Operators bet on FWA for revenue growth despite huge challenges

Leading telecom operators are making investment in fixed–wireless access (FWA) business to grow their revenue though addition of new FWA customers can potentially impact the network experience for both mobile and fixed wireless users.
Apple Mac salesGrowing revenue is becoming a huge challenge for telecom operators globally. In Q4 2023, telecom network operators achieved 1.7 percent growth in revenue at $445.3 billion thanks to their enterprise offerings, according to MTN Consulting. European operators including BT, Orange, Telecom Italia, Telefonica, and Deutsche Telekom are driving the revenue growth.

Why FWA

Top telecoms are betting on FWA business to expand their presence in fixed broadband markets despite knowing the fact that FWA will account for only 4 percent of fixed broadband connections worldwide in 2027, Analysys Mason’s forecasts show.

GSMA Intelligence says the number of fixed broadband connections in 36 countries analysed is forecast to reach around 1.5 billion by 2030.

A recent report from Opensignal, which measures speed and experience of broadband users, says FWA benefits from lower prices compared to wireline competition, access to existing mobile retail channels and subscribers, and the ability to deliver a “good enough” broadband service.

FWA user growth affects some

Zain has reported 1.1 million FWA subs and approximately eight million mobile subscribers, resulting in a far greater ratio of FWA-to-mobile subscribers as of February 2023. The growth in FWA penetration has likely strained Zain’s network performance, resulting in decreased performance for both mobile and FWA services in areas with higher FWA subscriber density.

The number of FWA customers at T-Mobile USA and Verizon Wireless has reached 1.9 million and 4.8 million, respectively, in 4Q 2023 after launching FWA services in 2021, says Analysys Mason.

Despite adding millions of 5G FWA subscribers, 5G speeds on T-Mobile and Verizon’s mobile networks have continued to improve. Their success in managing FWA traffic is due to a variety of factors, including plentiful access to mid-band spectrum, localized load management, and differences in peak usage time of day patterns between mobile and FBB usage, Opensignal said.

Main strategies

Operators have developed strategies for FWA that support their fibre-to-the-premises (FTTP) initiatives and can help them to target specific areas where FWA can be disruptive, Analysys Mason said.

For converged operators, FWA is a stepping-stone technology for FTTP. Operators can quickly deploy FWA than FTTP. This is an important feature of Mobily’s strategy in Saudi Arabia.

Operators are using FWA to their advantage: they can use it to reach new fixed broadband customers quickly, and then upgrade them to an FTTP connection when they pass the location with FTTP build outs.

Vodafone UK has adopted an FTTP beachhead strategy: Vodafone targets areas where it plans to roll out FTTP services in the future so that FWA customers can be migrated to FTTP once its roll-out is more advanced.

Waiting for FTTP

There are challenges because customers, who are looking for high-speed Internet, will receive faster and more-reliable connection from FTTP compared to FWA. FWA customers are likely to shift to FTTP operators if they roll out FTTP in their area. Plus, FWA tariffs are unlikely to be competitive in areas where FTTP coverage is high.

Data from Analysys Mason’s survey of 18,000 consumers suggests that this is a viable strategy. FWA respondents were more likely to report intending to change their plan while remaining with their existing provider than customers that took FWA over wireline technologies (for example, FTTP, DOCSIS or DSL).

Quality of experience

Several operators said the average traffic volume for FWA customers was 10 to 20 times that of handset customers. This poses a problem for operators. FWA customers can reduce mobile handset customers’ quality of experience if network performance is reduced by traffic from FWA. It can also lead to revenue cannibalisation if operators onboard a small number of FWA customers instead of a large number of handset customers.

Operators need to consider additional investment in network capacity as one of the main options to overcome the challenges. However, the cost of expanding mobile network capacity for FWA services is greater than simply purchasing access to wholesale FTTP networks.

As a result, operators strategically target areas where there is spare capacity on their network, rather than investing in capacity specifically for FWA. T-Mobile USA forecasts traffic at individual base stations in order to plan the number of 5G FWA users that it can support at each location without hindering network performance.

Operators can generate savings by improving the efficiency in marketing and selling FWA with the use of insights from their networks. Operators that plan to maintain a long-term FWA subscriber base, rather than use it as a stepping stone to FTTP, will benefit the most from investing in this process specifically for FWA.

Operators need to be aware of best-practice approaches to FWA from around the world to determine which FWA strategies are best for their local market contexts. This way, operators can benefit from the opportunities presented by FWA in the specific contexts where it will be disruptive, Analysys Mason said in its report.

Opensignal suggests that making investment in 5G network will be one of the solutions to enhance FWA experience. But the latest report from MTN Consulting indicated that network operator Capex in 2023 fell 3 percent to $543 billion.

In 2024, network Capex of telecoms will be $309 billion. This is indicating that telecoms are not going to invest enough in networks this year though ensuring seamless coexistence requires careful planning, load balancing, and traffic routing. Operators must also ensure sufficient spectrum to maintain capacity and mitigate interference to enhance FWA revenue indicating that they need more funds.

Baburajan Kizhakedath

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