Verizon’s Case for 5G, Part 1

Ronan Dunne, an EVP and President of Verizon Wireless recently made Verizon’s case for aggressively pursuing 5G. On an investor call he talked about potential ways that the company might monetize the new technology. Over a series of blogs I’m going to look at the various market applications of 5G envisioned by Verizon.

Mr. Dunne thinks 5G cellular can be used to develop advanced networks to provide better long-term patient monitoring. The solution he envisions would use cellular technology to power medical monitoring devices worn by patients or used in homes.

This one application gets to the heart of Verizon’s vision of the future with using 5G as the primary technology to connect to IoT devices. Today there are already health and medical devices connected through the cellular network. For example, there are GPS-enabled running watches today that require a cellular subscription. These devices communicate 2-way with the cloud through cellular. They can upload a runner’s statistics like heart rate and can also download things like a map of the runner’s location.

However, there are huge numbers of similar devices that don’t use cellular. For example, there are running monitors that provide the same features by connecting through a runner’s smartphone, which the runner must carry to get the same kind of feedback. Many of the most popular devices like Fitbit don’t require cellular at all and can store runner’s statistics until they can sync with their home WiFi network. There are also many in-home medical monitors that connect only through WiFi.

Verizon wants to capture the IoT market, and medical devices are just one of the many market niches they envision. In their vision of the future, all medical monitors would come with a cellular subscription. For medical devices that need to be connected 24/7 this application makes a lot of sense. For example, out-patients after surgery could be monitored at all times and wouldn’t be restricted to being in range of a WiFi network.

But this comes with a cost, at least today. Currently WiFi and Bluetooth technology is cheap and there is very little incremental cost of building these technologies into the chips in devices – many common chips already have built-in WiFi. It’s more expensive today to provide a 2-way cellular device.

There are also weaknesses with cellular coverage that would need to be addressed. For example, I can see a weak Verizon signal from my upstairs office, but I have zero bars of coverage on the first floor or in my yard. There are still a lot of homes today who have no cellular coverage, or coverage only outside or in some parts of their home.

Like many of the applications that Verizon has in mind, the goal is for them to sell many more cellular subscriptions. Practically everybody in the country now has a cellphone and Verizon envisions IoT-monitoring subscriptions as a way to boost sales. But this is going to require a public willing to pay more for the extra connectivity. In the case of medical monitoring, a device that can connect to WiFi in the home or to a smartphone outside the home can provide the same connectivity at zero extra cost to the consumer. My guess is that Verizon will be pushing sales of medical monitoring through doctors and hospitals, because a lot of consumers would choose the cheaper alternative if they are given a choice.

The battle to connect to in-home medical devices will be an even harder sale for Verizon to win because most homes today have WiFi. Verizon pictures a future world where all of our IoT devices connect using cellular. This connectivity is made easier with 5G since the new specification calls for allowing 100,000 simultaneous connections to devices from each cell site. However, WiFi already has a huge market lead in this area and IoT devices come WiFi enabled, I foresee a huge uphill fight for Verizon to try to capture this business. I know personally that, given a choice, I’m going to buy an appliance with WiFi connectivity over a model that requires an additional cellular subscription, no matter how small the extra fee. Verizon ultimately foresees homes paying an additional $20 or $30 per month for IoT connectivity, which translates to huge profits for the company.

As a consumer I also worry about privacy using the cellular network. Today my landline ISP needs to somehow pick out my IoT signals from the rest of bits generated from my home – something I can easily hide if I wish to. But Verizon would automatically know the source of the communication from each IoT device connected to their network, allowing them to more easily spy on my IoT outputs – particularly if they are the ones translating the signals to send back to doctors, hospitals or whoever is at the other end of each IoT device. I really don’t trust Verizon enough to let them peer that easily into my personal data.

This application is no slam dunk for Verizon. There is certainly an opportunity for them to convince health care companies to use devices that require an extra 5G connectivity charge each month. But when this choice is left up to consumers I think most of them will choose to keep using WiFi once they understand all of the facts.

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