There’s trouble brewing in the world of 5G Fixed Wireless Access.
I last wrote about 5G FWA in February, explaining the critical role it plays in the telecom industry’s growth. FWA is a new source of service revenue for wireless companies like Verizon VZ , T-Mobile TMUS , AT&T T , Dish DISH and others. It’s the spectrum we use to connect to the Internet wirelessly, and thus to send email, text messages, listen to music, watch live TV and pretty much everything else.
But a new CTIA report says 5G networks may start to run out of capacity within five years — and that FWA providers like Verizon and T-Mobile may be among the first to feel the effects. (CTIA is the leading wireless trade association in the United States.)
While I expect the industry to solve this new capacity problem, investors are concerned. In the interim, the challenge won’t play out equally among the big providers in the space, with at least one having an advantage over the others.
We had a similar problem a decade ago when limited wireless spectrum bands threatened carriers’ ability to grow. Back then, the concern was that too many users would sign up and choke off capacity. To be sure, that wasn’t how things played out: The available spectrum did remain static, but our ability to use it didn’t.
(Consider a fiber optic cable that can carry only one stream of data. We learned how to slice that single stream into multiple lanes or channels, each capable of acting as its own cable.)
FWA is in the same position today as the wireless data spectrum was a decade ago. And we must come up with the same kind of solution: We need to increase capacity — or our ability to expand usability — or we will end up with an intractable data traffic jam. While we don’t have that answer today, I’m sure we will develop one. We always do.
Users don’t know about this yet and frankly, I don’t think most will care. Meanwhile, however, investors are sweating it.
Advantage AT&T?
In the beginning of the 5G revolution, AT&T and T-Mobile rushed to offer 5G to their mobile customers, while Verizon instead used the 5G technology to offer FWA to their land line customers.
That was a critical decision. The 5G service offered by AT&T and T-Mobile let their mobile phone users get faster speeds when they were out and about. Verizon used 5G to bypass the antiquated telephone network it had in many large cities.
Today, the wireless carriers seem to be catching up to each other. They are all offering 5G for their mobile phone customers. And AT&T is in the FWA space as well. However, Verizon and T-Mobile have been hot and heavy in FWA space for much longer — which means they may be heading toward overloading their capacity sooner than AT&T.
You may be thinking about tortoises and hares. But this problem is coming at us like a freight train. We need to come up with a solution once again for the amount of data we send through our limited spectrum.
The good news is we solved this problem before, and I am confident we will do so again. The bad news is that this sort of problem will continue to plague the industry for the foreseeable future.
