Wednesday, 25 November 2020

5G-aliser: October 2020 update – Assessing the FWA opportunity

by Harry Baldock, Total Telecom
Thursday 12 November 20

In this slightly belated October update to the 5G-aliser, we are taking a break from our usual assessment of the 20 factors to take a special look at the Fixed Wireless Access (FWA) market

The only factor we have moved this month is on 5G devices and services, to reflect the launch of the long-awaited 5G-enabled iPhone. Replacement cycles for mobile devices are extending, so while this may not materialise into a super-cycle of upgrades, it will nonetheless catalyse demand for 5G services among high-end device users, particularly in iPhone heavy markets such as the US and UK, as well as in affluent markets in the Middle East. This has led to a slight upgrade in overall 5G demand.   FWA: 5G is one of many catalysing forces 4G has already catalysed rapid growth of FWA in numerous markets, such as South Africa, Japan, Sri Lanka, Italy, and the Philippines. This growth has been driven by the combined impact of mobile network operators (MNOs) commercialising FWA services to households in underserved urban areas, the slow pace of fibre roll-out in some countries, government subsidies for rural broadband…

The only factor we have moved this month is on 5G devices and services, to reflect the launch of the long-awaited 5G-enabled iPhone. Replacement cycles for mobile devices are extending, so while this may not materialise into a super-cycle of upgrades, it will nonetheless catalyse demand for 5G services among high-end device users, particularly in iPhone heavy markets such as the US and UK, as well as in affluent markets in the Middle East. This has led to a slight upgrade in overall 5G demand.

 

FWA: 5G is one of many catalysing forces

4G has already catalysed rapid growth of FWA in numerous markets, such as South Africa, Japan, Sri Lanka, Italy, and the Philippines. This growth has been driven by the combined impact of mobile network operators (MNOs) commercialising FWA services to households in underserved urban areas, the slow pace of fibre roll-out in some countries, government subsidies for rural broadband, and improvements in network planning tools and customer premise equipment with easier self-install options.

According to STL Partners’ latest research and market forecasts, 5G is likely to have a major impact for operators in the coming years, especially from 2022 onwards as more spectrum becomes available to more operators, and equipment prices fall.

That said, 4G will continue to be more important than 5G in the FWA market overall at a global level over the next 5 years; the technology is much further down the cost- and experience curve, as well as using existing network infrastructure and spectrum. 

 

Figure 1: Using a broad definition, FWA will reach 305m premises by 2026

Source: STL Partners

 

STL believes that the biggest changes and opportunities catalysed by 5G FWA will be: 

    • Alternative source of gigabit broadband in urban areas without fibre, or with poor competition and pricing.

    • Mobile-only operators will target attractive demographic or sub-regional niches that fit with their existing and planned 5G footprint.

    • Fixed and fixed-mobile converged broadband providers will use 5G FWA as a backup or enhancement for fixed-line services.

    • The growing democratisation of 5G, with better support of unlicensed spectrum, plus cloud-delivered core networks and edge offload, will broaden its range beyond traditional MNOs to some wireless internet service providers (WISPs), cable operators, and others.

    • Local licensing and new tranches of unlicensed spectrum will create options for municipalities, education agencies, and other public-sector bodies to offer 5G FWA for home-schooling, telemedicine, and other applications.

    • In the longer term (2023 onwards) improved mmWave technology, including repeaters and other forms of signal-booster, could expand the addressable market for gigabit FWA.

 

It should also be noted here that 5G is not the only option for gigabit FWA. Various other options are available in this regard, including wireless point-to-point and mesh technologies, such as Facebook’s Terragraph. 

 

FWA demand drivers

STL’s view is that FWA is becoming more mainstream, but certainly does not represent an existential threat to existing broadband providers and vendors. It represents more of a challenge in areas currently with no good broadband, as it may cherry-pick customers (especially the most eager and therefore urgent users) and thus reduce the future economic viability of new fixed-infrastructure deployments. It poses a risk to incumbent DSL broadband, where operators are slow to upgrade to fibre. Its presence will also likely provide downward pressure on pricing in uncompetitive markets.

Rather than thinking about national average levels, it is better to think about FWA as being “mainstream” in specific contexts. FWA has particularly good local mainstream prospects in certain types of area with favourable geography, topography, or demography, such as agricultural communities, island nations, or specific urban settings where it is impractical or too costly to lay fibre.

 

Figure 2: FWA fits specific use cases, rather than the overall market

Note: MDUs = multi-dwelling units. Source: STL Partners 

 

Does the pandemic change anything?

While the COVID-19 pandemic has not shifted the outlook for FWA significantly, it may provide a boost for specific use cases such as connectivity for emergency medical facilities, such as mobile testing tents, growing interest in work from home packages, local authorities exploring how to support remote education, all of which are driving telco executives, governments and investors to pay higher attention on fixed/home broadband. 

 

The FWA value chain

For many years, FWA in most of the world has been successfully operated by niche providers in areas typically underserved by wireline broadband services. In rural areas, the distances involved often required the use of expensive outdoor customer-premises equipment with line of sight to the base station sites, installed by trained technicians. 

The value chain for WISPs remained fairly static, and mostly dominated by niche vendors that were considerably smaller than the network equipment suppliers into fixed broadband and cellular operators. 

Where 4G equipment was used for FWA, it was typically used by mobile-only MNOs either adding an extra proposition to soak up excess capacity in a few areas, or where consumer and enterprise MVNO partners developed niche propositions that appealed to the wholesale business unit. They typically used the same vendors as the main cellular RAN – with the exception of enterprise gateways from providers such as Cradlepoint (recently acquired by Ericsson). 

This is now changing. The value chain of vendors and service providers is evolving considerably in the 5G and mmWave era, with the shifts being observed in the WISP market as well as the telco domain. New players entering the value chain include:

    • Telco domain

        - MNOs evolving converged services, e.g. for work-from-home propositions

        - Traditional wireline and cable operators extending their rural footprints

        - Neutral host FWA where competitive or regulatory environment favours a wholesale access model – this includes towercos or fibre operators looking at new wholesale opportunities

    • WISP domain

        - Traditional rural WISP

        - Urban gigabit WISP

        - New entrants, such as municipal networks

        - Internet and cloud players, e.g. Microsoft playing tangentially with its TV White Space initiative, or Facebook’s Terragraph 60GHz mesh technology

 

 

From a new US President waiting in the wings to the first signs of a coronavirus vaccine – what do the major upheavals of November mean for the world of 5G? Find out in our next 5G-aliser update 

Also in the news: 
Today's headlines from The 5G Daily
Telstra subdivides to capitalise on tower assets
Rival firms rally to challenge NTT’s $40bn buyout of DoCoMo

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