In Early 2023, Fixed Wireless Access Services Are Still Going Strong

On April 24 and 25, T-Mobile and Verizon Wireless released their respective first quarter results for 2023. Once again, both nationwide mobile providers reportedly had strong net subscriber additions to their fixed wireless access (FWA) broadband services.  

T-Mobile reportedly added 523,000 net subscribers to its FWA services. According to a May 17 article in FierceWireless,T-Mobile "has a goal to grow its existing 3.2 million FWA customers to around 7 million to 8 million FWA customers by the end of 2025" and that "it is looking at various options that may allow it to grow beyond that 7 million or 8 million figure."

 

An April 25 article in FierceWireless by Sue Marek states that Verizon "reported 393,000 FWA net adds in the quarter, bringing its total FWA subscriber base to 1.9 million. Of those 393,000 FWA net adds, 137,000 came from the company's Business group." Additionally, an April 25 article in FierceWireless by Diana Goovaerts notes that Verizon "stands to gain 100MHz of additional C-Band spectrum later this year which it plans to deploy in urban areas to benefit FWA and wireless customers who are currently being served with 60MHz of C-Band."

 

With increased access to C-band spectrum, continued expansion of 5G network coverage, and growth of fiber for backhaul support, FWA is likely to be an attractive option for more Americans by the end of the year. And, as observed in a November 1, 2022 blog post, FWA is a particularly attractive option for those residing in areas with geographical terrain that are difficult-to-reach as well as in areas with lower population densities. These benefits of FWA are the subject of my April 2022 Perspectives from FSF Scholars, "Fixed Wireless Access is Boosting Rural Broadband and Consumer Choice." 

 

However, a replenished spectrum pipeline is a necessary condition for realizing the full potential of FWA and for maximizing the competitiveness of the broadband services marketplace. My blog post from March 9 of this year called attention to the lapsing of the FCC's authority to conduct spectrum license auctions. And the Free State Foundation's April 17 public comments to the NTIA urged the timely adoption and implementation of a National Spectrum Strategy that will boost the supply of spectrum for commercial and other private uses, particularly for licensed commercial use. Congress should promptly act to restore the FCC's spectrum auction authority, and the NTIA should act timely in adopting the implementation plan for the long-awaited National Spectrum Strategy.  

Verizon-Amazon Backhaul Deal Could Boost Intermodal Broadband Competition

In the latest example of dynamic intermodal ISP competition, Amazon announced this week that, once the satellite network launches, its Project Kuiper satellites will provide backhaul to Verizon’s fixed and mobile wireless networks in rural areas. This news is another sign of the existence of effective competition among ISPs and the growing irrelevance of distinguishing, for regulatory purposes, among various intermodal transmission platforms.

Project Kuiper is Amazon’s $10 billion low Earth orbit (LEO) satellite network that will offer high-speed broadband with a focus on rural and remote areas. The FCC approved Amazon to operate 3,236 satellites in July 2020. While these satellites are not yet deployed, Amazon is making progress towards launch. Project Kuiper likely will be the second large LEO constellation providing broadband—SpaceX’s Starlink already has launched over 1,700 satellites in LEO and is running a beta program for 100,000 broadband customers.

Credit: James T. M. Towill

While LEO satellite broadband offerings could sport innovations of their own, such as faster airline Wi-Fi and service in remote areas like oceans, I want to focus on what the Verizon-Amazon deal means for the overall marketplace. ISPs compete vigorously in most places for customers. The FCC’s 2020 Communications Marketplace Report demonstrated the extent of this competition, showing improvements with respect to both speeds and choice among providers. Free State Foundation scholars stressed the strong evidence of intermodal competition between transmission methods in comments submitted in this proceeding. While the FCC hasn’t yet adopted this view regarding the extent of the existence of intermodal competition, the Verizon-Amazon deal is further proof that intermodal competition is reality.

We discussed the emerging potential of fixed wireless as an intermodal competitor back in 2017. That potential is now reality. There are 6.9 million fixed wireless customers as of 2020, up from 4 million in 2016. Fixed wireless service is now available to 45% of US customers. Verizon alone has 150,000 fixed wireless customers after gaining a 55,000 subscribers in Q3 2021, an enormous 58% quarterly increase. T-Mobile, also seeing opportunity in fixed wireless, announced a price cut for its plans earlier this month. And the Verizon-Amazon deal for rural backhaul will ensure Verizon’s fixed wireless service is faster, more reliable, and available in more areas.

Senior Fellow Seth Cooper previously noted the importance of LEO satellites to future broadband competition in 2018 before the FCC approved any LEO satellite constellations. In that blog, Seth focused mostly on how satellite ISPs would compete for customers. The Verizon-Amazon deal is an example of just how dynamic broadband competition can be. While Project Kuiper and other satellite ISPs will certainly compete for their own customers, their provision of backhaul services will improve competitiveness for other transmission modes as well.

That the Verizon-Amazon deal improves Verizon’s offerings is an important point, because it shows how ISPs of various sorts can cooperate to form competitive offerings. Amazon, as a new market entrant, will face steep customer acquisition costs. These acquisition costs include marketing and sales investments to make customers aware of Project Kuiper's broadband offerings and convince them that they’re the right option. Verizon, as an established ISP, has a strong advantage in this area because it’s made these investments, has past success, and has a recognizable brand.

But Verizon needs additional, expensive-to-build backhaul capacity for its networks in rural areas. Amazon has already made capacity investments by manufacturing its satellite constellation. Given these facts, the companies teamed up according to comparative advantage. So Amazon provides backhaul to a customer of one—Verizon—in exchange for revenues Amazon can later invest in building out its customer acquisition strategy. And as a result, new customers get access to Verizon services, existing customers get better Verizon service, and Project Kuiper moves closer to viability.

Market entry by LEO constellations and cooperation among ISPs to create new competitive offerings are what Free State Foundation scholars mean when we say dynamic, intermodal competition is here. The deal between Amazon’s Project Kuiper and Verizon appears to be welcome news for broadband customers. The FCC should take note.

FCC Should Boost 5G Backhaul by Updating Rules in 70/80/90 GHz Bands

American success in the race to 5G depends on a strong supply of backhaul for transmitting ever-increasing volumes of mobile and fixed wireless data. To help enhance wireless backhaul capacity, the Commission should modernize its antenna rules so that small cells can provide backhaul in the 70/80/90 GHz spectrum bands. 

Backhaul connections route voice and data traffic from mobile and fixed wireless providers' cell sites to mobile switching centers that link to the providers' core networks, the public switched telephone network, and the Internet. Wireless spectrum provides a vitally important transmission medium for backhaul. In its Sixteenth Wireless Competition Report (2013), the FCC recognized that "[m]obile backhaul needs will keep increasing as wireless carriers continue to deploy LTE technology in their networks." This was undoubtedly true as mobile networks transitioned to 4G, and it remains equally true now that 5G networks are being deployed. According to Cisco's 2021 Annual Internet Report, there will be 299 million mobile wireless users in the U.S. in 2023, up from 285.3 million in 2018, and there will be 3.4 connected mobile devices per capita in 2023 compared to 1.7 devices in 2018. Additional backhaul capacity is needed to help support data traffic increases resulting from anticipated future demand, including continuing growth in wireless viewing of HD and even 4K video.

But the Commission's old antenna rules were not established with small cells in mind. Technical changes made to those rules back in 2005 long predate 5G technological advances. In its June 2020 rulemaking notice, the Commission stated that the 70/80/90 GHz millimeter wave bands have been underutilized. Recognizing these facts, the Commission proposed to update its antenna rules for the 70/80 GHz band, and it sought comment on whether to make similar updates to its rules for the 90 GHz band. 

 

Modernization of the Commission's antenna rules requires harmonization between federal and non-federal users of the 70/80/90 GHz bands. Fortunately, there appears to be an industry consensus that antenna rule updates to accommodate small cells won't interfere with other uses of that spectrum. A prime opportunity now exists to boost 5G backhaul in those bands, and that opportunity needs to be seized without delay.

 

A February 2021 report by the Boston Consulting Group (BCG) estimates that 5G infrastructure buildout will directly contribute $400-500 billion to U.S. GDP and create up to 1 million jobs over the next ten years. But BCG also estimates nationwide losses of $25 billion in potential benefits for every 6-month stall in 5G deployment. Given the importance of backhaul to next-generation wireless networks as well as the sizable economic benefits to Americans resulting from timely deployment of 5G, the Commission should take prompt action to update its rules for the 70/80/90 GHz bands.