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Exploring the value of FWA

Exploring the value of FWA

Boosting value with speed tiered 5G FWA

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The number of service providers offering Fixed Wireless Access (FWA) over 5G is growing in all regions, creating global economies of scale.

Key findings

FWA value creation can be achieved by combining the levers of additional revenues, reduced opex and smartly optimized capex shared with mobile broadband.

Three successful FWA deployment strategies offer options to migrate, compete and bridge connectivity gaps, aligning with varying market needs.

By embracing speed-tiered pricing models, service providers can create opportunities for revenue generation and market differentiation across diverse customer segments.

Measured by service revenue and connection uptake, FWA has emerged as one of the most successful 5G use cases. By leveraging advancements in infrastructure and the evolution of 5G to address this large opportunity, service provider FWA revenues are estimated to reach USD 75 billion by 2029.1 In addition, there is even more expansive market potential, given that over 1 billion households and businesses currently lack access to broadband services.2

Frontrunners adopting successful strategies

Successful service providers with a strong connection uptake utilize three types of FWA deployment strategies depending on their assets and market situation. Speed-tiered plans are growing in adoption and are key to meeting the various needs of consumers and businesses for fast and reliable broadband.

Among the 50 percent of global service providers that have launched 5G FWA, a select few have emerged as frontrunners, significantly scaling up their customer base several times in 2 to 4 years.

This article outlines key levers for value creation, three successful strategies being pursued, and how speed-tiered plans are implemented to capture the full value of 5G FWA.

Key levers for value creation

There are three key levers for value creation with FWA, with the ability of service providers to capture these depending on their market position and assets.

1. Revenue growth: The most common

With new FWA connections, service providers can grow additional revenues. For instance, a higher ARPU can be achieved when migrating existing customers on slow-speed offerings (such as xDSL) to high-speed 5G FWA offerings. Moreover, the fact that FWA can be deployed quickly means service providers can have weeks (or months) of additional revenues compared to other technologies, such as fiber, that take longer to deploy. In addition to FWA connectivity revenues, service providers can provide extra value-added services such as video streaming, TV and gaming.

2. Opex reduction: Operational benefits

Converged service providers with legacy copper-based fixed broadband networks can achieve operational savings related to energy consumption and operation and maintenance costs from xDSL commissioning. Additional operational benefits from bundling FWA with mobile broadband include reduced subscriber acquisition cost, reduced churn and increased mobile broadband capacity in areas with FWA deployed. Service providers can also achieve savings from migrating 4G FWA traffic to a more efficient 5G FWA with lower cost per GB.

3. Smart capex: Agnostic capital allocation

For converged service providers, FWA represents an alternative way to optimize capex, deploying lower upfront cost and cost-per-home passed compared to fiber. In addition, the capex invested can also be shared with mobile broadband, thus reducing risk. Mobile-only service providers have an additional revenue source to finance high-capacity deployments outside large cities, resulting in improved mobile broadband user experience and a lower cost per GB.

Market position and deployment strategies

To explore fully the potential across the value levers, three different major FWA strategies are utilized globally. These strategies are depicted in Figure 7, in relative perspective, based on their adoption rate and FWA connection growth, indexed by population size (all service providers are normalized as countries with 100 million inhabitants). Service providers also use a combination of these strategies.

Migrate and retain customer base

Modernizers are converged service providers with legacy xDSL networks that migrate their subscribers to FWA, thereby reducing opex, retaining customers and upselling with higher speeds. This strategy could also include migration of 4G FWA connections to 5G FWA. A fast adoption curve characterizes these cases as it is primarily a migration of existing customers rather than the acquisition of new customers. The focus is on retention and conversion of legacy customer base.

Capture fixed broadband adjacency

Typically, challengers are mobile-only service providers or converged service providers challenging the fixed broadband incumbents, such as the US service providers in the previous article on page 12. These service providers focus primarily on upgrading subscribers with slow-speed broadband to high-speed 5G FWA. Challengers often target regions with only one fixed broadband option, introducing a more competitive price offering. They are in many cases opportunistic, selling FWA only in eligible areas based on the competitive situation and available capacity.

Focus on unserved areas

Digital divide closers are service providers that bring high-speed broadband primarily to rural areas. These may include FWA-only providers in addition to mobile and converged service providers. The example depicted in Figure 7 is from a wholesale broadband provider that has built an FWA-only network to connect homes in rural areas. After 10 years with 4G FWA, this service provider has begun expanding and upgrading the network for 5G FWA, including migrating existing satellite customers to FWA.

Households and businesses want fast, reliable broadband for digital entertainment, working from home and increased productivity.

Figure 7: Major FWA strategies adopted by service providers A–H

Major FWA strategies adopted by service providers A–H

Speed tiers – the opportunity for large-scale offerings

Households and businesses want fast, reliable broadband for digital entertainment, working from home and increased productivity. While the majority of offerings (70 percent) are best-effort, differentiating services based on speed is increasingly common among broadband service providers, allowing them to create pricing models to cater for diverse customer needs and budgets.

As higher speeds often come at a premium price, service providers can generate different revenue streams based on the speed at which customers want to access data. By providing a more comprehensive range of speed options, or better speeds than competitors, service providers can attract customers looking for a specific speed or quality of service (QoS).

An Ericsson study of retail packages offered by 310 service providers in over 100 countries shows that using speed-tiered pricing models for FWA is increasingly popular. Currently, there are two main FWA pricing plan models, both centered on speed – typical and tiered.

Typical speeds

In typical speed plans service providers have a single plan for FWA, advertising an average/typical speed plan.

It is a model based on simplicity, often with a range of marketed speeds, for example, typical downlink speeds of 100–150 Mbps. In most cases, service providers use indoor customer premises equipment (CPE) for such pricing plans.

Tiered speeds

Tiered speed plans involve service providers with two or more FWA speed tiers, similar to fixed broadband offerings. The speed tiers are eligible for a selected location/address. To deliver such speed levels, service providers utilize a combination of factors, including site capacity planning and network features, and it is also common to use outdoor CPE, which enables better reception and antenna gains.

Emerging plans

FWA pricing plans are expected to evolve further, with emerging gigabit speeds and enhanced experience features such as improved uplink and latency. Such price plans would focus on specific needs for residential services such as gaming and enterprise services.

Figure 8: Relative proportions of speed-tiered plans and new emerging plans

Speed-tiered implementation

The evolved capabilities of networks and CPE offer a smooth implementation of speed tiers. The most common initial step is to optimize network performance by ensuring eligible areas utilize outdoor CPEs, geo-locking, and service differentiation using the 5G QoS identifier (5QI). With 5G standalone (SA), end-to-end slicing and radio resource partitioning can ensure minimum resources for FWA while protecting mobile broadband performance. The next implementation step includes improved and intelligent QoS with enhanced scheduling, management and automation.

Figure 9: Continuous performance management

Continuous performance management

As the capabilities for differentiation evolve, the different parts of an organization need to be synchronized in continuous performance management. These organizational parts will include operations, engineering and sales and customer care in areas such as traffic growth, available speeds, eligible areas, CPE type required, geo-sales and uptake, as well as customer satisfaction.

In summary, 5G service providers are well positioned to serve more than 1 billion premises currently lacking fast and reliable broadband,3 closing the digital divide and empowering consumers and enterprises.

Figure 10: Evolving network and CPE capabilities for differentiation

Evolving network and CPE capabilities for differentiation
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