In Business Model, Internet Access

Predictably, proponents of 5G as a product substitute for fixed network internet access are met with highly-skeptical objections. Not surprisingly, proponents stand to gain financially if substitution happens, while skeptics stand to lose.

You can put 3UK in the camp that believes 5G will be an effective substitute for fixed network internet access. The key is to remember that this will be true for segments of the potential buyer base, not all of the installed base of customers.

There are likely to be use cases where 5G (fixed or mobile) actually is a substitute for fixed network access and also other scenarios where 5G is not a substitute.

Even in the 4G era, 15 percent to 20 percent of U.S. households have become mobile-only for internet access, while in Canada perhaps 20 percent of households already rely exclusively on mobile networks for internet access. In some instances, reliance on mobile-only internet access is 10 percentage points to as much as 15 percentage points higher than that.

Some have argued that 5G fixed wireless is an existential threat to cable TV broadband service dominance. The threat is lower market share, compounded by lower gross revenue, lower profit margins and perhaps lower average revenue per account for internet service providers who lose the share.

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