LOS ANGELES—After years of discussing its 5G plans, and months of buildup and hype, Verizon finally took the wraps off of its first 5G commercial launch. And the results are uninspiring, to say the least.
As expected, Verizon is launching fixed 5G services in four cities starting Oct. 1. Importantly, the offering will allow Verizon to challenge Comcast and Charter in the in-home internet market in locations outside of its Fios fiber footprint.
But outside of that noteworthy strategic development, the actual details of Verizon’s service are decidedly mundane. Here’s why:
1. Verizon is still going to have to do a truck roll.
In some of its early discussions about its fixed 5G plans, Verizon executives hinted that the company was working on technology that would allow customers to install their own 5G 28 GHz receivers inside their homes or offices in order to obtain a 5G signal. The company even showed off a prototype device last year along those lines.
But in its commercial launch, Verizon will still have to send technicians into users’ homes to install its 5G equipment—a “truck roll” in telecom parlance. The situation results in extra expenses for Verizon and unwelcome intrusions for customers who don’t want to have to deal with installers drilling stuff into the outside of their home.
2. Verizon isn’t providing 1 Gbps speeds.
At the beginning of this year, Verizon CEO Lowell McAdam clearly said that “we’re very comfortable with being able to deliver a Gigabit of service to everyone that we’re providing service to.”
But that’s not the speed that Verizon is now promising. Instead, the company said that users can obtain “peak” speeds of 1 Gbps but usually ought to get around 300 Mbps.
Now, to be clear, 300 Mbps is probably going to be fine for most users, and Verizon executives have pointed out that the company routinely underpromises and overdelivers. Further, continuous, uncapped 300 Mbps speeds are significantly faster than most LTE connections.
But this is Verizon’s big 5G launch, and the company’s advertised speeds are pretty similar to what other fixed wireless providers like Starry and Common Networks are already providing. Further, both of those companies are offering 200 Mbps speeds using the 802.11 Wi-Fi standard.
Which begs the question: If 5G is so great, why are Verizon’s 5G speeds so similar to those already available from the likes of Common Networks and Starry?
It’s also worth noting that Verizon is going after cable companies in those four cities that have almost finished their own 1 Gbps build-outs. As the analysts at Macquarie Research noted, Charter expects to offer 1 Gbps services by the end of this year to hundreds of thousands of people in each of Verizon’s four launch cities, while Comcast launched 1 Gpbs services for $90 per month on a one-year contract last year and expects to expand the service across its entire footprint by the end of this year.
3. Verizon is going to trash all this equipment next year anyway.
This is the big one, in my mind. In its announcement, Verizon specifically said that customers who sign up for its fixed 5G service now are going to have to scrap all their equipment at some point in the future when Verizon’s suppliers begin producing 3GPP 5G NR gear.
That’s because, way back in 2015, Verizon decided to team up with Ericsson, Qualcomm, Intel and Samsung to create the 5G Technology Forum (5GTF) to create its own proprietary standard for transmissions in millimeter-wave spectrum. At the time, that made sense because it would potentially allow Verizon to launch services years before other companies could. However, AT&T and others worked to push the initial 5G standard through the 3GPP earlier than expected, and as a result the standards group finished the hardware portion of the standard late last year. AT&T and others now expect to launch mobile 5G services on the standard as early as later this year.
Thus, Verizon will be able to claim that it was first to 5G, but only by a few months. Not only that, the company will have to replace all of the proprietary 5GTF equipment it’s deploying now with 3GPP 5G NR equipment sometime in the future. So how exactly is this leading position paying off, considering it’s apparently going to require another truck roll?
Now, to be clear, I’m not saying that Verizon’s new 5G Home service is going to fail. On the contrary, in my discussions with other fixed wireless providers they generally argue that there is an enormous amount of pent-up demand among internet customers for an alternative to their existing wired internet providers. One fixed wireless provider told me that they’re essentially guaranteed 20% of the market simply because they’re not one of the wired incumbents.
Further, Verizon has made it very clear that fixed wireless service is one small part of the overall 5G opportunity. Indeed, Verizon has said it expects to build out fixed service to just 30 million U.S. households, or just 24% of the overall U.S. market, and analysts don’t expect that build-out to be finished until 2024. Verizon executives have promised to launch mobile 5G service roughly six months from now, and that additional 5G-based offerings—targeting both consumers and enterprises—are on tap.
Summarized the Wall Street analysts at Barclays: "If Verizon does succeed in proving the scalability of mmWave technology even on a small base, cable multiples could be at risk and wireless multiples could benefit. Also, if cable providers do start seeing fixed wireless demand scale, even in the subset of cities that VZ is launching in at present, we believe they would be incentivized to scale their wireless offerings faster than the present pace, which could drive up wireless costs. Given these factors, quadplay bundles could emerge as a much bigger theme in 2019 and beyond in the U.S."