Verizon CEO Hans Vestberg is excited about the opportunities for 5G in the enterprise even as some businesses need to cut back on their spending due to COVID-19.
Verizon’s 5G network is now in parts of 35 cities, while its fixed wireless 5G Home product is currently in six markets. The plan is to be in more than 60 cities with its mobile Ultra Wideband 5G service by the end of 2020, and it expects to be in 10 markets with its 5G Home fixed wireless access (FWA) service this year.
Of course, analysts are interested in Verizon’s plans for nationwide 5G coverage, and its use of millimeter wave (mmWave) technology remains a curse in the eyes of some. It means Verizon’s 5G coverage is paltry compared to AT&T, which yesterday announced a nationwide 5G service, and T-Mobile, which went nationwide last year with 600 MHz and it's adding 2.5 GHz.
Verizon is on track to deploy more than five times as many mmWave base stations this year compared to last year, “so the footprint will be much broader,” and it will be in some 60 cities, Vestberg said. Those cities will be much more covered than they were last year.
So far this year, it’s launched few markets out of those 60, so “you should expect quite a lot of noise from us in the second half, and we are really excited about that.”
Its model will include nationwide, he added. “Think about our model being a millimeter wave that’s transformative – no one is even close to it in the world – then we will have a national coverage on top of that.” In addition, “we have the best 4G network in the world. I don’t think that our customers will be disappointed with us. We build things that are transformative.”
Verizon is using dynamic spectrum sharing (DSS) technology to offer a nationwide 5G service this year. Vestberg said the company is on track on that and in some cases, ahead of plan. “Our test with DSS is going well,” he said.
Vestberg acknowledged that airlines, restaurants and some large travel-related businesses hit especially hard by COVID are trying to reduce their costs as much as possible, but others are accelerating plans for digitization.
When it comes to government customers, states and municipalities need to move to new models for delivering services to students or the community at large. Several states are using Verizon services for remote learning, and it just announced 5G tests with the Defense Department, he noted.
On the enterprise side, he estimates that he holds five to seven meetings with large companies each week to discuss digital plans, and many of them are accelerating rather than delaying their efforts.
Mobile edge compute (MEC) is going to be at 10 sites this year, and Verizon is working with IBM and SAP, two very important application providers. A lot of the use cases are about real-time decision making. A big manufacturing facility can use MEC to enable robotics, for example. IoT devices with 5G will enable new ways of delivering a service.
For some, it’s about low latency and security, in the sense that they can keep their data storage closer to the edge and the data is contained within a company. So far, “latency and security, that’s how the 5G Mobile Edge Compute scenarios are working out,” he said.
While AT&T CEO John Stankey on Thursday said he doesn’t see 5G as a good replacement for home broadband in the near term, Vestberg expressed confidence in Verizon’s 5G Home product and the progress they’ve made in improving it.
Verizon is going to have the CPE with a much better chipset in the second half, as he’s said before, and “we feel good.” The ambitions are high: The customer should be able to receive the CPE and install it themselves in a short timeframe.
“I want it to be below one hour,” and it doesn't sound like it's there yet, but it’s come a long way from the eight hours that it used to take. Compared to a fiber installation, which still requires an appointment and takes hours, “this is a totally different way,” he said.
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Regarding a 5G iPhone from Apple that’s expected in the second half, Vestberg said he couldn’t comment on Apple’s plans but that will be a big event when it comes. The U.S. market has a high penetration on iOS, Apple’s operating system, and customers are reluctant to change from one OS to another – iOS versus Android. A 5G phone from Apple is “a very important event,” he said.
Asked about T-Mobile’s recent low-end pricing moves, Vestberg said: “I feel very good about the competition… This is nothing new,” and the team is well prepared. “I am really excited for the second half.”
‘Easiest quarter’ for some time: analyst
While Verizon’s CEO is optimistic about the second half of the year, investment analysts aren’t so sure about its longer term prospects.
“As with AT&T, this is likely the easiest quarter Verizon will face for some time. We expect competition to pick up materially in August from T-Mobile and from Cable,” wrote New Street Research analyst Jonathan Chaplin in a note Friday.
Analyst Craig Moffett said the overall message from Verizon is similar to the one last quarter. “Overall, Verizon will be fine,” he wrote in a note for investors.
"But if that feels more like playing defense than offense, it is because, well, it is. And longer term, Verizon’s overreliance on millimeter wave spectrum leaves them vulnerable," Moffett said. "Their 5G deployment strategy leaves them well positioned only in dense urban setting, and indeed, only in dense urban gathering places. They remain exposed for coverage everywhere else. Even if they win big in the year-end auction for C-Band, they will be at least a few years behind T-Mobile. That will hurt especially in the Business market, where they are dominant today.”