Cable Largely Dismissive of Fixed Wireless Competition

Despite expectations that fixed wireless will have a particular impact in rural markets, "to date that is not the case," Cable One CEO Julie Laulis said in the company's Q2 earnings call last week. She said T-Mobile FWA growth is likely coming from DSL subscribers jumping ship. "We see a little bit" of FWA activity, WideOpenWest CEO Teresa Elder said during that company's Q2 call. Comcast and Charter Communications were largely dismissive of FWA's role in their stalled Q2 broadband growth (see 2207280035) and 2207300001).

However, Altice CEO Dexter Goei told analysts the company is having more churn in its western markets because of FWA, particularly in more rural areas. "I'm certain our peers are seeing the same trends we are," he said in the company's Q2 earnings call.

Cable's sanguine attitude "is all bravado for investors because they don’t want to admit they are vulnerable," emailed CCG Consulting President Doug Dawson. Enough cellsites put in by mobile carriers "could easily deliver solid 100 Mbps broadband," he said. He said FWA networks will likely be "great in some markets and not in others -- just like cellular coverage." He said FWA's offering -- unlimited usage at a price cheaper than cable -- is attractive to a lot of consumers, and pricing could drop even more if Dish Network becomes a notable competitor. He said cable C-suites undoubtedly paid close attention to T-Mobile and Verizon getting 50% of new nationwide broadband customers in Q1.

Fixed wireless "is taking a huge share" of broadband net adds already, and there are signs that will accelerate, Jeff Moore, Wave7 research principal, told us. He said FWA had 50% of Q1 net ads, compared with 45% for cable, and FWA could capture two-thirds of new broadband adds next year. He said FWA growth is part of increased head-to-head competition between cable and wireless carriers, with wireless encroaching on cable's turf of internet access while cable gets into mobile service.

Many cable operators dismiss FWA as a serious long-term threat. Altice's Goei said FWA has limited capacity to be a serious competitor. FWA operators know "there is a short runway for the product," and market share losses will reverse following Altice's accelerating investments in fiber, he said.

MoffettNathanson's Craig Moffett said Cable One's slowing broadband growth might be due to having more FWA competition in its largely rural footprint than a lot of its cable peers, in a note. At the same time, he said, "we remain somewhat skeptical about the longer-term risk posed by fixed wireless access."

FWA operators and watchers see it having big potential in rural markets where there's less capacity demand on wireless networks. Wave7's Moore said FWA has more limited bandwidth than wireline, but "I'm not sure people need an infinite amount of bandwidth."

FWA is largely the purview of major national wireless carriers, and it "is a real phenomenon, and the cable [companies] which ignore it do so at their peril," emailed a Wireless ISP Association spokesperson. He said FW technology and offerings "can more than meet today’s needs of the average household or business." He said WISPA's members are focused largely on providing point-to-multipoint fixed wireless service to rural areas, while the major carriers will focus more on higher-density urban and suburban areas and their offerings aren't a threat to WISPA members.

Most customers at Pennsylvania fixed wireless operator Upward Broadband are rural and switching from DSL or satellite, said Austin Beiler, network engineer. He said the company's low-hanging fruit is rural areas without much coverage. He said FWA doesn't have cable speeds, but most customers don't need or use those speeds. "We are not scared to go up against cable," he said. He said Upward's focus is more on its software that prioritizes real-time traffic like voice and Zoom calls and allocates less bandwidth to less latency-sensitive uses.