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Home broadband providers face an uncertain future in the 5G era

Home broadband providers face an uncertain future in the 5G era

Mobile phone companies pitch 5G, the superfast successor to today’s wireless networks, as a huge opportunity. The nascent technology will, in theory, make their service indispensable to subscribers who use data-hungry video games, smart home devices, and want blazing fast Internet speeds.

But that same 5G technology creates an uncertain future for home broadband providers, the cable and telecom companies that offer wired Internet service to more than 100 million subscribers nationwide. If consumers can use 5G to stream Netflix and play Apex Legends at home, why would they pay for traditional broadband?

The answer to this question will have huge implications for the giant broadband industry. The ultimate outcome, however, is anything but clear.

Analysts, mobile network providers, and home broadband companies have starkly different views about how 5G will impact how consumers get online. Some say 5G will upend the current broadband reality, while others, including the cable companies that stand to lose a huge cash cow, argue that 5G will have limited impact on their businesses.

What is clear is that 5G can provide download speeds of up to 10 Gbps, which is much faster than most existing wireless and home broadband connections. Cable company home broadband plans often start at 100Mbps—a fraction of what’s possible with 5G.

“5G will bring meaningful, new in-home broadband alternatives to millions of people in America,” says T-Mobile, which has a 5G network that can already reach a huge swath of the country. “An estimated 21 million people—about 15% of Americans—lack access to fixed high-speed broadband and 48% of U.S. households lack any competitive choice for in-home broadband service.”

T-Mobile, Verizon, and AT&T plan to invest billions of dollars in 5G networks over the next several years. They say they can replace home broadband providers, like Cox, Comcast, and Charter, which for decades, have had a big share of the home Internet market.

Verizon, like AT&T, already sells home broadband to customers and therefore could end up losing some of them to 5G. But Verizon also offers a 5G home Internet service that is marketed as an alternative to traditional broadband. That service is available in a small number of cities including Chicago, Houston, and Los Angeles, and is slated to expand to more by the end of this year.

“5G will be the technology of the future,” a Verizon spokesman says.

Some analysts say that home broadband providers should be worried about new challengers like Verizon.

“The potential is certainly there for 5G to have a material impact on the home broadband market,” BroadbandNow analyst Tyler Cooper says.

Consumer interest in 5G is already strong, says ABI Research analyst Khin Sandi Lynn. Frustrated by slow speeds, many consumers want an alternative.

“Home broadband users who currently experience slower fixed broadband speeds will want to switch to 5G as soon as possible,” Lynn says. “5G will be a good option to replace last-mile fiber-optic connections.”

But in interviews with Fortune, other experts, along with cable companies, say 5G’s benefits to home connectivity isn’t nearly as great as what wireless providers say.

“It will have no impact on the home broadband market in terms of high-speed and future access,” says Ernesto Omar Falcon, senior legislative counsel for the Electronic Frontier Foundation, an organization that defends digital rights.

Falcon argues that cable companies already have vast nationwide networks that will allow them to deliver even faster speeds than 5G. But it will take time to upgrade those wired networks to what’s being called 10G, a specification that was announced in 2019 and is to be tested sometime this year.

“Pretty soon cable will reach 10 gigabit speeds while 5G will still be in deployment and substantially slower than cable systems, which means they won’t be in direct competition on the high-speed market,” Falcon says.

Cable company Cox insists that 5G won’t significantly impact its home broadband business. In fact, it says 5G and broadband are complementary, similar to existing broadband and wireless networks.

“5G and broadband will coexist,” Cox says. “Mobility is extremely important, but fast and reliable broadband networks will continue to carry the majority of traffic.”

At minimum, Cox says that 5G cell towers will have to be connected to wired lines to function. Providing that back-end infrastructure is a huge opportunity, says the company, which already powers 82% of the non-5G towers currently in operation in its coverage area.

In any case, cable companies are making baby steps into 5G. Earlier this week, Charter and Comcast announced plans to sell Samsung’s new Galaxy S20 5G phone to their customers for use on Verizon’s 5G network.

Comcast also plans to introduce unspecified 5G data options. Meanwhile, Charter has said that it is considering debuting a 5G network.

Still, broadband also has one major advantage today 5G can’t match: near ubiquity. Verizon, AT&T, and others have only started rolling out 5G, and plan to continue adding coverage in the coming years. Broadband is already available in nearly every city and suburb, though not in some rural areas. In order for 5G to truly compete with broadband, it must be available everywhere—and that will take time.

“The impact will be gradual and will immediately impact urban areas, followed by more populated suburbs,” says Babak Beheshti, dean of the College of Engineering and Computing Sciences at New York Institute of Technology. “The rural and less densely populated areas may not be affected by 5G for quite some time.”

If anything, says Andrew Moore-Crispin, content director at telecom operator Ting Mobile, 5G will force today’s home broadband providers to improve their services. The cable industry, in particular, needs more competition to force it to improve its notoriously poor customer service.

“Home broadband is in need of some disruption,” Moore-Crispin says. “And 5G may well have a role to play in the future.”

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Catch up with Data Sheet, Fortune’s daily digest on the business of tech.

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