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FWA-The key lever to get into B2B customers base, agrees Wells Fargo

Both Jio and Airtel are looking forward to bridging the digital divide through 5G FWA and helping industries digitally transform through 5G private networks. This is despite both the telcos having different strategies for 5G deployment.

With an addressable market of USD 7 billion revenue opportunity, annually the telcos have been ramping up household broadband coverage.

Jio has introduced its 5G FWA services in regions with high footfalls. As networks get denser and more infrastructure is erected, FWA will play the most important role in taking high-performing mobile broadband to places unserved by fixed wireline. Jio’s aggressive target to reach 100 million households through the launch of the 5G fixed wireless access (FWA) could make it one of the world’s largest players in this space.

Bharti Airtel is nearly prepared to launch its 5G fixed wireless access (FWA) service in India which will allow the telecom operator to aggressively tap B2B customers. The telco has done its testing. “FWA is something that we are really concentrating on,” said Satkeerthi Muralidharan, CTO, Airtel Business.

Airtel has already demonstrated several 5G-driven use cases such as connected ambulance, agricultural use cases, and Industry 4.0 use cases. The telco has started making inroads into the enterprise segment, successfully deploying its 5G services with Mahindra & Mahindra, Apollo Hospitals and Bosch.

In India, one major challenge is cost of the key router device. Bharti Airtel MD Gopal Vittal at Airtel’s December quarter earnings call, had cautioned that high CPE costs remain a key challenge to mass adoption of 5G-based FWA services. “A CPE required for 5G-based FWA services still costs around $180-200 apiece, potentially making the service expensive compared to fibre broadband. The CPE that you need, is almost double that of a fiber (connection) that is rolled straight to the home today.”

Broadband subscribers -India

“5G-based FWA services are emerging as an alternative for fiber broadband in India’s tier 3/4 cities once CPE prices drop, especially as fibre broadband is unlikely to cross 50-70 million households anytime soon, commented Sachin Salgaonkar, BofA research analyst. “Since telcos will piggyback on their 5G networks, the incremental investments to target these users would be low,” he added.

FWA will also bring about the next wave of disruption for both internet service providers (ISPs) and cable/DTH operators, a key for 5G monetisation.

A new outlook from the financial analysts at Wells Fargo has a similar forecast for the US market. Fixed wireless access (FWA) will continue to grow in the US broadband market throughout this year and next year, say financial analysts at Wells Fargo.

That undoubtedly comes as welcome news to FWA providers like T-Mobile and Verizon, and to a lesser extent AT&T. But the cable companies competing against FWA offerings – particularly Cable One – will continue to struggle, according to the Wells Fargo analysts.

Overall, it’s a big adjustment from historic trends, the analysts noted. “The change in cable’s broadband outlook has been dramatic over the last few years, to say the least. In 2018-21 cable was on average responsible for ~100% of broadband industry net [customer] adds. .. However, net adds came to a severe halt in 2022 as both growth in fixed wireless and a growing tide of fiber passings seemed to impact cable subscriber growth at once.”

Broadly, the analysts predict that fixed wireless will remain “the biggest disruptor” in the market for US broadband through next year, generally gobbling up 80-90% of industrywide net subscriber additions through 2024. The analysts predict FWA in general will capture around 12-13% of the overall US broadband market – and fully 10% of the residential broadband market – by 2025.

Meanwhile, the analysts predict that cable’s performance in the market will remain relatively flat in the coming year, with the sector’s share of the overall residential market falling from 67% in 2020 to 62% in 2025.

“By 2025/2026, we suspect FWA will start to run into capacity constraints in metro areas that could require incremental investment (i.e. cell splits, small cells, tower densification) and may slow the trajectory of subscriber adds,” the analysts noted. That outlook dovetails with other predictions.

A shift to rural. Although FWA will continue on its growth trajectory through next year, the analysts at Wells Fargo predict it will do so via a slight shift in strategy.

“The distribution of fixed wireless customers so far has largely been in urban and suburban areas (in part due to midband 5G’s availability largely in more urban environments), with ~65-70% of subscribers coming from urban/suburban footprints and ~30-35% from rural or smaller markets,” the analysts wrote. “The next leg of FWA growth will likely happen in suburban and rural locations where fixed wireless is less penetrated. Rural and smaller markets … comprise over 40% of the US population, which often only have one high-speed Internet provider (or in some cases zero). The wireless providers should have substantial excess wireless capacity in those markets, as many are rolling out midband channels of 150-200MHz, which is unlikely to be fully utilize by mobile use cases given lower population densities in those markets.”

According to the Wells Fargo analysts, Cable One is the cable operator that ought to be worried about this shift. “If T-Mobile and Verizon are successful in rolling out more aggressively into rural areas, it will cast a long shadow over Cable One’s prospects for growth,” they wrote, arguing that FWA’s cheaper prices could cut into Cable One’s typically expensive rates.

Having said that, according to the GSMA Intelligence report, 5G FWA connections across 52 countries are projected to reach only 40 million households by 2025. In fact, FWA penetration as a percentage of total households in 2021 was a mere 1 per cent in the US, with Poland reporting the highest, at 16 per cent.

CT Bureau

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