Image may be NSFW.
Clik here to view.
Mike Dano, in LightReading recently quoted Sowmyanarayan Sampath, the EVP and CEO of Verizon’s consumer business, as saying that Verizon expects to have 4 to 5 million FWA customers at the end of 2024, up from 3.4 million at the end of the first quarter of 2023. Mr. Sampath says that Verizon’s current network can support 4 to 5 million customers, but that the company is assessing how to grow beyond that point – a decision they will make later this year.
Verizon says its FWA growth was a little sluggish at the beginning of 2024, but that sales have picked in March after the company started offering new customers a free Nintendo Switch, the game console that retails for $200 to $300.
Dano also quotes financial analysts at TD Cowen who predict that Verizon will add 888,000 new net subscribers this year while T-Mobile will add 1.3 million more customers this year to add to the 4.8 million customers at the end of 2023. We also can’t forget that AT&T has entered the fray. The financial analysts at New Street Research recently predicted that AT&T will hit a peak of 180,000 new FWA customer additions per quarter by late 2025.
FWA broadband has majorly disrupted the broadband industry. According to the TD Cowen estimates, FWA operators will gain 2.6 million new customers in 2023 while fiber operators will add around 600,000 new customers. They predict that the big cable companies will lose about 1.1 million customers in 2024. That’s a net market change of 2.1 million new broadband customers – down from 3.5 million new customers in 2023.
I don’t know if the TD Cowen estimates include the impact from the end of the ACP program that brought discounts to 10 million landline broadband households. While many of those customers will likely still keep a broadband connection, many of these households got free broadband after applying the discount, and it doesn’t seem unrealistic to think that at least several million households will eventually disconnect broadband without the discount.
FWA broadband has one notable weakness that might define a natural market cap for the product as currently configured. The current version of the product shares bandwidth with cellular customers. Cell sites were not designed to accommodate large numbers of broadband connections that stay connected for long periods of time – and that, according to OpenVault, now use an average of 651 gigabytes of broadband every month. FWA broadband usage has to be eating into the resources at cell sites – and the impact will only get worse as both home and cellular customers use more broadband every year.
I think I’ve already witnessed some evidence of the stresses caused by FWA. I’ve had access to detailed speed test records for entire counties, and I’ve seen FWA customers who test at speeds of 100-300 Mbps down most of the time but who occasionally test at only a few Mbps. The FWA providers all say that they throttle users any time the cell site gets too busy, and I’ve seen enough examples to think this is evidence of severe throttling. That’s a situation that will occur more often as the FWA providers add more customers. Most broadband customers today won’t tolerate occasionally losing all broadband and likely will return to their original ISP if they continue to get throttled.
Mr. Sampath touched on a possible solution to the problem. He says Verizon is exploring the use of millimeter-wave spectrum at cell sites. Both Verizon and T-Mobile are considering C-Band spectrum for FWA customers. Moving at least some FWA customers off the same spectrum used for cellphones would eliminate the biggest weakness of FWA – that it uses the same spectrum that is serving cellphones. As much as carriers like FWA, they are not going to endanger their much larger cellular business – and one has to think that the success of FWA has already degraded cellular quality to some extent.
Interestingly, both Verizon and T-Mobile had originally publicly predicted that they would eventually achieve 15 million customers on FWA. They still have a long way to go to get there. It already looks like Verizon might have tapped into a lot of the households that are choosing FWA strictly due to lower prices. Having to bribe new customers with a new video console is a sign of a market that is already maturing.
It’s clear that FWA growth is probably the most important statistic in the market today since other ISPs are competing for the customers who aren’t opting for FWA. If the overall broadband market is reaching maturity, it gets even harder to predict how any given ISP or technology will perform.