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2 August 2022

USA sets interesting if atypical trends in FWA, spectrum and Open RAN

In some ways the USA is a very atypical wireless market. Its spectrum bands and plans are at odds with those widely adopted in Europe and Asia, and increasingly in Latin America. Its operators command higher ARPUs than those in almost any other country and account for the largest totals of mobile revenues and capex investment in the world, though the latter is periodically eclipsed by Chinese spending. Yet the USA has no tier one RAN vendor, something some policy makers hope to remedy via support for Open RAN, as we note in the coverage this week of the huge CHIPS Act.

However, it is still worth examining the latest trends in the USA in detail from time to time, because while they may not be representative of the global norm, they do provide indicators and examples that are taken seriously by telecoms deployers and investors round the world. The CHIPS Act reflects the drive for new self-sufficiency in advanced semiconductors for strategic applications such as 5G, but just as interesting for companies’ short term planning are the different responses of US chip providers to the current supply chain and economic crises. While diversification is helping cushion the blow for Qualcomm, Intel is facing a very negative combination of pressurized markets and falling behind in technology.

The leading US operators announced their quarterly results last week, and were also reflecting the impact of pandemic and potential recession, but also of the huge spending they have made for 5G expansion and other drivers of success. This hit their profits at a time when debt was on the rise again, though it has driven increased subscribers and ARPUs – something European operators will view with envy, given that they are also reporting high expenses and debt, but are not necessarily turning that into growth in their saturated and competitive markets.

A differentiating factor between the USA and most other markets is the focus on fixed wireless access (FWA) and millimeter wave spectrum, often hand-in-hand. This is an example of how the US operators provide useful indicators and test cases for strategies that operators elsewhere may be interested to adopt, but with less urgency than in the USA, with its peculiar spectrum situation.

Certainly, it has been FWA rather than macro mobile networks that have driven initial moves to diversify the supply chain, with Samsung taking advantage of its expertise in fixed wireless and millimeter wave to secure an initial base with Verizon and AT&T, which has now expanded into mobile networks and into other FWA deals, most recently with Mediacom (see below). This is likely to have more impact on the adoption of new vendors (though not, in this case, native ones) by US operators than the $1.5bn assigned to US-centric Open RAN players in the CHIPS Act.