Charter CFO: FWA’s A Fading Threat
By Ted Hearn, Editor of Policy band
Washington, D.C., Dec. 7, 2023 – Key cable industry executives see the surging Fixed Wireless Access (FWA) business as a fading threat.
That’s based on two assumptions.
Assumption one is that is T-Mobile and Verizon will run out spectrum, limiting their ability to add new customers.
Assumption two is that customers who consume large amounts of data – say, a terabyte per month – will eventually realize they will need to depend on cable’s fat pipe, ending FWA’s impressive run over the past two years.
“In the case of fixed wireless, eventually they’re going to be capacity-limited,” Jessica Fischer, Chief Financial Officer at Charter Communications, said two days ago at the UBS Global Media and Communications Conference.
She went on to say, “And, from a product-usage perspective, as data usage continues to increase, I think that we’ll continue to see customers recognizing that that quality does matter. And so, we think that we’ll get those customers back.”
In her presentation, Fischer disclosed that her company – the second largest broadband Internet provider in the country with 30.6 million subscribers – will likely lose customers in the 4th quarter after picking up 63,000 in the previous quarter.
Although Fischer described her 4th quarter forecast as a “short-term” challenge, Wall Street cut Charter’s stock price by nearly 10 percent, an indication that the subscriber downturn took traders by surprise.
Fischer isn’t alone among top cable executives in voicing doubts about FWA’s long-term viability.
Addressing the same Wall Street audience the day before, Comcast President Michael Cavanagh made clear his focus was on the companies laying fiber wires across Comcast’s service territory. He expects this overbuild activity, now at 50% of Comcast’s footprint, to reach 60% and keep going.
Echoing Fischer, Cavanagh believes that FWA can’t fulfill the needs of the average Comcast broadband customer that today is using about 700 gigabits of data per month. FWA, he added, will become even more vulnerable as millions use broadband to stream high-bandwidth offerings like NFL games.
“I think [FWA] will be a permanent part of the marketplace, but I think we are going to see at some point, and I’m not going to predict when, the excess capacity that’s … being used up to provide it as a service will start to tap out,” Cavanagh said.
Comcast, the leading U.S. broadband provider with 32.3 million subscribers, lost 18,000 customers in third quarter.
Although Comcast and Charter struggle to add or retain broadband customers, T-Mobile and Verizon have been on a tear, adding 941,000 FWA subscribers combined in the 3rd quarter to bring their combined overall FWA subscriber total to 6.9 million. Wireline broadband providers serve about 98.4 million subscribers.
Verizon officials believe they can design their FWA network to meet consumer demand and predict the addition of 350,000 to 400,000 FWA subscribers per quarter going forward.
Frontier Executive Chairman John Stratton questioned FWA’s ability to keep up the torrid pace on subscriber growth, saying he was stunned to learn that the top 10 percent of company users were consuming about 2 terabytes per month.
“I don’t personally believe that fixed wireless access is a compelling proposition for consumers of bandwidth in the residential context,” Stratton told the UBS conference. “Fixed wireless has to date had very limited effect or impact on our overall operating results.” Stratton said.