U.S. Cellular is starting to turn on its 5G network in parts of Iowa and Wisconsin this year, so the regional carrier probably is not in a rush to hear its competitors sing the praises of 5G in markets where it doesn’t yet offer the service.
But U.S. Cellular President and CEO Kenneth Meyers also this week said something that’s very real for a lot of the country: 5G in its current iteration isn’t that big of a change compared to its 4G counterpart. Sure, there are blazing fast speeds in some markets, but as a recent Opensignal report concluded, the U.S. is seeing only a preview of what the full 5G experience will look like in the coming years.
Speaking at a Raymond James investor event on Monday, Meyers said there are some really exciting 5G-related opportunities, in particular wireless broadband and in some business and government account areas. From his perspective, the broadband advantages really will come later this year to early next year, and the business and government opportunities probably will arrive early to late next year. Both require the network be in place, and it’s a long sales cycle on the government side of things.
“From a consumer’s standpoint, I don’t know that 5G has a dramatic effect today on what the consumer gets or needs,” he said. “I’m sure there will be a lot of marketing around it, but I don’t know that it really changes their experience much today.”
Super cycle for handsets?
There’s been considerable debate as to whether 5G will drive a so-called “super cycle” in handsets this year.
“I think it eventually will, but I hope it’s not this year,” Meyers said. “I think the big mistake would be for the industry to over-promise and under-deliver… The fact of the matter is that I don’t think from the consumer experience that what happens on this size of device is going to change meaningfully at all from a consumer standpoint. Talk about next year, late next year perhaps when networks are much more pervasive and maybe there’s something that can better take advantage of it, but I’m concerned that we do it too soon.”
Network slicing is another hot topic, and fundamentally, what it means is an operator can take part of its network and dedicate it to an individual customer, and do it in a way that it can be monetized. Based on work U.S. Cellular did with Bell Labs a year ago, that’s where some of the value really gets unlocked, according to the CEO.
Meyers was asked: If 5G is here, what happens to 3G and 4G? “I still have hundreds of thousands of people that have feature phones,” and they like their phones. The last thing the carrier wants to do is turn a network off on them.
Two and three years ago, discussions revolved around how CDMA would be gone by now, and it’s not. “It’s at least two years out,” just based upon commitments U.S. Cellular has made with other carriers, he said. And 4G is going to be here for a while—it’s a base on which 5G is built off of, so it will interact with 5G for at least the next five or 10 years.
Guidance depends on mmWave
U.S. Cellular is in the last year of its VoLTE rollout, and it needs to complete that while at the same time other carriers are hyping 5G in some of its larger markets. The company's early 5G rollouts will use its 600 MHz spectrum, similar to what T-Mobile is using, and then later in the year, plans call for introducing 5G based on millimeter wave (mmWave), but that could change.
In its guidance for the year, U.S. Cellular is estimating a range of $850 million to $950 million for capital expenditures. But Meyers indicated the numbers can change depending on the progress it makes in mmWave as it relates to some negotiations and supply chain issues. “We put it in [the guidance] so as to not surprise people,” and if it takes longer, the company will pull its guidance back in, he explained.
The Federal Communications Commission (FCC) last week voted to move forward on a plan to relocate satellite operators in the C-band in order to make way for 5G in the 3.7-4.2 GHz space. Meyers said U.S. Cellular had been working with the now-defunct C-Band Alliance, as well as other carriers, to free up the spectrum. It’s attractive because it offers better coverage than mmWave, and there’s a meaningful amount of the spectrum being made available.
“It’s attractive given all the other options,” Meyers said, and the rest of the world is using mid-band to roll out 5G, so there’s equipment already available. The challenge is in the United States, even with an auction starting later this year, it will be three years before anyone sees widespread availability across the industry, he said.
Valuable tower assets
U.S. Cellular owns about two-thirds of the towers it uses, roughly 4,000 structures, and as it competes on network quality, one of the things that has accelerated its moves to new technology is the ability to move up or down on the tower. It started off on top of some tall towers in the early days and “we kept moving down,” Meyers said. Now with mmWave, U.S. Cellular is talking about going back up on the towers.
He said U.S. Cellular understands there’s a lot of value in its towers, and it could monetize that asset for another strategic asset like spectrum. In this industry, spectrum is the lifeblood of a carrier. However, he doesn’t sound like he’s in a hurry to go that route. “Currently those towers are just as important today as they were yesterday,” he said.