Verizon is keeping its full 5G fixed wireless playbook close to the vest, but it will be looking to leverage the full scale of Verizon Communications’ business, including fiber, when it launches a commercial fixed broadband offering in 2018.
The operator announced Feb. 22 that it is launching pre-commercial trials in 11 markets, where it will have the opportunity for additional vetting and learning in urban and suburban environments with different densities, foliage and elevations, said Verizon’s John Stratton, EVP and president of operations, at the Deutsche Bank 25th Annual Media & Telecom Conference in Palm Beach, Florida, on Monday.
“I’m going to be a little bit obtuse here in terms of not describing with great precision the exact intended market that we would pursue,” Stratton said of Verizon’s fixed wireless plans. “But what I would say is that we would look in the places where we’re going to have those dense deliveries, what is the addressable market in those spaces,” whether consumer, business or large enterprise, and then how is value created either through cost avoidance in the current business or through new revenue creation, and “I’m sorry I can’t be more specific than that.”
As for predictions about when 5G moves from fixed to mobile, Stratton said that declarations at Mobile World Congress 2017 last week about 2019 are a little overly optimistic, and more likely it’s going to be the “end of 2019, maybe into 2020, where you might see the first delivery of mobile-based 5G,” noting the need to seed the market with handsets.
3GPP is deciding this week whether to accelerate the development of the 5G New Radio (NR) specifications; a group of vendors and carriers are pushing for the ability to launch commercial services as early as 2019, a standards move that Verizon does not support. Under the current timeline, the earliest 5G NR deployments would likely not be possible until 2020; Verizon has worked with ecosystem partners in the Verizon 5G Technology Forum to develop its own specifications outside the standards bodies.
Stratton’s comments about the timing of its fixed wireless offering align with those of Verizon EVP and CFO Matt Ellis, who said the operator expects to see the results of the pre-commercial trials in a few months and then be in a position to launch a commercial fixed wireless broadband offering in 2018. Appearing at the Morgan Stanley Technology, Media & Telecom Conference last week, Ellis said the company has a good amount of fiber in most major U.S. cities to support its endeavors.
Stratton’s message was much the same with regard to the fiber situation nationally. “We’re really comfortable. There’s a lot of different options out there,” Stratton said, noting Verizon’s current fiber build and the access it gets through the XO acquisition.
Beyond technical learnings, Verizon intends to use the pre-commercial trials to inform itself of the commercial and operational implications of a fixed wireless offering.
“The question that needs to be asked and answered is what is the propagation characteristic, what is the load per node so to speak, what are the sort of fundamental building blocks that will then inform the investment case, and in the end, what we’re trying to determine is the addressable market and we have a series of thresholds that we say above and below these thresholds is the sweet spot where we can deliver a great product at a cost” and ultimately a retail price that would be appealing to the market, Stratton said.
Stratton also was asked about Comcast and Charter Communications triggering their MVNO agreements using Verizon’s network and the competitive implications from that. “Certainly we’re ready to go,” he said, and from an MVNO or reseller standpoint, that’s a business Verizon has been in forever.
“We feel pretty good about our ability to compete,” he said. “Competition generally is good for an industry. It draws attention to it and I think this has been a pretty dynamic market already, the addition of a couple more guys ... Just bring it on, we’ll see how we go.”