Verizon is positioned to be an ‘insurgent’ in cable industry

Verizon's Nicola Palmer discusses the company's 5G strategy. (Mike Dano/FierceWireless)

LOS ANGELES—Verizon’s Nicola Palmer described the company as an “insurgent” due to its new strategy to challenge cable operators with a 5G-based fixed wireless product.

Speaking here at the FierceWireless “5G Moves from Trials to Commercial Reality: What's Next?” event held in conjunction with the MWC Americas trade show, Palmer said that although Verizon is an established telecom player in a maturing market, the company today is using a cutting-edge technology to disrupt cable providers’ grip on the wired internet service provider market.

Specifically, Verizon is launching internet services over wireless connections in four cities starting later this week; the action will challenge Comcast and Charter in those markets. Verizon has said it will expand the effort to additional markets in the coming months.

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Interestingly, the analysts at Barclays said that Verizon’s pricing for the service—$70 per month or $50 per month for its phone customers—could well present a challenge to Comcast and Charter. “The service is attractively priced in our opinion relative to cable even though headline service prices appear to be comparable,” the Wall Street analysts wrote in a note to investors. “For instance, post the promotional period, the price of the bundle at $110/month compares to ~ $118 for Charter in LA, with the latter providing more content. However, Verizon doesn't appear to be charging anything for hardware such as the router, while Charter charges about $7 per set top box. Also, Verizon is in effect providing an upfront promotional value of about $300, which is not insignificant between free YouTube TV and Apple TV. Also, the effective service price of the new offering for Verizon wireless subscribers is $20 lower making it even more attractive for this base vs cable bundles. This gap is even bigger vs other cable providers who have been more aggressive with price than Charter. Therefore, we believe promotions, combined with lack of hardware costs could make this compelling for cable subs.”

For her part, Palmer described fixed wireless services as the best “entry point” for Verizon into the 5G market, adding that the company could pursue other 5G use cases from remote patient monitoring to cloud gaming to public safety services via “clouds” of drones and “fleets” of autonomous vehicles.

Nonetheless, Verizon’s 5G announcement, and its pricing and equipment strategy, received critiques from the company’s rivals. As reported by Bloomberg, AT&T CEO Randall Stephenson said that he’s not sure how Verizon’s fixed 5G home broadband service would be received, but he pointed out that Verizon is launching the service first with nonstandard equipment and would later upgrade that equipment to 3GPP standard equipment. Stephenson said that AT&T, meanwhile, plans to launch 3GPP mobile 5G later this year.

Separately, Comcast’s Brian Roberts reportedly questioned whether 5G networks would be able to challenge the network performance and capacity supported by wired cable networks.

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