Starry’s Wi-Fi service better than fixed 5G, Oppenheimer asserts

Starry’s 802.11ax-based fixed wireless service is more economically effective than a fixed wireless service based on the 5G standard, according to Wall Street research firm Oppenheimer.

The firm said that, by its calculations, it will cost Starry around $2 billion to cover 70% of the dense areas in the United States with its fixed wireless service, which uses the latest version of the 802.11 standard for Wi-Fi. Covering that same area would cost $35 billion to $50 billion using 5G technology—and that figure would be double for providers covering the area with fiber.

“Starry's deployment costs multiples less than 5G fixed wireless. Management stated generously it would cost $10K per mile to lay fiber, whereas Starry's capex costs are $20 per home passed in dense areas,” wrote the Oppenheimer analysts in a recent research report on Starry’s fixed wireless deployment plans. “Starry's Beams [the company’s base stations] do not require municipal approval as they are small (18 in. x 18 in.) unless in a historical setting. This is unlike 5G fixed wireless, for which approval is a long process.”

Added the analysts: “Starry's roadmap is much more economical than 5G fixed wireless … and speeds are comparable without the expense/complexity that accompany the deployment of thousands of 5G small cells.”

Oppenheimer based its report on a recent meeting with Starry executives. The Oppenheimer analysts said that Starry eventually wants to take its service nationwide, and that Starry management believes that 70%-75% of America “is a target market for the company, similar to Boston's density.”

Starry spent much of 2017 testing its fixed wireless service in Boston, and earlier this year the company announced it would expand its $50-per-month month fixed wireless service—which provides speeds up to 200 Mbps—to 16 major markets during 2018. According to Oppenheimer, Starry’s equipment and installation costs a total of $480, a figure the company hopes to cut by 25% over the next few quarters.

“Starry is at nine sites in Boston and will go to 18 by year-end. This will blanket Boston, covering ~600K homes passed at an incremental capex cost in the ~$25M area,” the firm wrote.

“A quick analysis puts the cost for Starry to cover 70% of the dense parts of the U.S. at ~$2B in capex ($20 per home passed x 120M homes x 70%), which is well below the potential cost of running fiber at anywhere from $85B (120M homes x 70% x $1000 per home passed),” the Oppenheimer analysts wrote.

Interestingly, Starry’s management hopes to ultimately capture 20 million subscribers to its service, according to Oppenheimer.

The Wall Street research firm’s figures ought to raise concerns among supporters of 5G technology, at least for fixed applications. Importantly, Starry uses 600 MHz of spectrum in the 37.0-37.6 GHz bands that's largely shared between commercial and federal users. Although the FCC is still finalizing its rules for this band, the result is that Starry doesn't have to pay billions of dollars for the spectrum.

Oppenheimer’s report on Starry contrasts notably with Verizon’s push to deploy fixed wireless services using its own V5GTF, 5G-style standard. Verizon has said that it will launch fixed wireless services in 3-5 markets this year, offering 1 Gbps speeds at distances up to 2,000 feet. Eventually, Verizon has said it will expand its fixed wireless service to a total addressable market of 30 million homes.

However, the details of Verizon’s fixed 5G service remain under wraps, including how much the company will charge for the service and how much it will cost for the equipment and the installation.

Article updated March 30 to correct information about the spectrum Starry uses.