Verizon’s Case for 5G, Part 2

This is a second in a series of blogs that look at Verizon’s list of ways that the company thinks they can monetize 5G. The first blog looked at medical applications. Today I look at the potential market use for 5G for retail.

Verizon’s retail vision is interesting. They picture stores that offer an individualized shopping experience that also uses augmented and virtual reality to communicate with and sell to customers. This is not a new idea and the idea of using 3D graphics and holograms in stores was one of the first future visions touted by augmented reality developers. We are just now on the verge of having technology that could make this possible.

Verizon obviously envisions using 3G bandwidth to enable these applications. Stores will want the flexibility to be able to put displays anywhere in the store, and change them at will, so doing this wirelessly would be a lot cheaper than stringing fiber all over stores. Streaming holograms requires a lot of bandwidth, so this seems like a natural application for millimeter wave spectrum. Our current cellular frequencies are not sufficient to support holograms.

The new 5G standard calls for the use of millimeter wave spectrum to deliver gigabit data paths wirelessly indoors. These frequencies don’t pass through walls, so transmitters in the ceilings could be used to beam down to displays anywhere in a store.

Verizon envisions companies using Verizon licensed spectrum. However, the FCC has already set aside several bands of millimeter wave spectrum for public use and there will soon be a whole industry developing millimeter wave routers for use as WANs – likely the same companies that today make WiFi routers. I have a hard time seeing how Verizon will have any market advantage over the many other companies that will be developing millimeter wave WANs using public spectrum.

The personalized shopping experience is a different matter. Verizon is envisioning a network that identifies customers as they enter the store, either through facial recognition, through cell phone signals, or perhaps because customers voluntarily use an app that identifies them. Verizon envisions using the 5G network tied into big data applications to enable stores to craft a unique shopping experience for each customer. For regular customers that would meaning using a profile based on their past shopping history, and for everybody else it means using a profile cobbled together from the big data all of the ISPs are gathering on everybody.

Verizon and the other big ISPs have invested in subsidiaries that can crunch big data and they are hungry to snag a piece of the advertising revenue that Google has monetized so well. Using big data to enhance the shopping experience will likely be popular with the kinds of shoppers who use in-store apps today. Customers can be offered live specials as they walk down aisles, with offers personalized to them. This could be tied into the holographic product displays and other in-store advertising systems.

However, this application could quickly get creepy if it is done for all shoppers. I know I would never visit a store a second time that recognizes me as I walk in the door and that uses a cloud-based profile of me to try to direct my shopping. Perhaps my distaste for this kind of intrusion is a generational thing and it might be attractive to younger generations of shoppers – but I would find it invasive.

There are physical issues to consider with this kind of network. I tried to use my cellphone from the rear of a grocery store yesterday and I had zero bars of data and couldn’t connect to the voice network. Dead spots can be fixed by installing one or more small cell sites inside a store to reach all parts of a store – something that will become more affordable over time.

Verizon will have an advantage if smartphones are a needed component of the customized shopping experience. But the shopping applications don’t necessarily require smartphones. For example, screens built into shopping carts could fulfill the same functions and not tie a retailer to pay Verizon.

One of the biggest hurdles I see for Verizon’s vision is that retail stores are slow adapters of new technology. This kind of application would likely start at the big nationwide chains like Target or Walmart, but it’s a decades-long sales cycle to get stores everywhere to accept this. Verizon’s vision also assumes that stores want this – but they are already competing for their own survival against online shopping and fast delivery and they might be leery about using a technology that could drive away a portion of their customer base. From what I can see, stores that provide a personal touch are the ones that are competing best with online shopping.

To summarize, Verizon is espousing a future vision of retail where the retailer can interact electronically with shoppers on a personalized basis. The first big hurdle will be convincing retailers to try the idea, because it could easily go over the top and be viewed by the public as invasive. More importantly, licensed 5G from Verizon isn’t the only technology that can deliver Verizon’s vision since there will be significant competition in the indoor millimeter wave space. This is one of those ideas that might come to pass, but there are enough hurdles to overcome that it may never become reality.

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