With so much focus on 5G Mobile Broadband (MBB), it is sometimes easy to forget that Fixed Wireless Access (FWA) Radio Access Network (RAN) investments are projected to comprise a growing share of the overall RAN capex, reflecting the size of the potential upside, continuous technology advancements, new spectrum, and improving market sentiment for both basic and high performance wireless broadband connectivity.
The overall market opportunity for both DSL and fiber replacements/alternative solutions is significant — according to the ITU and Ericsson’s Mobility Report, around 40% of the world’s two billion households still lack a broadband connection.
Given the link between GDP growth and broadband penetration—World Bank estimates a 10 percentage point increase in fixed broadband penetration boosts GDP growth by 1.4% in developing economies—governments and regulatory bodies around the world have set out various targets to minimize the digital divide. The number of countries with a national broadband plan approached 174 in 2020, up from 102 in 2010 (The State of Broadband 2020).
In addition to addressing households with no broadband, FWA is increasingly viewed as a possible solution to improve broadband connectivity offerings in markets with limited competition. Per T-Mobile’s recent investor update, 50% to 60% of the U.S. household are located in markets with limited broadband options.
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Not surprisingly, we don’t need to wait for the future to verify this narrative. According to the GSA, more than 400 operators have launched FWA networks, supporting approximately 70 million connections globally (Dell’Oro Broadband Access). The number of FWA connections represented just about 1% of total mobile broadband subscriptions in 2020, however, the typical FWA connection consumed around 150 GB/month accounting for 15% of the combined global mobile plus FWA network traffic (Ericsson Mobility Report).
Fresh data from recently updated 4Q20 reports also suggest FWA adoption could be accelerating at a faster pace than expected in some markets. Telia, for example, reported that its FWA installed base is up 5x over the past two years and now accounts for nearly 10% of its overall broadband connections.
Similarly, Globe Telecom’s FWA connections more than doubled in 2020, now accounting for about 80% of Globe’s total broadband connections. Bell Canada doubled its FWA coverage in 2020 and recently announced plans to boost its capex by about 14% over the next two years, partly driven by its wireless home expansion plans, which remains on track to double again in 2021. The list goes on.
Our preliminary RAN analysis suggests Fixed Wireless Access (FWA) RAN investments, including both dedicated fixed networks and mobile RAN, accelerated at a double-digit pace in 2020 and remains on track to surpass $1 billion in 2021. In fact, the FWA ascent is contributing to the greater than typical decoupling between RAN and wireless capital intensity.
The outlook remains favorable for mobile, hybrid and dedicated deployments. Clearly underutilized sub 6 GHz macros will continue to dominate the FWA mix over the near-term. At the same time, the upper mid-band spectrum will not provide enough incremental capacity to address longer term data traffic growth projections for both mobile and fixed applications. In other words, once the low-hanging fruit has been depleted, the ratio between mobile and dedicated FWA investments will gradually evolve. And even though all capacity roadmaps eventually lead to increased millimeter wave (mmWave) usage, the transition from mobile toward dedicated WB FWA systems will vary depending on not just the state of the demand drivers but also the success with FDD Massive MIMO as well as the upside with other spectrum including the 6 GHz band.
We still need to keep in mind that FWA is just one part of the broader broadband toolkit, and the business case will not make sense everywhere. Over time operators will figure out the right balance between the capacity requirements and the overall profitability for the various FWA segments--including the underserved, relatively served, and well-served markets.
Extension solutions including repeaters and RAN planning tools such as Pivotal’s WaveScape, that can improve the total cost of ownership will likely play an increasingly important role going forward expanding the TAM for dedicated FWA RAN systems.
In short, we have talked about FWA boosting the RAN market for a long time, and we can now safely conclude it is happening. It is not a game-changer for the overall RAN market. But the impact is meaningful, and the opportunity is sizeable.
Stefan Pongratz is a vice president at the Dell’Oro Group. He joined Dell’Oro in 2010 after spending 10 years with the Anritsu Company. Pongratz is responsible for the firm's Radio Access Network and Telecom Capex programs and has authored advanced research reports on the wireless market assessing the impact and the market opportunity with small cells, C-RAN, 5G, IoT and CBRS.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of the editorial board.