Fixed Wireless Access subscriber additions are expected to rise sharply in the next two years, according to MoffettNathanson senior analyst Craig Moffett, but then moderate in later years, as its rural base begins to saturate.

In a series of slides posted on its website, MoffettNathanson predicted that T-Mobile and Verizon will add 2 million and 1 million FWA customers, respectively, in 2022 and 2023, up from 546,000 and 173,000 in 2021. But that growth is expected to begin to trail off in 2024, to 1.3 million for T-Mobile and 700,000 for Verizon, falling further by 2025 to 500,000 additions for each company, according to Moffett. By 2026, Moffett predicts T-Mobile will add about 200,000 FWA subscribers and Verizon 400,000 FWA customers, according to the report. 

T-Mobile added 565,000 FWA customers in Q2 2022, soundly beating analysts’ estimates, and is expected to finish the year with more than 2 million fixed wireless customers. The company has said it expects to have between 7 million and 8 million FWA customers by 2025. 

Moffett’s predictions are slightly less aggressive than some analysts who have estimated that fixed wireless could add as many as 10 million additional subscribers by 2027, but they’re not that far off. According to his estimates, T-Mobile and Verizon would add a collective 9.6 million additional FWA customers by the end of 2026. 

Though FWA appears to be a viable alternative to cable broadband, Moffett and other analysts have warned, it has mainly been deployed in rural areas and attracted residential and business customers not targeted by wired service. For example, fixed wireless has been extremely popular with construction trailers and food trucks, business customers that aren’t able to receive wired service.

That appears to be backed up by an earlier MoffettNathanson report, which cited estimates from Boston-based market researcher Comlinkdata that 33% of T-Mobile’s broadband customers are in rural areas, representing just 6% of the company’s total homes passed. In addition, Comlinkdata estimated that 88% of T-Mobile’s FWA customers are coming from the 36% of its network that is underutilized.

Looking Beyond Rural Markets

At the Goldman Sachs Communacopia conference earlier this month, Verizon CEO Hans Vestberg said the company plans to expand the service beyond rural markets.

“[W]e’re going to open up new opportunities outside the suburban, out of rural as well, where it's even greater opportunities for us,” Vestberg said of FWA at the Goldman conference. “Our devices coming out on fixed wireless access will basically cover all the frequencies we have, all the way from millimeter wave, C-band and 4G low-band, which is going to make this product enormously great.” 

Cable operators have been keeping an eye on fixed-wireless competition, but have in the past dismissed the service as inferior to wired broadband. But as their own cable broadband subscriber growth has slowed considerably, they are at least giving some credit to the service. 

At the Bank of America Securities conference earlier in September, Charter Communications chief financial officer Jessica Fischer acknowledged that fixed wireless played a role, albeit small, in its Q2 subscriber declines. Later at the BofA conference, Comcast deputy chief financial officer Jason Armstrong said that although fixed wireless is seeing gains, he is most concerned about fiber competition. 

Also: Wireless Connectivity Will Determine Winners in Broadband, Streaming Race, Rutledge Says 

Even other telcos have joined in on the fixed-wireless bashing. Frontier Communications CEO Nick Jeffery said at the Communacopia conference that comparing fixed wireless to fiber was like “comparing a Ferrari to a horse.”

According to Moffett, telcos and cable service providers should worry more about fiber. Planned fiber to the home passings more than doubled in 2021 to 4.2 million from 1.9 million in 2020, and he predicts that they should nearly double again to 7.8 million passings by 2022. He added that planned fiber passings will rise to 9.4 million in 2023, 9 million in 2024 and 8.3 million in 2025. Most of those gains will come from projects from three carriers: AT&T, Lumen (with Apollo Global) and Frontier. Moffett estimates that AT&T will add 4,000 fiber passings in 2022, 3.75 million in 2023, 3.25 million in 2024 and 2.6 million in 2025. Lumen is expected to add 1 million, 2.4 million, 2.5 million and 2.5 million passings in the same time frame, while Frontier should add 1 million, 1.5 million, 1.6 million and 1.6 million, according to Moffett.

But those deployments are not without risks, mostly on the cost side, where labor and equipment expenditures are expected to rise, Moffett wrote. As providers build out in less populated areas the cost per home passed will also increase, as well as capital costs due to inflation and a “higher equity risk premium,” Moffett wrote. ■ 

The sharp pandemic-fueled growth in broadband customers appears to be ebbing, just a little, for the top U.S. cable operators. 

The eight biggest MSOs collectively added nearly 937,000 broadband customers in the first quarter. It was the first time the U.S. cable industry didn’t reach the 1 million mark in high-speed internet customer growth since the pre-pandemic fourth quarter of 2019, according to data compiled by Leichtman Research Group (LRG). 

Comcast added 460,000 HSI customers in Q1, down 3.5% from the 477,000 it added in the first quarter of 2020. No. 2 operator Charter Communications saw a sharper decline in first quarter growth, decelerating by 39% to 355,000, LRG said. 

Adding the top eight wireline phone companies to the mix, the top 16 U.S. broadband providers collectively added 1,020,907 users to their ranks, with both AT&T (51,000) and Verizon (64,000) growing in Q1. That's about 87% of the growth in Q1 of 2020 (1.17 million), LRG said.

“This marked the fourth time in the past five quarters that there were more than one million net broadband additions in the U.S.,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, Inc. “Over the past year, there were about 4,665,000 net broadband adds, compared to about 2,760,000 net broadband adds over the prior year.”

Cable broadband operators were continuing to applaud the FCC's Emergency Broadband Benefit program framework--the vote was unanimous--particularly given that the FCC will allow broadband service from both eligible telecommunications carriers (ETCs) and non-ETCs to qualify for the $3.2 billion subsidy.

The FCC released the report and order (R&O) Friday, and explained the decision to cast a wide net.

Also Read: FCC Approves Broadband Subsidy Framework

"This interpretation allows not only for ETCs or non-ETCs like traditional Internet Service Providers (ISPs) including cable providers and wireless Internet service providers, but also permits non-traditional broadband providers like community-owned networks, electric cooperatives, or municipal governments," the order said.

The FCC said that interpretation squared with the plain language of the statute--the subsidy was included in the Consolidated Appropriations Act COVID-19 relief bill package last December, that language being the broadband provider is defined as "any "provider of broadband internet access service."

“We commend the FCC's adoption of a thoughtful and balanced framework for the Emergency Broadband Benefit program, an important initiative that will help ensure millions of Americans can use broadband to work and learn from home during the pandemic," said NCTA-The Internet & Television Association. "We will continue working with the FCC and other stakeholders to keep existing broadband customers connected and reach those that have yet to subscribe. Today's action also represents a real accomplishment given the voluminous record and significant time constraints involved. Acting Chair [Jessica] Rosenworcel, her fellow Commissioners, and FCC staff deserve great credit for the open and efficient process that led to this result.”

Also Read: ISPs Prepare for Broadband Billions

The result also included a priority application window for non-ETCs who have not been participating in the Lifeline program on which the subsidy is based, giving them a chance to be on equal footing with ETCs once potential subs start spending their subsidies--up to $50 per month for broadband service ($75 per month on tribal lands) and a one-time $100 device subsidy.

"By allowing non-ETC providers to obtain the necessary administrative approvals prior to the commencement of the program, eligible households will have more choices in the provider they can select to obtain supported broadband service and devices," the R&O said.

Cable broadband operators had said that their vigorous participation likely hinged on not giving ETCs a head start.

Adjusting its product line to a pandemic lockdown environment in which operators are looking to quickly address peak upstream capacity expansion with moves such as node splits, Harmonic has introduced its new CableOS Reef.

The San Jose, Calif.-based technology vendor calls the Reef a dense Remote PHY Shelf (RPS) — a product that converges a cable operator's services, including internet protocol-based data, legacy video and out-of-band signals, into a centralized indoor platform. The operator’s services are converged over IP and transmitted from a single RF port.

Notably, the Reef allows operators to add capacity with node splits without incurring all the extra labor, wiring, plant-size expansion and power usage associated with splitters and combiners, Asaf Matatyaou, VP of solutions and product management for Harmonic’s cable access business, said.

Housing as many as nine modular line cards in two standard rack units, each with two independent Remote-PHY devices (RPDs) for a total of 18 RPDs, CableOS Reef delivers significantly increased density relative to existing solutions and lower power consumption per service group.

“It’s far more cost-effective from a power, space, wireline perspective,” Matatyaou said. “Traditionally, node segmentation requires combining and splitting, and
that sits on racks and racks of receivers and transmitters.”

Reef can be deployed with networks that run Harmonic’s CableOS virtualized cable modem termination system (CMTS) software. But it can also be used with non-CableOS networks that are built around remote PHY architecture.

Harmonic said during its first-quarter earnings report in late April that increased upstream usage amid pandemic-related shelter-in-place market dynamics has shifted operator priorities.

There has been a 35% increase in upstream traffic on U.S. cable networks, according
to NCTA: The Internet & Television
Association.

Harmonic is on the leading edge as operators migrate to virtualization and Distributed Access Architecture (DAA). Commercial deployments of CableOS reached 27 in the first quarter, up 17% over Q4. Modems served globally by CableOS increased sequentially by 30% to 1.3 million.

But the increased upstream peaks associated with rampant Zoom video conferencing has shifted client priorities toward immediate capacity expansion solutions.

And CableOS Reef “is going into trials as we speak,” Matatyaou said. 

Seemingly aware that self back-patting doesn’t present great optics right now, cable network operators and their associated vendors are at least indulging in well-earned sighs of relief.

With NCTA–The Internet & Television Association showing an aggregate traffic increase of 16% for downstream data and 34% for upstream, cable operators — which collectively control two-thirds of U.S. wireline broadband connections — are seeing the sharp usage increases on their networks during the COVID-19 pandemic hit a plateau, with few instances of major outage or service interruption.

“They probably should pat themselves on the back,” said CommScope Broadband Networks chief technology officer Tom Cloonan. “Their networks have helped hold society together at a crucial time.”

Speaking during a virtual panel event on April 28 conducted by Cisco, Cox Communications chief technology officer Kevin Hart conceded, “It’s been a mad dash over the last few months, but our networks have held up well.”

From virtually every point on the cable engineering spectrum, the message has been similar. Operators have designed their networks anticipating usage patterns 12 to 18 months in advance, with plenty of headroom built in.

In some cases, though, the margin of error hasn’t been all that thick.

Built to Survive

Hybrid fiber coaxial (HFC) network engineers have managed to “survive” a harrowing two months in which their networks — particularly on the upstream end, with suddenly house-bound residential customers engaged in vastly greater video-conferencing activity — “close to running out of stream,” Cloonan said.

CommScope, he said, has kept up a steady dialogue with engineers working for its operator clients, teaching them how to remotely fine-tune complicated configuration settings that had been merely adjusted to an “OK” performance level in the aftermath of the industry conversion to DOCSIS 3.1. (It’s akin to learning how to fine-tune the picture settings on your flat screen two years after taking the thing out of the box.)

This includes turning on additional channels at the cable modem termination system (CMTS) level, even those that had been in noisy “keep out” regions of the plant spectrum. They also include adjusting the buffer control settings on user modems.

“Operators have been calling us, looking for things they can do in the near term, remotely from a PC on a software level,” Cloonan said. “There have been a lot of phone calls covering a lot of topics over the last seven weeks. There are a few knobs you can turn and a few tricks you can perform. We’re all trying to squeeze every megabit out of the box we can right now.”

Beyond conducting fine-tune optimization initiatives, operators are beginning more aggressive node optimization projects that involve truck rolls and, perhaps, a bit more risk to staff.

Operators, Cloonan said, have been “kind of awakened” during the pandemic that while they’ve managed to pull through, their plants lack “infinite resources.” That has inspired some engineering teams, for example, to upgrade the upstream signals from their plants to 85 Megahertz from 42 MHz.

Hart said that “99%” of Cox’s network nodes “are in a healthy state.” But Cox did physically address “those having a problem with things like taking fiber deeper and doing node splits.”

Comcast, meanwhile, has been “running additional fiber and optical nodes” to “give us more headroom,” the company’s top technologist, Tony Werner, told reporters during a recent briefing. That work, Werner said, was in addition to a significant increase in the amount of remote “dial turns” conducted by Comcast engineers to the network.

Cloonan noted: “Every time you do a node split, you reduce the number of subscribers who have to share bandwidth. And I think we’ll be seeing a lot more note splits in the coming months. But this is something your techs can’t do from their homes. You have to roll trucks.”

Tomorrow’s Network, Today

Moderating the virtual panel presentation, Jonathan Davis, senior VP and GM of mass-scale infrastructure for Cisco, said, “As a result of COVID-19, we’re getting a glimpse of what the future of the internet is today.”

Most folks in the cable technology business seem to agree that, regardless of whether or not efforts are successful in tamping down COVID-19 and people return to their offices anytime soon, network usage will probably never again go down to February 2020 levels.

So assuming that — save for a few tweaks — the HFC network of today has proven up to the task of handling the worst crisis so far of the 21st century, will cable operators hold off on making major investments into new network technology?

The first very early indicator suggests the answer is … maybe. Harmonic just reported decelerating deployments in the first quarter for its disruptive converged cable access platform (CCAP) virtualization software, CableOS, with commercial deployments slowing to 17%.

Cloonan, though, believes the pandemic will only inspire operators to prioritize movements toward new technologies that include not just virtualization but also Extended Spectrum DOCSIS and Full Duplex DOCSIS, both of which are included in CableLabs recently published DOCSIS 4.0 specification.

“Every operator will look at what has happened and make a decision on how to analyze it and view,” Cloonan said. “But most will realize that they snuck through. Barely.”