Cable and fiber executives have largely downplayed the potential competitive threat fixed wireless access (FWA) broadband poses to their businesses, but there could be reason to worry if comments from T-Mobile executives are to be believed.
The wireless operator posted Q4 results on Wednesday which showed it added 224,00 fixed wireless broadband subs in the quarter to end the year with 646,000 home internet customers. The latter figure was significantly higher than its goal of 500,000.
Dow Draper, T-Mobile’s EVP of Emerging Products, said on an earnings call that while it’s gaining traction in rural regions, a majority of its customers are coming from suburban and urban areas. He added it is pulling the most subscribers away from cable, though it is also reeling in former fiber customers as well.
According to Draper, it all comes down to price and customer experience.
“Quite frankly, we're half the price in a lot of cases against cable companies when you add in their fees and all the different charges they have. Also, it's simplistic. We don't have price hikes. I mean, customers are generally very unhappy with the cable industry,” he explained. “So, that tends to be why we see people coming to us from all different types of geographies, all different providers, especially cable and fiber, is it's just a better value proposition.”
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T-Mobile CEO Mike Sievert insisted its FWA offering is a “mainstream” quality product rather than a niche service. He noted average customers are using 300 to 400 gigs per month, with a mid-single-digit percentage of users consuming more than 1 TB.
“People might say, ‘Well, that's not the same as cable. Cable uses more than that.’ But if you look at the broad distribution of cable users, their medians are right in that range,” Sievert said. “Their averages are only higher because they have some 10%, 20% of people that use multiple terabytes. Look, we can support some of that, too, as we're demonstrating today.”
In a note to investors this week, New Street Research analyst Jonathan Chaplin pointed out that T-Mobile and Verizon added a combined 302,000 fixed wireless subscribers in Q4 2021.
While cable has “continued to take share in the fixed broadband market” over the past twelve months, he noted that when FWA additions are factored in “Cable lost share of the overall broadband market in 4Q21. If this result holds, the last two quarters may be the first time Cable hasn’t taken share in well over a decade.”
He warned FWA net additions are expected to ramp in the current quarter “pressuring cable further.”
Jeff Heynen, Dell’Oro Group VP of Broadband Access and Home Networking, previously told Fierce cable operators especially should keep a wary eye on fixed wireless in 2022, arguing subscribers could be lured away by stellar customer service.