According to Craig Moffett of MoffettNathanson, the Sprint/T-Mobile deal has sucked all the oxygen out of the room, although, as of today, the final disposition still hangs in the balance.
“But while everyone obsessively focuses on whether the deal will or won’t be consummated,” Moffett said, “there may be a bigger story that is being obscured. In the race to 5G, Verizon risks being overtaken by AT&T.”
Verizon’s commitment to millimeter wave spectrum as the foundation for its 5G network, risks creating a network that’s perhaps fastest among the majors, according to Moffett, but also the weakest in coverage. “Longer term, Verizon is almost certainly correct when they protest that they can make do with the spectrum they’ve got,” he said. “But for the next few years, AT&T and T-Mobile could have a better transition- to-5G story than does Verizon.”
Moffett feels it’s as much a marketing issue as it is a technology one. AT&T’s or T-Mobile’s 5G in lower frequency “coverage bands” may not offer much of a step-up from LTE in user experience. “But for an operator that has staked its brand on being the industry’s best-in-class network, it is not tenable to argue that ‘our 4G is better than their 4G,’” he said.
He feels there’s a certain irony to all this. For the past two years, his firm and others, have lauded Verizon for sticking to its knitting, and for avoiding distracting and value-destructive deals. AT&T’s DirecTVdeal has been a disaster, and there are already signs that Time Warner faces real trouble. But AT&T’s decision to fight for, and win, the FirstNet contract looks, in retrospect, brilliant.
“They have the industry’s best mix of millimeter wave, for speed, AND mid- band/low-band ,for coverage,” he said. “Over the next few years, Verizon risks losing, if not the reality of 5G, then at least the marketing war.”
June 28, 2019