A Fixed Wireless Boom 20 Years In The Making

While going through my email this morning, I came across a note from Bruce Leichtman, founder of the broadband-focused research company Leichtman Research Group (LRG). It highlighted the rapid gains made by 5G Fixed Wireless Access (FWA) services offered by mobile companies, namely T-Mobile and Verizon. Over the past two years, T-Mobile and Verizon have added 6.79 million new connections. Meanwhile, AT&T has entered the market with its Internet Air offering.

5G FWA technology uses a special router to connect homes to the Internet via a wireless high-speed broadband connection. Offering speeds ranging from 70 to 300 megabits per second, this service, priced at about $50 a month, is proving to be lucrative for the top two U.S. wireless companies. Some estimates suggest that T-Mobile is earning over $2.5 billion a year from this service.

The recent success of fixed wireless broadband access took me down memory l to two decades ago. This story is a good reminder of The (Bill) Gates Law. 

“Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years.” 

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As a long-time follower of the U.S. broadband industry, it’s truly amazing to witness FWA’s moment in the sun. But before I go any further — here is a general definition of fixed wireless.

Fixed wireless internet is provided through radio transmitters that communicate between fixed points. These transmitters are mounted on static structures such as poles, buildings, or towers, placed in specific locations to form a wireless network. This type of internet service is frequently used by providers to bridge the service gaps left by larger companies, offering high-speed internet access to more remote, rural areas.

Historically, fixed wireless broadband was rich in promises yet poor in achievements. During the dot-com era, companies like Winstar emerged explosively, only to be quickly ousted from the market.

A few years later, Clearwire emerged, capturing our imagination with its (then) radical vision of a wireless broadband future. At a time when only a few were lucky to get 10 Mbps connections, the company made us dream of big fat pipes connecting our homes, our laptops, and devices to the Internet. Today, unless you are a broadband nerd like me or actively involved in the telecom industry, you might not even know about a company like Clearwire. You see, history is a four-letter word in technology.

Clearwire was initially established in 1998 as a division of Sierra Technologies, a company specializing in modems and other wireless equipment. It was later renamed Clearwire Technologies and spun off. In 2003, Craig McCaw, the biggest, baddest telecom investor ever, bought the company and moved it to Kirkland, Washington. He was betting on technology developed by another one of his investments, NextNet Wireless. And the rest is history. By the way, McCaw is to telecom what Cable Cowboy John Malone is to the cable industry.

McCaw saw the future of mobile in broadband. In Clearwire, he saw a company that could bypass the stagnant, past-oriented mobile operators with little or no interest in moving toward a wireless broadband future. Clearwire was a company dreaming of a future based on a technology called WiMAX — Worldwide Interoperability for Microwave Access. It was focused on providing high-speed Internet and data service at a flat ra, asas we did for landline connections. 

WiMAX, based on the IEEE 802.16 standard and developed by the WiMAX Forum, was set to compete with LTE (Long Term Evolution), a standard proposed by the mobile industry group 3rd Generation Partnership Project. WiMAX backers, primarily Internet and computer companies, believed it was a superior path forward for the Internet.

It didn’t take long for the company to raise over a billion dollars — $100 million from Goldman Sachs, $900 million from Intel and Motorola in 2006, and eventually an IPO in 2007, which helped the company raise $600 million. The company also formed a partnership with Sprint Nextel in 2007.

Another $3.2 billion was pumped into the “new” company — Comcast invested $1.05 billion, Intel another billion, with Time Warner Cable and Google contributing $500 million each. Despite this, even such a significant investment couldn’t save the company. The new company, called Clearwire, combined Sprint and Clearwire’s WiMAX networks. And despite all that, it went nowhere. Over a decade ago, it eventually became part of Sprint, which in turn was acquired by T-Mobile. Sprint, another WiMAX champion, too failed. Clearwire, like WiMAX, faded from memory. 

Despite being less optimal technology, LTE gained much more traction due to support from existing operators. This encouraged handset makers to adopt the technology. The large scale of the rollout led to economies of scale within the ecosystem. LTE networks might not have offered the best performance, but they provided greater flexibility in frequency spectrum usage. This allowed LTE enough time to evolve — improving both speeds and overall network performance. However, what ultimately worked in LTE’s favor was its ubiquity and the ability for users to roam across borders and stay connected. 

However, there is a bittersweet ending to this story. Clearwire primarily operated in the 2.5 to 2.7 GHz frequency spectrum range, owning a significant amount of spectrum in many U.S. markets. This 2.5 GHz frequency band, originally owned by Clearwire and later by Sprint, is now a key component of T-Mobile’s 5G strategy. T-Mobile’s 5G Home Internet service operates in various frequency bands, including those acquired from Sprint, and has become a critical mid-band component in its multi-band 5G spectrum strategy.

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It is quite amazing to think how far we have come. I clearly remember the early days when fixed wireless suffered from technical challenges. In the early days, rain, clouds, or even the thickness of window glass caused problems for wireless access. Some fixed wireless networks require a direct line of sight between a transmission tower and the receiving antenna.

This made it difficult for service to be offered in areas with the topography and physical makeup of the areas. That not only limited its reach and appeal. And as if that weren’t enough, there were also numerous regulatory challenges. Clearwire tried to solve all of those challenges, but even billions of dollars couldn’t save the company.

What has truly worked is the ‘smartphone boom.’ We are so addicted to our devices that we don’t mind paying for wireless broadband. It has allowed wireless companies to invest in faster networks and newer technologies such as 5G, whican to offer higher speeds and lower latency.

In parallel, semiconductor technologies have improved to the point that transmission devices and smartphones to function across multiple network frequencies. The new chips consume less power and have more capabilities to undertake software-defined radios alongside advanced network technologies like Massive MIMO, beam-forming, and network slicing.

This has allowed mobile operators to utilize different wireless spectrums to cobble together robust enough networks simultaneously to accommodate many devices.

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Back to today.

During the first nine months of 2023, T-Mobile and Verizon added 2.75 million connections, up 21 percent from 2,265,000 for the same nine months in 2022. Most of these new additions have come at the expense of the landline connections from the phone companies. Even cable companies are starting to lose customers to fixed wireless access. Leichtman, the founder of LRG, has pointed out that these FWA connections are ‘attracting a disproportionate amount of young renters and movers.’

With their networks relatively underutilized, these companies can tap into this market before they need to start worrying about network capacity and the degradation of connection quality. Verizon is dreaming of up to 5 million FWA subscribers by 2025.

T-Mobile has even greater ambitions. The company wants between 7 to 8 million subscribers by 2025. It currently has 4.2 million subscribers for its FWA service. One can see why T-Mobile is so excited. T-Mobile, the first company out of the gate to offer FWA, is estimated to be bringing in over $2.5 billion from this home broadband business — for now, it is better than having empty pipes.

Some analysts have noted that the growth is leveling off — even sooner than most thought. Still, industry watchers like Chetan Sharma, who runs an independent telecom networks consultancy, estimate that even with moderating growth, we can expect to see 10 million FWA connections before the end of 2024. Sharma points out that with no major surge in traffic in 5G networks, carriers have a capacity for FWA offerings. Unchecked growth can start to degrade the mobile experience, and that is why the operators are intentionally keeping the growth in check for now.

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The story of fixed wireless is a good reminder that even though we live in an era of instant gratification, the time and path technologies take to become a seamless part of our lives are long, arduous, meandering, and unpredictable. As Roy Amara, a computer scientist from Stanford University, once said:

“We overestimate the impact of technology in the short-term and underestimate the effect in the long run.”