Everyone in the broadband industry is talking about the explosion of 5G home internet service. But virtually no one seems to agree on where it’s going.
That was evident at this week’s Goldman Sachs Communacopia + Technology conference, a rare opportunity to hear from the CEOs of the three major wireless companies, Verizon, T-Mobile and AT&T, as well the top two largest cable companies in Comcast and Charter. When it came to 5G home broadband, it was all over the place.
Verizon CEO Hans Vestberg sees so-called fixed wireless access, industry jargon for a 5G broadband connection, as a big growth driver. “I see a great opportunity for us to continue this,” he said.
T-Mobile CEO Mike Sievert expressed more caution. “It plays a role in the marketplace,” he said.
AT&T CEO John Stankey said making a distinction between wireless and wired broadband was a “fallacy,” and said it all came down to fiber.
Seemingly the only two industry leaders who could agree were the cable competitors, who don’t offer the service. Comcast CEO Brian Roberts and Charter CEO Chris Winfrey both slammed it as the next “DSL.”
The varying opinions – even among the telecom executives – shows that 5G home internet is nearing a crossroads. In the last year, the service has jumped in popularity, now outstripping all other growth in the broadband industry. With its ease-of-setup and potential to cover more people, it could represent Cord Cutting 2.0. But the comments from this week, as well as some networking and spectrum limitations, may relegate it to more of a side act down the line.
For now, it’s an increasingly big business for the wireless carriers as consumer awareness and demand grows.
“This is money that’s lying on the street,” said Roger Entner, an analyst at Recon Analytics. “They just need to pick it up.”
Tempered Enthusiasm
Despite coming out well after Verizon, T-Mobile has been the most successful player in signing up customers to its home 5G service. But Sievert downplayed his accomplishments in this area, instead focusing on the success the company is seeing in the core wireless business.
“We won’t change the broadband world with the offer,” Sievert said at the conference on Wednesday.
Despite the growth, T-Mobile has targeted only single-digit millions of customers for the service, a small fraction of its more than 115 million wireless subscribers. The numbers give you some perspective on how much of a priority the business is to the carrier.
Sievert said that for now, it remains a growth engine. With a base of 3.7 million 5G home internet customers, it’s also ahead of its own goals for sign-ups.
Verizon, meanwhile, is looking for new customers at a time when it is working to stem the exodus of wireless subscribers. As a result, it’s leaning even more into 5G broadband, with a target of 4 million to 5 million customers by 2025, although Vestberg said his internal targets are even more aggressive.
“Right now, there’s pent-up demand for broadband in this country.”
Verizon CEO Hans Vestberg
“Right now, there’s pent up demand for broadband in this country,” he said.
Vestberg may be emphasizing 5G home internet because it’s one of the rarer bright spots in the business.
“Verizon needs a win for its consumer business, and fixed wireless is starting to deliver that after a slow start,” said Techsponential analyst Avi Greengart.
Because AT&T has only launched in about 20 markets, Stankey had the least to say about the prospects of 5G home internet. But he remains bullish in the area.
“I’m absolutely confident that when we get the distribution right and the product connection between fixed and wireless right, we can be a winner in this space and take back (total addressable market) that we were not addressing very effectively,” he said.
Both Verizon and T-Mobile agreed that the consumer reaction has been strong thanks to the ease of installation and simplified pricing. The Net Promoter Score, which measures
Hitting a ceiling
The future of 5G home internet remains a little murky because no one knows what happens after the wireless carriers hit those single-digit million targets. The strategy for the wireless carriers has been to offer the service in areas where it has excess spectrum capacity – either in places where there’s less smartphone congestion or where they have lots of ample radio airwaves to work with.
But once the carriers hit those goals, they would have to start investing in new infrastructure to offer the service to more people.
“They’re still looking at whether they can do this in a cheaper way that doesn’t impact mobility service,” Entner said.
Sievert said he was looking at different options, but said he hadn’t “cracked the code” on it. “We’re not done looking,” he said.
A common theme from Verizon’s Vestberg and AT&T’s Stankey was the instinct to fall back to fiber.
“That’s where I believe the domestic U.S. market is moving over time,” Stankey said.
Vestberg sees 5G home internet as a way to get the customer now, and gives him the option of later on adding a fiber line to that home. “I’ll have optionality down the road if you want fiber,” he said. “But that’s far out.”
Even Sievert acknowledged that its service wouldn’t “replace cable or fiber.”
For now, the service is popular enough that it’s eating into cable, not that Comcast or Charter would admit it.
Cable takes its shots
Comcast’s Roberts and Charter’s Winfrey didn’t mince words when talking about 5G home internet.
“We’ve seen that with DSL in the past and we’ve been able to do well against that,” Roberts said. “We don’t take it for granted, but we’ve seen lower price, slower speed offerings before and in the long run I don’t know how viable the technology holds up.”
“The initial success of fixed wireless access shows that there is a niche market for limited bandwidth, limited capacity and limited reliability product that exists in the marketplace,” Winfrey said.
“I don’t know how viable the technology holds up.”
Comcast CEO Brian Roberts
These could just be boisterous remarks from a cable industry that’s taking its licks. After all, Verizon and T-Mobile combined to add nearly 900,000 5G home internet customers in the second quarter, while the cable industry combined just added 10,000 (Charter added 70,000 broadband customers, offsetting losses from other cable providers).
The cable industry is also pinning its hopes on DOCSIS 4.0, a new standard for cable broadband that will dramatically boost the available speeds. The technology is supposed to roll out later this year.
Those multi-gigabit speeds would give it a more viable competitor to telecom’s fiber, but the cable industry believes will also fend off the threat of 5G. T-Mobile’s 5G broadband speeds range from 72 Mbps to 245 Mbps, while Verizon’s is 85 Mbps to 300 Mbps, with some markets accessing high-frequency millimeter wave spectrum that can enable 300 Mbps to 1 Gbps speeds. Even now, Winfrey and Roberts mentioned that many of their customers are on 300 Mbps plans or faster.
The question is whether the wireless cables will invest further to boost the speeds available to 5G home customers down the line.
And further down the line, Entner said, the conversation may shift away from just pure speed.
“The game goes away from speed and toward reliability,” he said.
Time will tell if 5G home internet is still a major force in that game.