It’s almost redundant to say that the telecoms industry is in a state of flux. This has been the industry’s default state for decades, with service providers competing relentlessly to offer better connectivity, win subscribers, and ultimately keep the digital world turning. Until recently, however, wireless and wireline operators have largely stuck to their own respective lanes, playing to their strengths to deliver connectivity in the most obvious and appropriate way. For wireline providers, that meant connecting homes, offices, factory floors, and other self-contained environments at a time when cellular data was comparatively slow and expensive. For wireless providers, it meant “filling in the gaps” between fixed networks, allowing users to connect while they were on the move. But times have changed. Now, they are eating each other’s lunch.
This year will go down history as the tipping point when wireless and wireline operators merge lanes and start competing for subscribers with the same offerings. Mergers and acquisitions will become commonplace, further boosting interest in Wi-Fi and 5G convergence solutions. As ever, the end user calls the shots. This transformation is all about chasing new use cases and opportunities that will improve the customer experience, winning subscribers and lifting profits in the process.
Eating each other’s lunch
For years, wireless and wireline operators have dined at the same table, but now they are eating each other’s lunch. According to the financial analysts at New Street Research, cable and 5G mobile operators in the US have reached a stalemate. Both are essentially offering the others’ core product for the same price or less. For instance, Comcast, Charter, Altice, and other cable companies are now adding mobile services to their core internet offerings via mobile virtual network operator (MVNO) relationships, while wireless players like Verizon and T-Mobile are adding home internet services to their nationwide mobile networks via fixed wireless access (FWA).
This is a tale that is doomed to be repeated over and over again in the coming years. What is unfolding is a game of Texas hold ‘em, where each player knows some of the cards the other hand has and is now waiting for the next move, deciding whether to draw from the pack or play their ace in the hole.
For wireless and wireline operators, the playable cards tend to be heavily discounted service bundles, aiming to sell more services and reduce the all-important subscriber churn rate. It has now been well documented in the US that FWA, using 4G and 5G to deliver fixed broadband access over the air, has captured most of the broadband industry’s growth, followed by fiber. According to Leichtman Research Group, the top cable companies added about 40,000 subscribers in Q3 2022 – compared to about 590,000 net adds in Q3 2021. At the same time, FWA services from T-Mobile and Verizon added about 920,000 subscribers compared to about 190,000 net adds in Q3 2021. The feast has already begun.
The battle for subscribers
Eating off each other’s plates is one thing, but there is a limit to how much a given party can eat. For instance, there is an upper limit to the number of FWA subscribers a 5G operator can handle while maintaining quality of service (QoS) and delivering on the expectations of users. Regardless of how good their service offering might be, their reach can only extend so far when it comes to market share. Analysts are already predicting that FWA subscriber additions for 5G operators will peak sometime next year. That said, T-Mobile has stated that it still has a “wide array of spectrum resources” to reach its goal of 7-8 million FWA customers by 2025.
Meanwhile, on the other side of the fence, cable operators have fewer limitations. They can offer wireless subscriptions via MVNOs with attractive service bundles. A significant difference is that cable operators will invite mobile operators to dine with them as cellular network providers. As a result, cable operators such as Comcast, Charter, and Altice are taking a substantial share of the wireless subscriber net additions, eating into the mobile operators’ core business.
Put simply, the worlds of cable and wireless are colliding. Mobile operators seem to have the upper hand in eating a more significant portion of the cable operators’ lunch, and having a stake in their wireless sales. But US cable operators in particular still have a few aces up their sleeves. One of those is Wi-Fi, but how much of an ace is it?
Mobile operators’ journey into Wi-Fi
Operators are, of course, investing heavily in 5G, but in order to obtain blanket coverage in a way that will appeal to their base of users, they will need to densify their networks and deploy indoor solutions – often at high cost. The question then becomes, how do mobile operators compete with cable providers when it comes to their bread and butter - indoor coverage?
The answer to this lies not only in the technology, but the services that are wrapped around that technology. Operators that provide Wi-Fi services in parts of an organization could add a Wi-Fi SSID for secure and seamless offload if they haven’t already. They can also expand their footprint further by selling managed B2B Wi-Fi services - currently the only way to expand the Wi-Fi network for offloading while getting paid.
Pure-play mobile service providers can also add Wi-Fi indoor coverage without deploying a single Wi-Fi access point. Take 3UK as an example. It uses a third-party Wi-Fi network to provide its mobile subscribers with seamless and secure internet access in the London underground. The WBA OpenRoaming initiative, with 1 million hotspots and counting globally, makes obtaining third-party Wi-Fi footprints like this even easier. What’s more likely, however, is that mobile operators will do a “reverse MVNO deal” with cable operators, utilizing cable operators’ indoor Wi-Fi footprint.
Regardless of how mobile operators’ foray into Wi-Fi goes, one thing is certain – we haven’t seen the last merger and acquisition between mobile and fixed operators globally. They will keep coming, and mistakes from the past will be learned from, such as operators still working in separate silos between mobile and fixed years after the merger is complete. Operators will need to break these silos, because the future of connectivity lies in the seamless convergence of 5G and Wi-Fi.
