Owners of 5G wireless networks may hit pay dirt after all.
High-speed 5G internet service to homes has emerged as a growth driver for two wireless service providers, T-Mobile US and Verizon Communications, even if a so-called "killer app" for mobile phone users remains elusive.
Further, the growth of 5G services to homes, called fixed wireless access or FWA, is one reason cable TV stocks could remain in disfavor.
Cable TV firms Comcast and Charter Communications dominate the U.S. broadband market. They hold nearly 70% market share. But a significant number of 5G wireless subscribers signed up by T-Mobile and Verizon seem to be switching from cable TV companies.
T-Mobile and Verizon also are gaining traction in rural areas with 5G wireless to homes, analysts say. Both T-Mobile and Verizon offer discounts on 5G broadband service to existing mobile phone customers.
5G Wireless Subscribers Ramping Up
T-Mobile added 560,000 5G subscribers in the June quarter. Verizon added 256,000 subscribers, including both 5G and its older 4G wireless network.
"FWA had another standout quarter," Morgan Stanley analyst Simon Flannery said in a recent note to clients. "The second half of 2022 should see a further acceleration in FWA adds, helped by T-Mobile's recent move to offer FWA nationwide with a capped Internet Lite offering for those who don't qualify for unlimited."
T-Mobile launched a 5G Home Internet Lite service on Aug. 16. The $50 service caps data usage at 100 gigabytes per month. The service will be available across T-Mobile's entire wireless footprint, including markets where it lacks network capacity to offer its unlimited fixed broadband service.
Take Our Anonymous Survey And Tell Us What Makes A Great Online Broker.
Ten Participants Will Win A $50 Amazon Gift Card.
T-Mobile is targeting 7 million to 8 million fixed 5G wireless subscribers by 2025. Verizon is targeting 4 million to 5 million.
On its June quarter earnings call. T-Mobile said two-thirds of its new FWA broadband subscribers are coming from cable TV territory in urban and suburban markets. One-third of the new subscribers live in rural areas, where cable TV service may not be available.
Cable Broadband Growth Slows
The fixed 5G wireless services also compete with local phone companies, including AT&T, in areas still served by copper line-based "DSL" services.
At UBS, analyst John Hodulik expects 5G broadband customer additions to accelerate at least through 2023.
"Given all the spectrum still to be deployed by Verizon and T-Mobile and the increasing importance of FWA as a growth driver for these carriers, we view a meaningful reversal in FWA net adds as unlikely before 2024," he said in a report.
T-Mobile stock has gained 22% in 2022, bucking the S&P 500's 18% retreat. Verizon stock is down 20%. Comcast stock has tumbled 30%.
With mortgage rates rising, cable TV firms point to a slowing housing market for disappointing broadband subscriber growth.
"Cable operators (Comcast and Charter) have both vehemently messaged the unprecedentedly low home-moving environment as the main for their poor Q2 performances," Cowen analyst Gregory Williams said in a note. "While subdued activity is indeed the top culprit, the strong FWA results cannot be ignored."
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
