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GSMA Releases 5G Fixed Wireless (FWA) Playbook

Fixed Wireless is one of the recurring topics on our blogs (see links to other posts at the end). Now GSMA Intelligence has just released a playbook on this topic. The executive summary says:

One of the most interesting potential applications of 5G is in providing access to home broadband, through fixed wireless access (FWA). This hybrid approach combines aspects of traditional mobile and fixed-line delivery methods but is primarily marketed as a ‘home’ internet product.

FWA offers the principal advantages of (generally) lower upfront deployment costs relative to fixed options, and capital efficiency gains through the reuse of existing spectrum holdings. The technology has been around for more than a decade through the 3G and 4G eras, particularly in serving rural areas that lack fixed broadband access or have low speeds. At the end of 2020, 492 mobile operators (approximately 50% of the sector) had launched 4G FWA services, with varying levels of ambition.

5G will enable FWA to target a broader opportunity. We envisage the following deployment scenarios where FWA can be competitive:

  • broadband provision in countries with low existing home internet take-up (mostly emerging markets)
  • a broadband alternative in higher income countries (either as the primary fixed line asset or as a complement to existing cable and/or fibre products for converged operators)
  • an offering for the enterprise segment (especially companies with fewer than 250 employees).

Service availability depends on the breadth of 5G network coverage. As of January 2021, about 40% of the 135 5G commercial launches worldwide contain an FWA offering – a relatively high proportion at this early point in the generational cycle and one which could rise further as operators take stock of pilots, demand and return on investment. One real change factor compared to the LTE era is an expected rise in lower cost routers (CPE) with enhanced performance capabilities. A range of industry estimates indicates a projected cumulative sale of 250–350 million CPE units over the next five years – the majority of which will be 5G.

However, if the economics of deploying FWA services are not there, the business case will be difficult to justify. This is particularly important for those operators considering whether to allocate resources to FWA versus mobile broadband services. It is also why the technical enhancements to CPE matter, including the use of massive MIMO and multiple antenna selection, among others.

Spectral efficiency refers to the amount of cellular data that can be transferred per unit of spectrum (Hz); it is generally measured in bps per Hz. As new CPE units percolate into the customer base, indications suggest that 5G FWA is likely to gain a spectral efficiency advantage of 2.0–3.5× relative to 5G mobile broadband (for smartphones) over the next three to five years, based on the immobility of CPE (situated nearer to windows), multi-user pairing and other enhanced technologies. This is important for the economics of the FWA business case as it provides the underpinning for increased asset efficiency and revenues as operators monetise home data usage.

The efficiency can be expressed in terms of revenue per unit of spectrum (Hz). If we compare FWA versus 5G mobile broadband, the revenue per Hz is primarily driven by three variables:

  • spectral efficiency (cellular data transferred per Hz)
  • customer ARPU
  • cellular data usage (per day or month).

The revenue yield rises in parallel with ARPU and spectral efficiency, while being inversely related to data usage.

Increased spectral efficiency is, however, the key determinant. It helps to offset what could otherwise be very high bandwidth consumption relative to revenues for FWA versus mobile broadband. As spectral efficiency increases, it should drive the FWA revenue per Hz on an upward path towards parity with mobile broadband by 2025, significantly strengthening the underlying business case.

The extent to which profitability gains are realised at a retail level will depend on the spectrum holdings of the mobile operator, FWA data usage and commercial pricing strategy.

In a subsequent phase of research, we will explore the FWA economics in more detail based on the above inputs.

Prioritising urban/metropolitan areas before expanding into rural locales – which may be financed through part subsidy and/or co-investment models with government – means FWA will be marketed primarily in higher density areas in the near term (the next 12–24 months). Regulatory acknowledgement of FWA as a high-capacity option in helping achieve national broadband goals is also important, with BEREC’s guidelines in Europe providing a good example.

Some challenges related to network architecture remain: urban and suburban areas require a higher density of small cells to provide sufficient capacity and mitigate the risk of signal obstruction (such as from trees). Expedited planning approvals and permissions from local governments will be important to facilitate rollout of small cells in these areas. Partnerships between telcos and organisations that control city infrastructure (e.g. utilities, transportation authorities and municipal governments) are also important to increase the number of points where small cell sites can be located. Finally, a multi-band spectrum strategy will help balance trade-offs in capacity and coverage bands depending on the deployment scenario.

It is important to note that FWA will be heavily competing with the likes of Fiber in the urban and sub-urban area while with the satellite connectivity like Starlink in rural areas.

With the US C-band spectrum auctions just concluded, there is a renewed discussion on Fixed wireless for US by the operators.

As the tweet above says, Verizon is planning that the network upgrade will allow it to offer in-home broadband services to up to 50 million households by 2024, or around 41% of the entire US. Read more details on Light Reading here.

As the tweet says, AT&T's CEO isn't sold on fixed wireless Internet services. AT&T CEO John Stankey said during the operator's analyst event, "We think midband spectrum has its role – it has its role in being a premium mobility product – and we think there's better ways to deal with what's going on inside most of the walls of society." More details on Light Reading here.

Light Reading reported that T-Mobile said it expects to gain between 7 million and 8 million fixed wireless Internet customers within the next five years across both rural and urban locations. 

The point echoed by Gabriel Brown is what we were mentioning earlier, fiber for urban and sub-urban while satellites for rural and remote looks like a practical possibility.

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