Verizon is building on its millimeter wave (mmWave) strategy, pledging to deploy its 5G Ultra Wideband service in more than 60 cities by the end of this year—and relying on a lot of small cells to do it.
“2020 is going to be a really big year in terms of 5G Ultra Wideband,” Chief Technology Officer Kyle Malady told analysts during an investor meeting Thursday. “This is the year that we’re really going to start scaling 5G Ultra Wideband,” he said.
The last couple years have been about developing the technology, learning and building processes to scale it. Now it’s going to be all about deploying it, with the aim of rolling out more than five times the number of small cells as last year. Some of these small cells will be in new markets, and some will be used to densify existing markets.
“We’re going to be deploying a whole bunch more stadiums, a whole bunch more venues,” he added, noting Verizon’s deal to deploy 5G in NFL stadiums and Thursday’s announcement with NASCAR to modernize 12 racetracks.
Verizon executives were playing before what would seem to be a tough crowd. T-Mobile just received the green light for its merger with Sprint, eliminating a potential source of 2.5 GHz mid-band spectrum and taking Dish Network out of the running as another secondary spectrum market alternative (although to be fair, Dish has long been in the running as a potential spectrum seller without a deal to show for it.)
The investor meeting came at a time when Wall Street analysts are questioning Verizon’s 5G spectrum strategy and its focus on mmWave, where the economics are unproven.
“Building new processes to move to a small cell environment, as opposed to a macro cell environment, has been a big change for us,” Malady said, with an internal dialogue about how they’re currently making artisanal sandwiches and need to move to a McDonald’s type of approach. “That’s what we need to get to if we’re going to scale this thing up.”
It’s important to get the kit out, especially with a new technology, but it’s also working to optimize the technology, testing eight component carrier aggregation where it’s usually using four carriers today. “We’re going to double that,” he said.
New methods to connect small cells without fiber are being investigated, including using its own spectrum and a feature called IAB, or Integrated Access and Backhaul. New repeater technologies are also part of the mix.
On the back half of this year, Verizon will start with 5G in-building installations. It has been working with partners on 5G DAS-type solutions.
Spectral efficiency is a big deal for Verizon engineers, according to Malady. They’re always looking 18-24 months ahead to come up with new solutions. That gives them enough time to react and do the engineering and operational work, so solutions are ready when customers need them.
They started talking about dynamic spectrum sharing (DSS) a couple years ago or so, and while they aren’t revealing any dates for deployment, they're saying that Verizon will have a DSS nationwide rollout this year. While there have been reports that DSS is in for a tough year, Verizon executives didn’t say anything about that.
DSS will allow Verizon to use the same spectrum for 4G and 5G. Malady said with previous wireless generations, operators needed to clear the band to make way for the new technology, which requires a big coordination effort. DSS makes it easier, but he made a point of saying it doesn’t give any extra capacity. In fact, there’s a slight hit to capacity because of it, but that’s been planned into the deployment, and they already have hardware and software for it, so when the team decides to pull the trigger on it, they will.
“We feel really good about this,” he said, noting it’s the first time in his career that there’s a technology that allows for putting in a new "G" very elegantly.
In a research note for investors on Friday, analysts at Wells Fargo Securities who attended the meetings said “Goliath is not taking a nap” and they were reminded of the Mark Twain quote: “The reports of my death are greatly exaggerated.”
“While we know there are many VZ doubters in wake of S/TMUS approval, what we continue to see from them is tangible and focused strategy,” wrote senior analyst Jennifer Fritzsche in the note, which also said Verizon “strongly disagrees” with T-Mobile on DSS readiness.
“VZ network team was very clear – that DSS is out of lab testing with all 3 of its vendors and chipsets are ready. So ready it committed to nationwide 5G capabilities using DSS this year.” The report cited Nicki Palmer, Verizon’s chief product development officer, as being clear that DSS is out of the lab with all three vendors and chipsets are ready.
If they're worried about competition from the New T-Mobile that just got the green light this week, Verizon executives didn’t show any signs of it. The New T-Mobile will be adding Sprint’s bevy of 2.5 GHz mid-band spectrum to its 600 MHz country-wide spectrum and its mmWave top layer, although it doesn’t match Verizon’s stash of mmWave.
Verizon CEO Hans Vestberg reiterated that Verizon has all the assets to deploy its 5G strategy today, and it remains interested in the C-band spectrum when that comes up for auction. The FCC’s recent announcements about C-band are encouraging, he said, but he revealed little else.
As for Dish entering the market with its virtualized 5G core, Malady said virtualization is fantastic, and it’s part of the Verizon Intelligent Edge Network. However, there are areas where it doesn’t make sense, and it “doesn’t help you at all at the permit office,” he said. Vestberg added that one important aspect is access to fiber, something that has been a big priority at Verizon.
Given the changing competitive environment, with T-Mobile not being shy about taking pot shots, Verizon was asked if it expects to poach subscribers that might be up for grabs during the Sprint integration.
“We don’t spend a lot of time talking about our competitors,” said Ronan Dunne, EVP and CEO of the Verizon Consumer Group. “I think what you’re referring to is the fact that they wanted to run an ad to talk about our network so we had a little fun at their expense. But that is not the core of what we’re doing. The core of what we’re doing is we’re offering customers true value,” which is choice built around experience and quality, and that’s something that differentiates it from others.