The strengthening case for fixed wireless broadband

Transcription

1 The strengthening case for fixed wireless broadband Publication Date: Julian Bright

2 Summary Ovum view Ubiquitous and affordable access to broadband is fundamental to building a modern digital economy. According to the International Telecommunication Union, more than 150 governments have released national broadband plans, backed up in many cases by universal service obligations (USOs) which place legal requirements on broadband service providers to meet specified timescales, minimum connection speeds, and even cost thresholds. The UK government recently proposed a USO to be implemented by 2020 which will see all citizens given the legal right to request broadband connections with download speeds of at least 10Mbps. Extending connectivity to underserved and remote areas is crucial, but so too is improving the overall experience for broadband users, be they rural, suburban, or urban. Growing consumption of services such as video on demand (VOD), TV, and interactive content is driving demand for faster speeds and greater capacity, leading service providers to consider their technology options. Operators are turning to wireless Wireline networks using copper or fiber have traditionally been the preferred choice for delivering fixed broadband services due to their high capacity and resilience, but the need for universal connectivity means that alternatives to the wired network are more in demand than ever. According to data from one leading vendor, 82 operators around the world had launched fixed wireless services as of 2017, and Ovum has calculated that 350 million households could potentially afford WBA services by Outside of China (where fiber deployments will far outstrip competing technologies) annual growth rates for fixed wireless access (FWA) are forecast to be approaching those for FTTH over the next few years. Annual broadband subscription growth rates (CAGR) by technology, * Source: Ovum *excludes China 2018 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 2

3 In future, service providers will need to consider a range of technology options to meet customer needs and service obligations. These technologies include fixed wireless, which has recently been enjoying a global resurgence. The renewed interest in FWA as an alternative to wireline is not surprising. Coupled with the cost advantages of deploying wireless networks compared with wireline equivalents, recent developments in fixed wireless technology are delivering performance gains that make it a serious contender in the global broadband market. Modern fixed wireless networks can support speeds approaching those of fiber, provide a comparable video experience to wireline broadband technologies, and address a range of delivery scenarios where wireline alternatives such as VDSL or FTTP make less economic sense. LTE leads the way; 5G will follow The much-anticipated launch of 5G fixed wireless services later this year promises users a first taste of next-generation services. But LTE-based FWA is already proving capable of delivering sustained, high-quality broadband access under a variety of market conditions in a host of different usage scenarios. Large-scale fixed wireless networks are already being developed by the likes of Softbank in Japan and Zain in Saudi Arabia, as well as by a host of service providers in markets around the world. Softbank's FWA service, Softbank AIR, is similarly priced to the company's fiber product. By leveraging its LTE network and adding 4 4 MIMO-capable CPE, Softbank says it can deliver massively improved spectrum efficiency, and promises a user experience equal to that of its fiber network. Leveraging mobile spectrum assets enables operators to target a number of market sectors. These include untapped rural populations with no home broadband, but also hard-to-reach fiber black spots and more densely populated areas. Increasingly, FWA is being employed to acquire higher ARPU customers through rollout of networks in urban and suburban centers, delivering content-rich services to the home broadband market. Fixed wireless technology is also being used to provide a flexible, high-speed replacement for legacy fixed network connections such as DSL, and to penetrate valuable customer segments that would otherwise not sign up for home fixed broadband solutions, such as tourists, foreign students, and renters. Ovum forecasts that LTE-based FWA will account for more than 40% of all fixed wireless broadband subscriptions by 2022, with 5G FWA accounting for 16% Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 3

4 Fixed wireless access growth by technology, Source: Ovum Addressing ROI Recent advances in fixed wireless technology and self-install CPE are further enhancing the opportunities for FWA in the urban home Wi-Fi market, where the opportunities for early payback can be favorable. A recent Ovum study found that in a range of urban and suburban scenarios, a newly built LTE-based FWA network capable of delivering speeds of up to 50Mbps can achieve monetization significantly faster than equivalent wireline options can. Delivering broadband access to remote rural communities can present a more challenging business case, with the prospect of prolonged payback periods due to sparse populations and low subscriber ARPU. However, there is scope for regulators and governments to assist fixed wireless providers through the easing of barriers and provision of financial stimuli to local services. In rural areas, delivering a minimum level of performance for all subscribers also tends to outweigh the need to provide gigabit access for the few, and a sustainable throughout of tens of Mbps cannot only be adequate for most users' needs and sufficient to support a range of services, but also more economically viable. In addition, equipment providers point to a number of factors that are delivering a more positive business case for FWA, from reusing radio network assets and fiber plants to making more efficient use of spare cell capacity on the existing network that arises from the uneven traffic distribution associated with smartphones. Unlike in a mobile network, fixed wireless connectivity can also be designed to deliver a guaranteed and sustainable level of service to the customer. Forward planning for network expansion as user take-up increases will be critical, however, and service providers can improve ROI through on-demand expansion and by exploring new business opportunities in the smart home and enterprise markets. Vendors are driving the FWA ecosystem Vendor engagements in FWA are well advanced. Leading suppliers including Ericsson, Huawei, and Nokia are now offering fixed wireless as a last-mile broadband access solution. All vendor platforms incorporate LTE, LTE-A, and LTE-A Pro technologies to push network capacity toward the 1Gbps threshold, such as through the use of massive MIMO and 256QAM at the enodeb Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 4

5 At the same time, commercial CPE for FWA is becoming more widely available. Advances in selfinstall CPE are being made along with performance gains. Products are already capable of delivering speeds of up to 1Gbps, incorporating advanced features such as integrated 4 4 MIMO and carrier aggregation, and covering a range of LTE bands up to 3.5GHz. Both indoor and outdoor CPE increasingly supports easy or self-install capabilities. For example, external units can include omnidirectional antennas that remove the need for alignment between the antenna and the base station. Commercial 5G CPE is expected to be available this year including for millimeter wave (mmwave) frequencies and incorporating dual-connected CPE combining LTE and 5G. By delivering greater spectrum efficiency and lower cost per bit, technology enhancements are further strengthening the business case for FWA and helping to support the evolution toward 5G services. Commercial services are taking off Commercial fixed wireless deployments will always need to be preceded by an evaluation of the business case based on aspects such as existing network capacity, build-out cost, opportunity for equipment reuse, anticipated take-up rate, and the availability of local funding or incentives. But from the technology, commercial, and regulatory angles, the prospects for fixed wireless are looking increasingly positive. Appendix Author Julian Bright, Senior Analyst, Next Generation Infrastructure julian.bright@ovum.com Ovum Consulting We hope that this analysis will help you make informed and imaginative business decisions. If you have further requirements, Ovum's consulting team may be able to help you. For more information about Ovum's consulting capabilities, please contact us directly at consulting@ovum.com. Copyright notice and disclaimer The contents of this product are protected by international copyright laws, database rights and other intellectual property rights. The owner of these rights is Informa Telecoms and Media Limited, our affiliates or other third party licensors. All product and company names and logos contained within or appearing on this product are the trademarks, service marks or trading names of their respective owners, including Informa Telecoms and Media Limited. This product may not be copied, reproduced, distributed or transmitted in any form or by any means without the prior permission of Informa Telecoms and Media Limited. Whilst reasonable efforts have been made to ensure that the information and content of this product was correct as at the date of first publication, neither Informa Telecoms and Media Limited nor any 2018 Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 5

6 person engaged or employed by Informa Telecoms and Media Limited accepts any liability for any errors, omissions or other inaccuracies. Readers should independently verify any facts and figures as no liability can be accepted in this regard readers assume full responsibility and risk accordingly for their use of such information and content. Any views and/or opinions expressed in this product by individual authors or contributors are their personal views and/or opinions and do not necessarily reflect the views and/or opinions of Informa Telecoms and Media Limited Ovum. All rights reserved. Unauthorized reproduction prohibited. Page 6

7 CONTACT US INTERNATIONAL OFFICES Beijing Dubai Hong Kong Hyderabad Johannesburg London Melbourne New York San Francisco Sao Paulo Tokyo