWave) to guarantee the quality of their FWA services and overall network capacity.”

Consulting firm PwC recently released a report that 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.

More 5G fixed-wireless access spectrum and competition

Neville Ray, who recently moved from president of technology at the carrier to president and strategic network advisor at T-Mobile US, said the carrier continued to have “so much excess capacity” within its 2.5 GHz spectrum holdings that are for the most part powering its FWA service. This will allow the carrier to continue adding customers toward a goal of eight million total FWA customers.

Ray also said the carrier was conducting service trials using its millimeter-wave (mmWave) spectrum holdings, “but … we have to remember that it’s limited in reach, and we will put it into an economic formula over time to see if it makes sense to pursue it.”

T-Mobile US rivals Verizon and AT&T are increasing activity in the space.

The former announced this week that it added nearly 400,000 new FWA connections during the first quarter. This pushed its total FWA customer base to 1.9 million customers, with the carrier maintaining expectations of five million FWA customers by 2025.

AT&T remains more subdued with its FWA efforts, though that could be starting to change. CEO John Stankey told investors during the carrier’s most recent earnings call that it remains focused on “durable” service offerings that provide a solid return on investment.

“There are many businesses that have usage profiles where I believe fixed wireless bundled in with other wireless services is a very durable offer and it will be durable for a long period of time to come,” Stankey said of its FWA plans. “There are certain consumer segments where that’s durable, but it’s not most consumer segments, in my view.”

The carrier has hinted at plans to refresh that offering, which looks like it’s set to hit the market. LightReading’s Mike Dano recently found an AT&T website touting an “Internet Air” fixed-wireless service. The carrier has not yet announced an official launch of the service.

T-Mobile US capex to moderate, wireline sale on track

T-Mobile US CFO Peter Osvaldik said the carrier expects capex to run between $9.4 billion and $9.7 billion for the year, with quarterly spend dipping a bit between Q1 and Q2 “and then moderating in the back half of the year.”

This total capex is roughly half of what AT&T and Verizon are spending this year, though those operators also have substantial wireline assets they continue to grow. Those operators have also expressed plans to cut their overall capex, which is coming off all-time highs tied to their initial 5G deployments.

Osvaldik also said the carrier remains on track to close the sale of its wireline assets to Cogent by early next month. That $1 deal was initially announced last September, and has T-Mobile US unloading the unwanted assets that it acquired as part of its Sprint acquisition.

As part of that deal, T-Mobile US is transferring approximately 1,300 employees to Cogent and agreed to spend $700 million for “services” running on that network over the next four-and-a-half years, though T-Mobile US did note that it was unsure if it will ever use that option.

Osvaldik this week added that the deal would result in approximately $125 million in lower wholesale and other service revenue and approximately $175 million in lower cost of service expenses on a quarterly basis.