Verizon’s 5G threat to cable is ‘overblown,’ analyst says

Verizon 5G home internet service (Verizon)
Verizon is selling its 5G Home service as an opportunity for cable customers to switch providers. (Verizon)

Verizon is specifically targeting cable operators with its new 5G Home service, according to Verizon’s Ed Chan.

Verizon is targeting cities "where cable is today, just foundationally, because we definitely see the customer demand in those places," Chan told Ars Technica. The cable industry has "done a very good job of always aligning to a single cable-only provider” in most U.S. cities.

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"Those customers are very eager to get a choice in their broadband provider," Chan noted.

Thus, Verizon’s new 5G Home service—which offers 300 Mbps service for $50 per month to existing Verizon mobile customers—is an effort by Verizon to introduce additional competition into the wired internet market.

But cable companies like Comcast and Charter shouldn’t be too concerned—at least according to the analysts at Jefferies.

“We continue to believe the threat of 5G to wired BB is overblown,” the analysts wrote in a note about Comcast late last month, following Verizon’s 5G Home announcement. “We are skeptical on the economic viability for a deep rollout given the propagation characteristics of mmWave, and expect sign ups will be slow. Further, given the full footprint rollout of DOCSIS 3.1, and the ability to upgrade the HFC plant to 10 GB symmetrical speeds with little capital investment, we expect 5G's perceived speed advantage will be short lived.”

The analysts at Jefferies weren’t alone.

“By the end of 2020, 5G fixed wireless solutions remain niche despite deployments by more than 50 network operators worldwide,” the analysts at CCS Insights wrote in one of their predictions for 2019. “A slew of providers offers fixed wireless access as an alternative to fibre in high-density areas. They follow early launches of 5G networks in the US that take the same approach to providing broadband access in a fixed location. However, such services remain niche, representing only a tiny fraction of total 5G connections in the long term.”

Indeed, executives from cable companies like Charter and Comcast have generally downplayed the threat from Verizon’s 5G launch. They generally noted that their position in the market for internet services is largely cemented, and that they will be able to provide much faster speeds thanks to Docsis 3.1 technology as well as forthcoming network enhancements like Full Duplex, which promises to boost speeds to up to 10 Gbps.

However, Verizon isn’t alone in looking to use high-speed wireless services to disrupt the market for wired internet services. Starry, C Spire and others are seeking to challenge established wired internet services providers with high-speed wireless services.