The fixed wireless industry is experiencing a transformation. Competition is mounting as rural communities are increasingly seeking greater access to faster Internet. Moreover, new technological advancements and regulatory changes are creating more options for fixed wireless providers looking to deliver high quality Internet services. Nevertheless, these new and upcoming developments have put pressure on over 2000 Wireless Internet Service Providers (WISPs) that currently serve over 6 million individuals and businesses in the United States alone. Increasing growth in the fixed wireless industry, investment into services such as 5G, changes in spectrum availability, and the US-China trade war will define the fixed wireless market in 2020.
A Growing Market with Growing Competition
Forecasts project that the WISP industry is set to serve 8 million subscribers by 2021, a 100% increase from the 4 million subscribers served in 2016. Furthermore, revenue gained from the WISP industry are anticipated to reach $4.4 billion in 2020, up from $3.7 billion in 2019. While fixed wireless operators and network managers welcome this growth, such gains will undoubtedly bring with them increased competition.
The emergence of hybrid-ISPs reflects the strategic approach that service providers are taking to diversify and expand their businesses. In an endeavor to increase their geographical footprint and offer competitive broadband speeds, ISP titans such as Comcast, AT&T, and Verizon, are all heavily investing in optical fiber to replace legacy copper cables.
Yet, industry veterans are not the only ones investing in modern, faster infrastructure. Smaller service providers, such as Cherry Capital Communications in Northern Michigan, have transformed themselves into hybrid-ISPs, offering a combination of fixed wireless and fiber-based services. While offering fiber is an attractive adjunct to WISPs’ core service, for those that hold out, the proliferation of hybrid-ISPs represents a growing threat.
An additional complication arises as the US government continues to offer subsidies and funding to fixed wireless providers in support of rural communities. Roughly 39% of rural Americans lack high-speed broadband access. In response, the federal government has created million and billion dollar programs to tackle America’s digital divide. However, distributing funding in a manner that remains fair in this increasingly competitive industry is difficult. For local WISPs facing fierce competition, missing out on a round of government funding could cripple their business.
The Rise of 5G
The US is spearheading the global convergence to 5G, where it is expected to become the country’s leading mobile network technology by 2025. As 5G becomes more pervasive, it will have a role in shaping new digital technologies, in addition to expanding access to fixed wireless technology. Cloud gaming, advanced automotive systems, a new class of wearable technology, ultra-high definition streaming, and augmented reality services are just some of the technological developments that 5G will boost. This will help support the growth of the FWA market, which is projected to reach $6.2 billion by 2024.
Nevertheless, in terms of volume, 4G will still dominate the global mobile connections market throughout the 2020s. With Indian, African, and Southeast Asian consumers trending towards the purchase of low-end, LTE-enabled smartphones, analysts predict that LTE will account for 60% of mobile connections by 2025.
New Horizons with Spectrum
2019 was a big year for WISPs, as the FCC and the federal government made strides in creating equitable opportunities for acquiring spectrum. The Citizens Broadband Radio Service (CBRS), Educational Broadband Service (EBS), and C-Band, among others, are representative of the work being done on a national level to release new spectrum to rural communities that need it the most.
Mid-band spectrum transmissions, like those of the 3.5GHz band, will provide opportunities to network operators and innovators alike, as they can balance coverage and capacity. This is not the case for low- or high-band spectrum, which transmit large amounts of data or span a across a large geographic area, but cannot do both. With auctions of the 3.5 GHz band set to begin in June, widespread commercial use of mid-band spectrum is set to follow.
The US broadband market will evolve even further as the FCC auctions off spectrum in the 5.9 GHz band. Moreover, the success of the CBRS band has led to demands for spectrum sharing to occur across other bands. As the US federal government currently maintains a hold on over 80% of usable spectrum, allowing sharing to occur of lightly licensed spectrum would allow WISPs to improve the quality, and scope, of service that they provide to rural regions.
Trade War Troubles
As WISPs work to deal with increasing densification, the US trade war with China poses a risk to the acquisition of wireless access technologies. A result of this feud saw Chinese manufacturer Baicells Technologies move their headquarters to Plano, Texas. Moreover, the FCC has since banned the use of Huawei and ZTE equipment from projects receiving payments from its Universal Service Fund.
Additionally, the conflict with China has also been detrimental to small US carriers, where the push to rid networks of Chinese technology could amount to billions of dollars in replacement costs. For WISPs, concern mounts over whether prices for wireless technologies will increase drastically as a result of these tariffs and bans.
WISPs will continue to face challenges as a result of political tensions, the advent of hybrid-ISPs, and new developments to 5G. Nevertheless, the relatively inexpensive business model of WISPs, coupled with new opportunities brought about by government intervention, ensures that the WISP industry as a whole will continue to thrive in 2020 and beyond.
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