Verizon Wireless’ 5G Breakout

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Verizon Wireless (VZW) appears to be turning the corner on its fortunes with 5G as the big driver going forward. The company reported positive results in its 4Q10/FY2019 earnings call. Most telling was that wireless services revenues continued to inch up. Wireless connections grew one percent to nearly 120 million and services revenues grew more than three percent to over $65 billion. That is down from a peak of more than $70 billion in 2015, but the positive turn, nonetheless. 

Anticipated continued services revenue growth shows that VZW is reversing the decline that has persisted for several years. Revenue growth has yielded positive cash flows that enabled VZW to increase in its 2019 wireless capital expenditures (capex) to roughly $9.6 billion, up more than 12 percent over the 2018 level. Most of this spending increase has funded early 5G deployments. The company’s guidance for full-year 2020e total capital expenditures is $17-18 billion, on par with 2019’s $17.9 billion. VZW’s network investment could garner the lion’s share and grow again close to $10 billion, another five percent uptick.   

It’s interesting that VZW’s 5G rollout focuses on high-band millimeter wave (mmW) deployments mainly at 28 GHz where Verizon holds a sizeable block of licenses. The company is deploying 5G on mmW in dense high-traffic urban applications where users can benefit from very high-speed connections, and has tested 5G speeds upwards of 1 Gbps over distances up to 1 Km. VZW is expanding its 5G rollout with more mmW sites in the 31 markets launched in 2019, and expects to double that number of markets in 2020. 

Understand that VZW is leaning towards high-band frequencies for 5G as opposed to bands now used for 4G LTE. The company runs its 4G LTE network on low-band 700/850 MHz, and mid-band 1900 MHz and AWS (1700/2100 MHz). The mid-band frequencies are used mainly in urban applications whereas the low-band 700/850 MHz bands serve suburban and rural markets where coverage over distance is achieved at the lower frequencies. For high-speed, low latency applications in dense urban markets, 28 GHz fits the bill and has become VZW’s go-to frequency for the initial deployments. Note that VZW has yet to clarify the extent of its 28 GHz use between its 5G Ultra Wideband mobile service and 5G Home fixed wireless application (FWA) offerings.

By comparison, the other national carriers are implementing 5G in different frequency bands that align with their current spectrum holdings. To wit, AT&T Mobility is deploying 5G in both low-band 850 MHz and high-band 39 GHz. Sprint is planning 5G in its extensive mid-band 2.5 GHz spectrum. With the merger approved, T-Mobile will complement Sprint’s mid-band deployments with its own 5G builds in low-band 600 MHz and high-band 39 MHz spectrum.

VZW sees a beneficial coexistence of 5G at mmW and 4G LTE at 700 MHz. Many new 5G sites are being located where VZW’s 4G LTE sites already exist. It claims that customers will receive reliable service on smartphones enabled for 5G Ultra Wideband even if the customer moves out of 5G coverage, suggesting that 4G LTE network seamlessly will pick up the slack.

To that end, VZW is looking to a new technology referred to as Dynamic Spectrum Sharing or DSS which essentially accommodates 4G and 5G on the same spectrum. So rather than dedicating a block of low-band spectrum such as 700 MHz to 5G, the company prefers to dynamically share the band among the base of existing 4G customers with 5G customers. Net-net, the company explains that with DSS it can leverage its existing low-band holdings for 5G and in fact, make 5G in this band seem more like 4G LTE performance than mmW 5G.

If this isn’t a breakout, it’s starting to feel like one!

By John Celentano, Inside Towers Business Editor

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