Cable Companies Are Losing Their Grip on the Home Internet Market

DENVER, Nov. 15, 2022 (GLOBE NEWSWIRE) — National wireless carriers T-Mobile and Verizon continue to disrupt the home Internet business with fixed wireless access (FWA) service, which they strategically bundle with attractively priced smartphone plans. score. The proposal upended the broadband market and led to unprecedented growth for T-Mobile and Verizon at the expense of cable companies Comcast, Charter and Altice USA.

According to a new CoBank Knowledge Exchange report, wireless companies are offering FWA in markets that already have network capacity. That means ISPs in smaller markets could be exposed to competitive threats from T-Mobile and Verizon. However, Jeff Johnston, chief communications economist at CoBank, suggests the risk is small and that national wireless carriers will dominate urban and suburban markets for the foreseeable future.

“Internet service providers serving small and rural markets are exposed because they tend to overcapacity in those parts of the network,” Johnston said. “While it’s possible that wireless carriers will target second- and third-tier markets when they exhaust more populated markets, that’s unlikely to happen anytime soon.”

National wireless carriers have spent billions of dollars on mid-range spectrum, which when combined with 5G adds incremental feature increases in network capacity with faster data speeds. Offering a fixed wireless connection that uses the same cellular sectors as their smartphones only incurs marginal costs. And when these two services are combined – a smartphone rate plan and fixed wireless – it can be an attractive proposition.

Verizon offers home internet starting at $25 per month with a qualified 5G cellular plan that comes with a 10-year price guarantee. Cable companies recognized the threat and responded with aggressive pricing of their own. Comcast now offers a 75 Mbps plan with a 2-year contract for $25/month. Charter Communications recently launched Spectrum One, which includes a single cell line and internet service (300 Mbps speed plan) for $49.99 per month.

Will it maintain stable wireless access speeds?

According to national wireless carriers, they have enough capacity to support several years of steady wireless growth before facing network challenges. However, there is much debate over the long-term sustainability of their current growth trajectory. According to Johnston, it comes down to scalability and cost.

“Wireless networks don’t have the same level of operational leverage as fixed broadband networks,” Johnston said. “In a wireless network, there is a strong negative correlation between network traffic and speed. Speeds decrease as network traffic increases. Wireless carriers are likely to face a critical decision point, especially if FWA traffic begins to degrade smartphone throughput, resulting in increased smartphone downtime.

In the meantime, wireless carriers are expected to continue to find success targeting urban and suburban markets where FWA service growth in customer additions is more attractive than in smaller rural markets.

Watch the video synopsis and read the report, When fixed wireless disrupts cable, are small providers next?

About CoBank

CoBank is a cooperative bank serving vital industries in rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural electricity, water and communications providers in all 50 states. The Bank also provides wholesale loans and other financial services to affiliated Farmer Credit associations serving more than 76,000 farmers, ranchers and other rural borrowers in 23 states across the country.

CoBank is a member of the Farm Credit System, a nationwide network of banks and retail credit unions chartered to support the lending needs of US agriculture, rural infrastructure and rural communities. Headquartered outside of Denver, Colorado, CoBank serves clients from regional banking centers throughout the United States and also maintains an international presence in Singapore.


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