Verizon Restarts Wireless Gigabit Broadband Roll-out

After a two-year pause, Verizon has launched a new version of its fixed wireless access (FWA) broadband, launching the service in Detroit. Two years ago, the company launched a trial version of the product in Sacramento and a few other cities and then went quiet about the product. The company is still touting this as a 5G product, but it’s not and using millimeter wave radios to replace the fiber drop in a fiber network. For some reason, Verizon is not touting this as fiber-to-the-curb, meaning the marketing folks at the company are electing to stress 5G rather than the fiber aspect of the technology.

Verizon has obviously been doing research and development work and the new wireless product looks and works differently than the first-generation product. The first product involved mounting an antenna on the outside of the home and then drilling a hole for fiber to enter the home. The new product has a receiver mounted inside a window that faces the street. This receiver connects wirelessly with a home router that looks a lot like an Amazon Echo which comes enabled with Alexa. Verizon is touting that the new product can be self-installed, as is demonstrated on the Verizon web page for the product.

Verizon says the FWA service delivers speeds up to a gigabit. Unlike with fiber, that speed is not guaranteed and is going to vary by home depending upon issues like distance from the transmitter, foliage, and other local issues. Verizon is still pricing this the same as two years ago – $50 per month for customers who buy Verizon wireless products and $70 per month for those who don’t. It doesn’t look like there are any additional or hidden fees, which is part of the new billing philosophy that Verizon announced in late 2019.

The new product eliminates one of the controversial aspects of the first-generation product. Verizon was asking customers to sign an agreement that they could not remove the external antenna even if they dropped the Verizon service. The company was using external antennas to bounce signals to reach additional homes that might have been out of sight of the transmitters on poles. With units mounted inside of homes that kind of secondary transmission path is not going to be possible. This should mean that the network won’t reach out to as many homes.

Verizon is using introductory pricing to push the product. Right now, the web is offering three months of free service. This also comes with a year of Disney+ for free, Stream TV for free, and a month of YouTube TV for free.

The router connects to everything in the home wirelessly. The wireless router comes with WiFi 6, which is not much of a selling point yet since there are practically no devices in homes that can yet use the new standard – but over time this will become the standard WiFi deployment. Customers can buy additional WiFi extenders for $200 if needed. It’s hard to tell from the pictures if the router unit has an Ethernet jack.

From a network perspective, this product still requires Verizon to build fiber in neighborhoods and install pole-mounted transmitters to beam the signal into homes. The wireless path to the home is going to require a good line-of-sight, but a customer only needs to find one window where this will work.

From a cost perspective, it’s hard to see how this network will cost less than a standard fiber-to-the-home network. Fiber is required on the street and then a series of transmitters must be installed on poles. For the long run operations of the network, it seems likely that the pole-mounted and home units will have to be periodically replaced, meaning perhaps a higher long-term operational cost than FTTH.

Interestingly, Verizon is not mentioning upload speeds. The pandemic has taught a lot of homes how important upload speeds are, Upload speed is currently one of the biggest vulnerabilities of cable broadband and I’m surprised to not see Verizon capitalize on this advantage for the product – that’s probably coming later.

Verizon says they still intend to use the technology to pass 30 million homes – the same goal they announced two years ago. Assuming they succeed, they will put a lot of pressure on the cable companies – particularly with pricing. The gigabit-range broadband products from Comcast and Charter cost $100 or more while the Verizon FWA product rivals the prices of the basic broadband products from the cable companies.

The Infrastructure Crisis

infrastructure revealed

infrastructure revealed (Photo credit: nicolasnova)

This country has an infrastructure crisis. A lot of my blog talks about the need for building fiber since I consider fiber as basic infrastructure in the same way that roads, bridges and sewers are infrastructure. Any town without adequate fiber is already starting to get bypassed in terms of opportunities for its citizens and businesses. And this is only going to get worse with the upcoming Internet of Anything, because only fiber is capable of carrying the vast amounts of data that are going to be generated.

But this country has a crisis with every kind of basic infrastructure. We are not spending enough money to keep our roads, bridges, power, water and other basic infrastructure from slowly deteriorating. The backlog of infrastructure upgrades needed just to get the country back to adequate is staggering.

It has historically been the purview of government to take care of a lot of this infrastructure – and while the federal government takes care of interstate highways and some bridges, the obligation for keeping up with infrastructure falls largely on state and local governments.

And those government entities do not have anywhere near the borrowing capacity to begin tackling the cost of fixing everything that needs fixing or updated. And local property and other taxes would have to be increased a huge amount to pay for it all. Even if there was a taste for doing the needed upgrades, the recent economy has brought many local governments up against their borrowing limits. And we are starting to see municipal bankruptcies, small and large, which is a sign that the municipal borrowing system is cracking around the edges.

And the ability for municipal entities to borrow could get much harder. The recent Detroit bankruptcy is just the tip of the iceberg in terms of large cities that are buckling under accumulated pension costs. And the nonsense going on in nonsense going on in nonsense going on in Washington with the federal debt ceiling might drive up interest rates.

Given all of these factors one has to ask if government financing is the best way to build infrastructure. There certainly are mountains of evidence that municipally funded projects cost more than similar projects constructed by private firms. And while municipal bond interest rates sound cheap, bond money is extremely expensive money due to the additives to bond borrowing such as capitalized interest and debt service reserve funds.

If this country has any hope of putting a dent in the huge infrastructure hole we find ourselves it is going to have to come from bringing private capital to bear on the problem. Where there is a financial crush in the public sector today we are looking at huge amount of private equity on the sidelines today just waiting to be invested in good projects.

The trick to attracting private money for infrastructure is to find a good way to forge public / private partnerships. Unfortunately, there is one key missing component that is making it hard to bring private money into infrastructure deals. And that is development capital.

Development capital is the money that is spent up front in a project to take it from concept to working plan. This includes such things as creating business plans, doing basic engineering, identifying hurdles and solutions – all of those early steps that private equity expects to be done before they will consider a project. In layman’s terms, private equity investors expect somebody else to have done the legwork to prove the feasibility of a project before they will consider it.

We have a development capital gap in this country. There are very few entities today that are willing to tackle spending the development capital needed to prove infrastructure projects. And so hundreds, even thousands of worthy projects are going undone because nobody is willing to spend that first 1% of a project needed to get it started.

What we need is a person or a group of people to step up to provide development capital. This could be government. For instance, for the cost of building one bridge they could instead provide the public development capital to build one hundred bridges. So state governments might be a great place to get this done.

It could also be done privately, meaning that somebody needs to create funds that strictly are development capital. Such funds could produce fantastic returns. But this is a concept that is alien to US investors.

But somebody needs to figure out how we get development capital or our infrastructure is going to continue to deteriorate until we have no choice but to fix it directly with tax dollars.