Verizon 5G: Existential Business Case

The priority of Verizon Wireless’ 5G strategy has never been based on the false, industry-wide narrative of offering its subscribers any unique applications broadly, but more simply on its intense concern of running out of adequate wireless capacity in general, resulting from the burgeoning data requirements of its present and near-term customers – in short, ensuring its sheer survivability is the business case. In fibeReality’s opinion, Verizon has been spending an enormous amount of money without the definite assurance of a single user app even today.

Despite the obvious drawbacks of millimeter wave, the MNO has been in the process of cornering the Central Business Districts (CBDs) of NFL metropolitan areas and other strategic cities across the US, while packing the greatest number of bits into a massive amount of spectrum. Although being compelled to quickly respond to getting hammered on the marketing side for full nationwide 5G offerings, especially by T-Mobile, Verizon has already gained a vital network cost and efficiency advantage in maximizing its internal scale capability, including deploying the most optimal architectural design, and encompassing its fiber support infrastructure.

It allows the operator to most effectively backstop its mmWave deployments and backfill its 5G coverage area with high-performance C-band spectrum it will acquire in the FCC auction towards the end of the year. In fact, fibeReality strongly asserts that T-Mobile, making coverage and penetration its priority, resulting in limited differentiation from 4G smartphones — while ignoring the critical investments necessary in its mmWave spectrum, is akin to putting the cart before the horse.

More recently, Verizon has been forced to become more cautious and tentative than usual with its 5G mmWave buildout not only based on the Covid-19 outbreak, but because of the unexpected expenses and of the additional time necessary to deal with technical difficulties. Consequently, for equipment vendors up and down the food chain, which were depending on purchases in a more significant way a lot sooner, the stakes will become greater with noticeably smaller opportunities in the short term.

Compared to fibeReality’s estimates for 2019 Verizon Wireless CAPEX, we project as much as a 20 percent decline in 2021 with a recovery to normal levels starting in 2022, which will include continuing work to enable the mid-band spectrum footprint. We also project that the operator’s CAPEX for mmWave will be as much as a third lower in 2024, compared with our estimates in 2019, principally because of expected cost reductions.

Verizon’s 5G Enterprise: Hoarding mmWave for Viability is available now in our store.