FWA could be the best growth opportunity in telecoms right now
It is late September 2020 and I continue to work from home – as do most of my colleagues, customers and partners around the world. It is well accepted by now that this pandemic is accelerating digitalization and increasing the importance of fast and reliable home broadband connectivity. Let’s look at how some service providers are capturing this unprecedented demand.
Limited fixed broadband growth
Large fixed broadband providers in Western Europe and North America have experienced flat development during the first two quarters of 2020. Ten service providers representing 94 million fixed broadband connections added 918 thousand connections in 2Q20, which represents a 1.7% quarterly decline. Some were strongly affected by lockdowns, reducing fiber net adds by over 80%. The highest performers (three out of ten) achieved 7-12% growth in net adds during 2Q20 compared to 1Q20.
Some service providers are leveraging FWA to capture growth
A group of converged operators are using FWA to successfully capture the demand for faster and reliable home broadband. Seven operators with combined 3.6 million FWA connections in 1Q20 added close to 900 thousand in 2Q20. This is more than double the number of net adds in 1Q20. Four out of seven operators have increased their FWA customer base at double digit rates since the beginning of the pandemic.
FWA may soon overtake fixed broadband in the Philippines
Two service providers in the Philippines have achieved the highest share of FWA net adds, reporting a 158% increase compared to 1Q20. FWA net adds grew five times faster than fixed broadband offerings, highlighting the short time to market of FWA compared to fixed broadband. They used a variety of FWA offerings, including LTE and 5G, to reach this figure. FWA tariffs were positioned across a wide price and speed range similar to fixed broadband offerings – also including pre-paid and content bundles. In 3Q20, these service providers will likely have more FWA connections combined than fixed broadband connections.
USD 100 million dollars and growing in Turkey
A leading operator in Turkey experienced a 25% quarterly increase in FWA in 2Q20. The FWA user base reached 0.5 million connections in July, representing an estimated annualized revenues over USD 100 million. It remains smaller than fixed broadband (2.3 million connections) but that gap narrowing with 2.4 times more FWA net adds than fixed broadband in the first half of the year. What’s more, the average FWA ARPU levels have been sometimes twice as high as fixed broadband as consumers adopt high-speed offerings previously unavailable in certain locations.
FWA and fiber are replacing DSL in Norway
A leading converged service provider is leveraging FWA as a complement to fiber to replace xDSL lines and to connect homes in Norway. The replacements were prompted by increased costs of operating and maintaining legacy infrastructure – as well as a regulatory timeline to shut down the copper network. FWA is preferred in locations where it is not economically feasible to deploy fiber. Since it was launched in late 2019, FWA connections have surpassed 50 thousand, representing just over 6% of Norway’s fixed broadband connections. FWA net adds have been about 30% higher than fiber net adds during first half of this year. FWA offerings today are based on LTE as 5G has only just been launched in the country.
Is FWA the best growth opportunity in our industry?
The increased uptake of FWA comes as no surprise. Between December 2018 and February 2020, the number of service providers with FWA offerings increased more than 40%. More than 60% of the service providers in the world have CPE-based FWA offerings, with more than half of 5G launches including FWA as a use case. This trend is continuing with the recent launches made by service providers on LTE and/or 5G in a variety of countries from Hong Kong to USA.
FWA represents an attractive growth opportunity where connections are forecast to grow threefold and reach close to 160 million by the end of 2025, accounting for 25% of total mobile network data traffic globally. With the third quarter financial reporting season around the corner, I look forward to seeing more success cases of service providers using FWA to capture the increased demand for broadband.
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