Verizon is already monetizing 5G, according to CEO Hans Vestberg, citing the adoption of 5G and increasing wireless service revenues as the the carrier targets faster growth over the next couple of years.
Asked by analysts Tuesday during a J.P. Morgan investor conference to give some proof points for what’s driving the expected uptick in growth, including 2% this year for total services and other revenue and 4% in 2024, Vestberg named 5G migration as number one.
“That’s why our service revenue is growing all the time, because we have this migration going form limited to unlimited premium,” he said, talking about service tiers and bumping most customers up to higher-value unlimited plans, according to a transcript.
“Sometimes people ask about, ‘when will you monetize 5G?’,” Vestberg noted. “We’re already doing it, remember that.” That’s partly seen in higher average revenue per user (ARPU) driving service revenue growth.
In the first quarter of 2021 Verizon lost 178,000 net postpaid phone subs, but wireless service revenue was up 2.4% year over year to $16.7 billion. Average service revenue per account for wireless postpaid increased 2.1% in the quarter to $141.74.
When it comes to the consumer side, Verizon has followed a strategy of partnering for content as a distributor rather than owning it. Earlier this month the carrier reached a deal with Apollo Global Management to sell Verizon Media, which includes AOL and Yahoo digital properties, for $5 billion.
AT&T, meanwhile, recently decided to spin out its WarnerMedia entertainment business in a major tie-up with Discovery.
For content, Verizon’s partnered with the likes of Apple Music and Disney+, hoping to attract and retain customers for pricier unlimited plans. Just last week the carrier got into mobile gaming, offering both new and existing customers six months of Apple Arcade or Google Play Pass, valued at about $5, for free when they take any unlimited plan – or a year free with premium unlimited plans.
“And for us it’s accretive, because ultimately we found a formula, where Ronan [Dunne] and team has done a great job, where they actually can both attract customers with this content because of our distribution, but also retain them,” Vestberg said. He added that it’s also beneficial for direct-to-consumer services that are looking to pick up more subscribers.
The bundling content for so-called “value upgrades” with mix and match plans are part of the strategy of Verizon’s five pillars for growth, which includes adding new 5G customers. In March Verizon had sold 10 million 5G devices including mmWave and about 70% already with C-band support.
C-band is certainly still top of mind for the carrier, with plans to spend $10 billion over three years after winning an average of 161-megahertz of the mid-band spectrum nationwide at auction.
Fixed wireless access
Mobility isn’t the only way to monetize 5G and Verizon has already been clear that the one network build will support services like fixed wireless access as well.
Having already launched a 4G LTE and 5G FWA service, the operator’s targeting 50 million homes by the end of 2025 using a combination of 4G, and 5G mmWAve and C-band. Overtime it could expand nationwide, according to Vestberg.
More movement on fixed wireless is going to start later this year and become a more important piece of Verizon’s growth in 2022, he said.
For its 5G Home product Verizon’s initially using the same mobility grid to offer FWA, “which is a great opportunity for us to add bottom line and topline to our business.”
He also pointed to small and medium businesses being able to access to broadband rapidly by using FWA, instead of waiting for fiber connections which may take longer and are more complicated to deploy.
In April, availability of its 5G fixed wireless service for business customers expanded from three cities to 24.
AT&T and T-Mobile are making their own respective moves on fixed wireless, for both home broadband and business customers. Earlier this week AT&T CEO John Stankey cited a 2023-2025 timeline for high-speed fixed wireless service nationwide. Wireless Service Internet Providers (WISPs), meanwhile, serve around 7 Americans users using FWA, largely in rural communities.
At Tuesday’s investor conference Vestberg also pointed to business-to-business applications, 5G mobile edge compute for both public and private set-ups, and pushing hard into the prepaid space with its pending Tracfone acquisition along with digital-focused brand Visible.