Verizon’s Case for 5G, Part 4

Ronan Dunne, an EVP and President of Verizon Wireless recently made Verizon’s case for aggressively pursuing 5G. This last blog in the series looks at Verizon’s claim that they are going to use 5G to offer residential broadband. The company has tested the technology over the last year and announced plans to soon introduce the technology into a number of cities.

I’ve been reading everything I can about Verizon and I think I finally figured out what they are up to. They have been saying that within a few years that they will make fixed 5G broadband available to millions of homes. One of the first cities they will be building is Sacramento. It’s clear that in order to offer fast speeds that each 5G transmitter will have to be fiber fed. To cover all neighborhoods in Sacramento would require building a lot of new fiber. Building new fiber is both expensive and time-consuming. And it’s still a head scratcher about how this might work in neighborhoods without poles where other utilities are underground.

Last week I read of an announcement by Lee Hick’s of Verizon for a new initiative called One Fiber. Like many large telecoms Verizon has numerous divisions that own fiber assets like the FiOS group, the wireless group and the old MCI business CLEC group. The new policy will consolidate all of this fiber under into a centralized system, making existing and new fiber available to every part of the business. It might be hard for people to believe, but within Verizon each of these groups managed their own fiber separately. Anybody who has ever worked with the big telcos understands what a colossal undertaking it will be to consolidate this.

Sharing existing fiber and new fiber builds among its various business units is the change that will unleash the potential for 5G deployment. My guess is that Verizon has eyed AT&T’s fiber the strategy and is copying the best parts of it. AT&T has quietly been extending its fiber-to-the-premise (FTTP) network by extending fiber for short distances around the numerous existing fiber nodes in the AT&T network. A node on an AT&T fiber built to get to a cell tower or to a school is now also a candidate to function as a network node for FTTP. Using existing fiber wisely has allowed AT&T to claim they will soon be reaching over 12 million premises with fiber – without having to build a huge amount of new fiber.

Verizon’s One Fiber policy will enable them to emulate AT&T. Where AT&T has elected to build GPON fiber-to-the-premise, Verizon is going to try 5G wireless. They’ll deploy 5G cell sites at their existing fiber nodes where it makes financial sense. Verizon doesn’t have as extensive of a fiber network as AT&T and I’ve seen a few speculations that they might pass as many as 7 million premises with 5G within five years.

Verizon has been making claims about 5G that it can deliver gigabit speeds out to 3,000 feet. It might be able to do that in ideal conditions, but their technology is proprietary and nobody knows the real capabilities. One thing we know about all wireless technologies is that it’s temperamental and varies a lot by local conditions. The whole industry is waiting to the speeds and distances Verizon will really achieve with the first generation gear.

The company certainly has some work in front of it to pursue this philosophy. Not all fiber is the same and their existing fiber network probably has fibers of many sizes, ages and conditions using a wide range of electronics. After inventorying and consolidating control over the fiber they will have to upgrade electronics and backbone networks to enable the kind of bandwidth needed for 5G.

The Verizon 5G network is likely to consist of a series of cell sites serving small neighborhood circles – the size of the circle depending upon topography. This means the Verizon networks will  not likely be ubiquitous in big cities – they will reach out to whatever is in range of 5G cell sites placed on existing Verizon fiber. After the initial deployment, which is likely to take a number of years, the company will have to assess if building additional fiber makes economic sense. That determination will consider all of the Verizon departments and not just 5G.

I expect the company to follow the same philosophy they did when they built FiOS. They were disciplined and only built in places that met certain cost criteria. This resulted in a network that, even today, bring fiber to one block but not the one next door. FiOS fiber was largely built where Verizon could overlash fiber onto their telephone wires or drag fiber through existing conduits – I expect their 5G expansion to be just as disciplined.

The whole industry is dying to see what Verizon can really deliver with 5G in the wild. Even if it’s 100 Mbps broadband they will be a competitive alternative to the cable companies. If they can really deliver gigabit speeds to entire neighborhoods then will have shaken the industry. But in the end, if they stick to the One Fiber model and only deploy 5G where it’s affordable they will be bringing a broadband alternative to those that happen to live near their fiber nodes – and that will mean passing millions of homes and tens of millions.