How – and why – Redzone plans to upgrade from LTE to 5G for FWA

Redzone Wireless, a fixed wireless Internet provider in Maine, is mulling an upgrade to 5G as it ponders an expected incursion into its territory by T-Mobile.

Redzone Founder and CEO Jim McKenna told Light Reading he expects to make the company's first 5G equipment purchases sometime this quarter. He said he plans to test equipment from a variety of vendors and then, eventually, begin to upgrade select Redzone transmission sites from an LTE-powered fixed wireless service to one running the 5G standard.

"We're very bullish on it," McKenna said.

Importantly, McKenna said that Redzone – a privately held company with around 30 employees – owns up to 100MHz of 2.5GHz midband spectrum in almost half of its service territory. He said an upgrade to 5G would give the company the ability to deploy advanced technologies like beamforming, Massive MIMO and carrier aggregation in order to offer fixed wireless access (FWA) services at speeds up to 500 Mbit/s.

Although McKenna declined to offer specifics, he estimated it could cost up to $100,000 per cell tower for Redzone to upgrade from LTE to 5G. He said the company counts around 90 cell towers in its network, and roughly 25% of those sites generate enough profits to warrant an immediate upgrade to 5G. Other sites may be upgraded as necessary.

McKenna declined to say how many customers Redzone has, but said the operator counts "thousands" of customers – but less than 10,000 – across all of the counties of Maine. He added that the operator – established in 2006 – has seen its revenues grow at a compound annual growth rate of 22% since 2015.

Enemies, frenemies and agreements

"We expect that they'll hit us like a freight train," McKenna said of T-Mobile. He said T-Mobile doesn't have much 2.5GHz midband spectrum for 5G in Redzone's coverage area – mainly because Redzone owns much of it – but T-Mobile purchased additional 2.5GHz holdings in Maine during a recent FCC spectrum auction. McKenna said he expects T-Mobile to use those auction winnings to expand into Redzone's coverage area at some point in the future.

(Source: Robert K. Chin - Storefronts/Alamy Stock Photo)

That, he said, is part of what's driving Redzone to invest in an upgrade from LTE to 5G.

Notably, though, McKenna said Redzone hopes to leverage T-Mobile's investments into 5G for its own move to the networking technology. He said T-Mobile's massive, nationwide 5G upgrade program has helped develop an ecosystem of equipment around the 2.5GHz band, and he said Redzone hopes to tap into that ecosystem for its own 5G upgrade. Nokia and Ericsson are T-Mobile's main 5G equipment suppliers.

Finally, McKenna said Redzone is also inking wholesale FWA agreements involving its 2.5GHz spectrum with several other unnamed wireless network operators. Specifically, he said Redzone has already executed a wholesale data agreement with one of the "major" US carriers, and expects to sign a second carrier agreement before the end of the third quarter. He said the agreements will enable Redzone to expand its FWA service area beyond the boundaries of its licensed 2.5GHz spectrum holdings. And the agreements are reciprocal, he said, in that Redzone's wholesale partners will be able to access the company's licensed 2.5GHz network in order to expand into Maine.

A history of things to come

Redzone is one of hundreds of smaller fixed wireless Internet service providers around the country. According to figures from the Wireless Internet Service Providers Association (WISPA), such providers collectively count around 8 million customers across the US.

But the space has caught fire recently thanks to the entry of T-Mobile and Verizon. Due to 5G networks running in midband spectrum, Verizon and T-Mobile collectively have captured virtually all of the growth in the US broadband market throughout the past year. And some financial analysts don't expect that to change much over the course of 2023. Partly as a result, the nation's cable companies – long the dominant force in the US broadband market – have experienced a historic slowdown in their core businesses.

For its part, Redzone continues to focus exclusively on fixed wireless rather than expanding into fiber like Rise Broadband and other FWA players. The company's operations have stretched across spectrum bands including 5.8GHz, 11GHz, 24GHz and 60GHz via equipment from the likes of Telrad, Ubiquity, Rukus, Dragonwave, Sikl and Nokia.

(Redzone also made an early foray into the 5G branding game with its "5Gx" trademark for proprietary multi-spectrum, carrier-aggregating, MIMO-capable fixed wireless.)

But in recent months, Redzone has embraced equipment from vendor Tarana for its unlicensed 3.5GHz CBRS operations. McKenna said Redzone has been running Tarana equipment for around two years now, and currently counts "hundreds" of customers across roughly 15 cell towers. "I'm very impressed with the technology's capability, its aggregate capacity and its coverage with CBRS," he said.

However, McKenna noted that Tarana's system is affected about once a quarter by nearby US military operations in the CBRS band. That's not necessarily a surprise: The CBRS band operates under a unique spectrum-sharing scenario that allows commercial operations to use the spectrum when it's not needed by Navy ships and other Defense Department operations. But McKenna said Redzone had expected that such operations – ones that would cut into its customers' services – would only happen once a year rather than once a quarter.

The broader market

Of course, T-Mobile's likely incursion into Redzone's coverage area isn't the only competitive factor affecting the FWA provider's future prospects. McKenna said Charter Communications is Maine's main cable operator, while Consolidated Communications' new Fidium brand has been making inroads in the fiber sector. He said Charter has been working to develop a moat around its customers by offering discounts and mobile services. However, he said that most of Redzone's customers come from Charter as they hunt for cheaper Internet services.

"What we're seeing, from a consumer perspective, is interest in more affordability and choice than in speeds and availability," McKenna said, noting that one of Redzone's most popular offerings is a $30 per month plan with 50Mbit/s speeds for seniors.

Regardless, Charter is "a formidable competitor," he said.

The topic is noteworthy, considering the US government is preparing to spread more than $40 billion across the country to support the construction of broadband networks in rural areas. Maine is set to receive around $272 million of that amount. But Redzone may not be able to dip into those subsidies due to regulators' preference for fiber networks.

That's unfortunate, McKenna said, because fixed wireless services can be affordable, reliable and profitable with relatively few customers. "I can do well with 10% market share," he said. Fiber providers, on the other hand, often need to acquire up to 50% of the customers in their coverage areas in order to be profitable. That could be difficult in rural areas.

"Most people just want a Toyota," McKenna explained, rather than a Ferrari. That's because Toyotas – the fixed wireless of the broadband world – are affordable and reliable.

"Fixed wireless is a perfect fit," he said.

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— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano