How many different types of fixed wireless access (FWA) are there? We thought there were two, but New Street Research has defined a third type.
When Verizon and T-Mobile jumped into the FWA business, Fierce Wireless noted that their technology, which leverages their macro networks, was different from traditional point-to-point FWA.
A main difference between traditional FWA and the FWA from the big carriers relates to the customer premises equipment. Verizon and T-Mobile use special customer premises equipment that is effectively like a mobile device to pick up the cellular signal. Whereas traditional FWA uses a directional antenna mounted on the house.
But in a note to investors yesterday, New Street Research analyst Jonathan Chaplin wrote, “We recognize two flavors of fixed wireless broadband.”
He said the “less threatening” FWA is delivered over a mobile network on spectrum below 6GHz.
“We think this poses little threat to the fixed broadband market and only modest upside to those delivering it,” wrote Chaplin. “We estimate this may capture 8% of the broadband market. The process of going from 0% to 8% will be painful for established broadband players if it happens quickly, but the long-term impact is slight. T-Mobile and Verizon fall into this category.”
Both T-Mobile and Verizon have said they can only support a limited number of FWA subscribers in a given geographic area because they don’t want to degrade their valuable mobile service.
According to Chaplin, the “more threatening” type of FWA is delivered over a purpose-built home broadband network on spectrum above 6 GHz. This is capable of delivering a fiber-like experience with unlimited capacity and speeds of 1 Gbps.
“The threat to the broadband market from this flavor of FWB is modest today, but only because it is being deployed to a relatively small portion of the country,” he said. “The threat could grow materially if addressability is expanded. Starry falls into this category.”
Starry
Boston-based Starry debuted on the New York Stock Exchange (NYSE) in late March.
Starry is disrupting the market by using IEEE 802.11-based technology and 24 GHz and 37 GHz millimeter wave spectrum to reach homes with its flavor of FWA. Starry pitches $50/month plans for "blazing fast" internet speeds.
“This is a complicated sector,” Starry CEO Chet Kanojia told Fierce recently. Starry designed and developed its technology stack entirely in house, combining its proprietary phased array antenna technology with MU-MIMO to deliver high-capacity bandwidth. According to Starry, it delivers superior propagation across the communities it serves.
New Street’s Chaplin said, “The Starry model is a greater threat because, by leveraging millimeter wave spectrum, it circumvents both the supply and demand constraints faced by less-threatening fixed wireless broadband.”
On the supply side, there is an order of magnitude more spectrum available in millimeter wave frequencies, and limited propagation makes frequency reuse much easier. In addition, this spectrum isn’t being shared with more valuable mobile uses cases, for the most part, said Chaplin.
And on the demand side, operators can deliver a fiber-like experience over millimeter wave spectrum, posing a threat to incumbent fixed broadband providers.
Speaking at a recent New Street event focused on fiber, Kanojia said Starry doesn’t see itself winning in rural areas where the government and other operators are focused. Rather, Starry is focused on dense urban areas.
Chaplin said Starry, itself, is not a big threat to incumbents because its subscriber goals over the next five years are modest. The company is only targeting 19 million homes during that time frame, hoping to capture 1.4 million subscribers.
However, if Starry’s model is adopted by one of the national carriers and deployed more widely, it could become a viable competitor to the cable companies. “The three national carriers all have 1 GHz or more of millimeter wave spectrum on average nationally. The only thing that holds them back is the willingness to invest in the fiber required to get base stations close enough to end user locations for millimeter wave to work its magic,” said Chaplin.