Mun: Mobile’s fixed broadband vs. cable’s mobile wireless

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Industry Voices Kyung Mun

Recent industry news and interest around fixed wireless on a path towards “5G” mobile services seem to suggest that some mobile operators are looking to fixed wireless in millimeter wave bands, as a way to compete in the fixed broadband market. Verizon and AT&T have been public about their fixed wireless trials using millimeter wave bands and have alluded to possible commercial offerings in the near future.

Meanwhile, cable operators have been explicitly posturing their mobile ambitions. The recent formation of a Comcast Mobile division headed by a long-time sales and marketing executive suggests a more concerted effort to execute on the cable operator’s mobile strategy, possibly based on the company’s vast Wi-Fi network for data offload and mobile network “rent” from Verizon (aka, “Wi-Fi first” MVNO play).

A third dimension comes from the over-the-top players (like Google), that originally looked to fiber but have recently changed direction to develop wireless broadband alternatives.

As the traditional wireline (cable) and wireless (mobile) telecom operators look to build newer network service capabilities, some may wonder whose strategy – mobile’s fixed wireless vs. cable’s “Wi-Fi first” mobile – affords a more sustainable advantage in case of a fixed-mobile competition. In the end, whoever has the lowest “cost per Mbps/Gbps” economics will likely be advantaged. Keeping a lowest unit cost of delivering Mbps or Gbps of capacity to fixed locations (for high-speed broadband services) or to mobile subscribers (for wireless services) will be paramount.

In the case of a “Wi-Fi first” MVNO play, the key cost elements are wholesale rates for mobile voice, text, and data services that an MVNO like Comcast can negotiate with a host mobile operator. So, it is critical for an MVNO to be able to negotiate and maintain low-cost wholesale rates that yield overall profitability of the business.  In addition, it is critical for an MVNO to capture as much of the mobile data traffic onto its own Wi-Fi network, or offload to lower-cost networks, to minimize the variable charges for use of the host mobile network.

For the “5G” fixed wireless play leveraging millimeter wave bands, mobile operators will be keen to determine whether the inter-site distance (i.e., network density) for fixed wireless and future “5G” mobile services can be optimized such that a single site can be leveraged for both mobile and fixed wireless services to reduce the site lease costs. Moreover, operators will be keen to deploy large swaths of low-cost or “free” spectrum to bring the overall passing costs down. In addition to the direct costs of spectrum, site lease, and network equipment, operators will be keen to deploy CRAN, network slicing, and other software-defined networking concepts to further optimize operational costs.

The “5G” fixed wireless play provides a transitional path for the mobile industry to prove out the millimeter wave band use without the complexity of supporting mobility handling from a “starting gate” and provides a gradual ramp for the chipset, device, and infrastructure ecosystem to mature as the ecosystem tackles the tougher tasks of enabling ultra-low latency, gigabit-speed mobile broadband services. Our recent study explores the challenges and complexities of RF front end chipsets for mobile devices.

As each side builds up their network service capabilities to possibly compete in each other’s core markets, it is far from clear whether or not they will actually pull the trigger. A competitor’s encroaching action upon another player’s core market(s) will likely yield a “like-for-like” response, and the net result may be an overall reduction of the aggregate profit pool for all players involved. In other words, if a cable operator launches a mobile wireless offering at-scale, a mobile operator may respond in kind and compete for broadband subscribers with a fixed wireless play. It’s like the Cold War:  Mutually Assured Competition. Despite this economic disincentive, both mobile and cable operators are preparing for the inevitable scenario where users will access broadband services wirelessly whether the last link is a few or a few hundred meters away. 

Meanwhile in the near term, cable and mobile operators will battle for rights to strategic site locations for radios and use of licensed and unlicensed spectrum – while keeping a close eye on enabling technologies such as 5G, unlicensed LTE, Wi-Fi, and other future wireless and networking technologies that continue to drive down the “cost per Gbps” economics. Our recent studies on Carrier Wi-Fi and LTE-U and 5G Broadband explore technical and market dynamics that drive adoption of these technologies.

Kyung Mun is a seasoned technology strategy and product development professional at Mobile Experts LLC. Mobile Experts is a network of market and technology experts that provide market analysis on the mobile infrastructure and mobile handset markets. Over the course of his career, Kyung has contributed to the advancement of mobile communication and telecom industry and learned from colleagues at Motorola, Texas Instruments, Alcatel-Lucent, CableLabs, and a few start-ups in between.