Verizon Wireless’ Second (Half) Act

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Wireless takes roughly half of the total. We estimate VZ will spend $8-10 billion in wireless capex in 2020 with about 53 percent invested in 1H20.

VZ Wireless reported 2Q20 service revenues of $15.9 billion, down nearly 3 percent from $16.4 billion in 1Q20 and down almost 2 percent from $16.2 billion in 2Q19. Declines resulted from reduced roaming revenues, increased unlimited data usage and waived late fees.

At the same time, retail post- and pre-paid wireless connections grew in the quarter by 320,000 to a total of nearly 119.9 million. 

Despite COVID-19 impacts, VZ continues its nationwide 5G build out on several different fronts.

For mobility applications, VZ’s 5G Ultra Wideband service utilizes the company’s significant millimeter wave spectrum holdings in 28 GHz and 37/39 GHz bands.

VZ has the greatest national weighted average spectrum depth in mmW frequencies, amounting to more than 2000 MHz. VZ CEO Hans Vestberg says, “ … our model being a millimeter wave that is transformative. No one is even close to it …”

To monetize that spectrum, VZ is deploying thousands of 5G small cells in dense urban markets. Vestberg added, “We are on plan to deploy more than 5X more millimeter base stations this year compared to last year” although he did not divulge the starting point for that deployment.

5G UWB rollout has commenced in 60 cities around the country. Many were on the air at the end of 2Q20 with the bulk to be activated through year end.

Access to fiber for backhaul is the key to making 5G small cells work.

VZ owns most of its fiber networks. Its extensive fiber infrastructure in its primary Northeast operating area supports residential and business customers with fiber-to-the-home/-premise (FTTH/FTTP) facilities.

Elsewhere, VZ expands its fiber footprint with its own builds, by acquiring existing facilities or by leasing access to third-party fiber networks such as Crown Castle’s (see 5G Fiber-rich Networks).

Beyond those top 60 cities, VZ will deliver nationwide 5G mobility services with dynamic spectrum sharing on its high-performing 4G LTE network. Its 4G network operates predominantly in the 700 MHz band with coverage and wide area reach beyond mmW.

DSS enables fast non-standalone 5G deployments while buying VZ time to install standalone 5G in those markets.

VZ’s reliance on mmW and DSS for nationwide 5G highlights the fact that the company lacks sufficient mid-band spectrum compared to T-Mobile’s (NYSE: TMUS) use of 150 MHz of 2.5 GHz acquired from Sprint.

To that end, VZ is bidding in the current CBRS auction for 10 MHz Priority Access License blocks in markets around the country. More importantly, VZ likely will be the big player in the upcoming C-band auction where it can gain over 200 MHz of 3.7-4.2 GHz spectrum. C-band extends VZ’s full 5G service reach beyond mmW frequencies.

On another front, VZ is deploying 5G Home, a mmW fixed wireless access service, initially in 10 cities. The 5G Home is not a substitute for its FiOS FTTH high-speed internet access service. Rather, 5G Home will serve customers in those markets where VZ does not offer FiOS.

In addition, VZ sees opportunities for 5G mobile edge computing particularly for Enterprise markets. The company is partnering with IBM and SAP to develop high-speed data throughput, low latency in business-to-business applications for its biggest customers.

by John Celentano, Inside Towers Business Editor

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