After almost two years of speaking about it publicly, Verizon is still excited about the kinds of fixed wireless services it can offer with 5G.
“I would say if anything, we’re more excited about it,” said Verizon Chairman and CEO Lowell McAdam in response to a question during a J.P. Morgan investment conference this week.
Verizon is conducting fixed wireless 5G trials in 11 markets across the country and has been talking about offering an alternative to cable companies, something rival T-Mobile executives have seized on, calling that a boring play for 5G. T-Mobile says it's pursuing a 5G strategy that will blanket the country and offer more exciting mobile use cases, like augmented reality heads-up displays that see everything a person does and provide information back to the person about surrounding people and objects.
Nonetheless, Verizon is sticking to its tune and expects to learn more as its fixed wireless 5G trials continue over the summer. Verizon's got FiOS in the Washington, D.C./Boston corridor, but it knew that doing a FiOS-like build elsewhere didn’t make sense economically. The cost of small cells versus the cost of spectrum made it clear that the better answer is deploying small cells, according to McAdam.
“The cost is miniscule to be able to address a very large market outside the Washington to Boston corridor, so as we have built that architecture, 5G on a fixed broadband perspective was the best application for us,” he said. “We did not need to wait for all of the mobile standards, we did not have to wait for it to be crammed into an iPhone or a Samsung Galaxy device. You can use basically your home router that you have today, just put some different chips in it and we’re working with Intel on that, and you are then a broadband provider and a TV provider outside of your franchise footprint.”
The big question for Verizon was around spectrum availability and the propagation characteristics of that spectrum. “The FCC declared 28 and 39 to be sort of the standards, which is what you see in Korea and Japan and other places,” he said, and by purchasing the XO fiber assets, it also got very substantial access to 28 GHz spectrum at “a very reasonable price, so we think we’ve got all of the assets.” Verizon also won the bidding war for StraightPath, giving it access to the 39 GHz.
As for propagation characteristics, McAdam said they were expecting, “let’s say less than 1,000 feet of propagation to deliver 1 Gig,” and the experiments they’re seeing in the field and what he saw in Korea about a month ago were showing substantially more than that 1,000-foot propagation. “We’re feeling very bullish on it at this point” and will be able to say more about that after the summer.
Skeptics of millimeter wave spectrum have pointed to the impact of foliage and other objects interfering with line of sight. But McAdam characterized that as akin to old-school thinking.
“You tend to lock in on the design principles of the 2000s,” because that’s when the wireless market was sort of exploding and back then, you didn’t have massive MIMO or the kind of compute power to do signal processing that can be done today. Then it goes back to the idea that an operator needs more spectrum, and “no, you don’t,” he said, adding that small cells are a fraction of what they were cost-wise even 5 years ago.
By way of example, he said they were 2,000 feet from the receiver in Samsung’s technology park and the system was delivering 1.8 gigs. “We said OK, take that truck, drive it around the back side of the building so there is no possible way you will have a direct line of sight—2,000 feet away, it delivered 1.4 gigabytes of throughput,” he said.
The system used all the different reflections and computing to process it and get the signal to work. “In the field today, we’re doing heavy foliage, we’re doing downtown urban areas, we’re doing residential, we’re doing long haul where you’re out in a rural area and you don’t have anything for five miles before you get to the next house. We’re going to shake all of that out, but I think people when they say 'oh, it’s just line of sight,'” they’ve forgotten about the compute and antenna technology that wasn’t available even 5 years ago.
Asked about renewed speculation about Verizon’s M&A plans, McAdam said there’s a lot more energy on Wall Street and in the media over big deals than in any actual businesses. “We’ve got a big thing to chew on here with Yahoo,” he said.
With pressure comes the tendency to do “knee-jerks,” and “you end up with Sprint/Nextel or AOL/Time Warner or some of those things that have been pretty difficult to manage,” he said. “We have always been a company that prefers to do organic growth,” but if there’s an opportunity to accelerate the strategy, “we would look at that. People should be fired if they don’t look at those sorts of things.”