Verizon sees priorities aligned for 5G as it heads into 2022 and prepares for what CEO Hans Vestberg is calling the second wave of 5G.
One element is key C-band spectrum that the carrier plans to deploy starting in January, combined with millimeter wave. Speaking at the UBS Global TMT investor conference Monday, Vestberg reiterated that “there is no impact” to the business from a voluntary one-month delay the carrier and AT&T agreed to. The carriers are now waiting until January 5 to activate C-band to give the Federal Aviation Administration time to review safety concerns about interference and agreed to temporary power limits.
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Getting the network ready is part of it and now getting customers onto 5G (and hopefully highest tier unlimited plans) is key.
“Now we come to a second wave, where actually it’s very important to bring in the customers, giving them the experience that they deserve,” said Vestberg.
At the end of the third quarter, around 25% of Verizon customers had 5G devices, he said, noting the launch of nationwide 5G roughly one year prior. To compare, Vestberg said that one year after launching 4G around 10% of customers had devices capable of using the network
As 5G moves into the next phases, he acknowledged competition for customers is heating up a bit but said that Verizon is differentiating with bundles like Disney+ and gaming offers. Still, with fewer players in the market Vestberg noted that the switcher pool of customers moving from one carrier to another is smaller, so many promos have focused on retention.
“I think that for us, it means that we still have a lot of growth potential on our existing base with our existing offer,” Vestberg said. “But of course, we’re going to see that we always are there taking our share...but we will do it disciplined.”
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For its existing postpaid base, stepping customers up to higher-tier unlimited plans is part of the play, with roughly 30% still on metered plans. Of the 70% of customers already on unlimited plans, he said 30% are on premium unlimited.
By the end 2023, Verizon has said it wants to up those percentages to 90% on unlimited plans with about 50% of that on unlimited premium.
“Our job is, of course, to see that our customers get the maximum value moving up that ladder. That's our main focus,” he said. “And that's what you have seen on our ARPU expansion in the last couple of years.”
The figures don’t include prepaid customers, which Verizon is set to absorb around 21 million of with its now FCC-approved TracFone acquisition.
Verizon’s consumer business next month also is poised to get a new leader when Manon Brouillette replaces Ronan Dunne as chief executive of the group, effective next January. There won’t be any change in strategy as the role changes hands, according to Vestberg. Brouillette had already been brought in as COO and deputy CEO for the consumer group in June.
Verizon is targeting annual wireless service revenue growth of 3% for 2021. It aims to increase overall annual service revenue from around 2% today to 4%, something Vestberg said Monday that he feels even more confident about now because of assets like TracFone, C-band and other growth areas.
“We have added things in the portfolio,” Vestberg noted, according to a transcript. “We have seen the greatness of our fixed wireless access as well as our 5G monetization. And of course…our MVNO partners are also adding to all of that.”
Comcast and Charter are the two major cable MVNOs leveraging Verizon’s network for their own wireless offerings. While cable goes after wireless subscribers, carriers like Verizon and T-Mobile have put their own targets on home broadband with fixed wireless access services.
Fixed wireless access big growth opportunity
Vestberg highlighted fixed wireless as a major growth area, made bigger thanks to C-band and mmWave 5G.
“We believe it's a big growth opportunity for us,” he said of fixed wireless access. “We have seen how great we have been doing…with fixed wireless access in the beginning here with millimeter wave and 4G. And of course this will kick off when we get the C-band launched because then we can address so many more households.”
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Verizon had around 150,000 FWA customers at the end of the third quarter (it offers both 4G LTE and 5G mmWave-based service) and wants to reach 50 million households by the end of 2025.
Of the around 55,000 FWA customers Verizon nabbed in Q3, Vestberg said half of them were new broadband customers and 50% were new to Verizon altogether.
“So it’s a great subset of customers are getting in there,” he commented. And for those customers that are both new to Verizon and new as broadband subscribers, he said there’s an opportunity to get them on wireless as well.
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Executives including CFO Matt Ellis have previously talked up the aim of becoming the go-to provider for broadband across the country, with mobile and home internet bundles possible with FWA. Customer premises equipment (CPE) was upgraded over the summer, so LTE routers already support C-band, allowing customers to upgrade when the spectrum becomes available.
Vestberg doesn't expect to hit FWA peaks in 2022, but as C-band and additional mmWave spectrum gets deployed the carrier aims to pass 70 million households.
“We are going to see more opportunity as we turn on more and more spectrum over time,” he said.
Since first launching fixed wireless a few years back Vestberg called out a few things that have changed including additional learnings from its Fios product, more devices on the market that can handle the different spectrum bands, improved CPE and the ability for customers to self-install.
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More bandwidth from 161-megahertz of C-band nationwide, alongside mmWave, also makes the chief executive confident the carrier won’t push up against capacity constraints for home internet subscribers.
“And we’re only starting with piece and blocks of it,” Vestberg said of C-band.
Right now Verizon is guaranteeing a minimum of 300 Mbps on 5G FWA and when C-band is launched Vestberg said that threshold will be a little slower. But “it’s still going to be that we can offer as much data as they want…and as well done.”