Verizon Hopes FCC Will Put More High-Frequency Spectrum in Play
Verizon is looking for more high-frequency spectrum for 5G in the secondary market, CEO Lowell McAdam said as the carrier met analysts. McAdam said Verizon doesn’t need additional low-band spectrum for 5G. The FCC has said it will hold two millimeter-wave auctions, McAdam said. “We’re obviously working closely with [the FCC] to accelerate” the time frame, he said Monday evening. “The activity that we’re spurred over the last couple of years has gotten the FCC to see there’s a lot of investment pent up to be made here.”
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Asked on the company's decision to sit out the TV incentive auction, McAdam said Verizon made the right call. The low-band spectrum isn’t as good as higher bands for meeting “capacity” needs, he said. Verizon already has a nationwide footprint in the 700 MHz band, he noted: The 600 MHz spectrum offered in the auction “really doesn’t add any value to you; it actually causes, frankly, more issues from an overall network efficiency perspective.”
The incentive auction results reflected which carriers had low-band spectrum and which needed to fill gaps, McAdam said. T-Mobile was the only major carrier to go big, after not bidding in the 2008 700 MHz auction (see 1704130056). “I personally don’t think it changes the competitive environment that much,” McAdam said. Verizon officials noted the spectrum is unlikely to be widely deployed before 2019.
The carrier views its spectrum holdings as being similar to a “birthday cake” with a layer of low-band spectrum as the base of the cake, and smaller bands of mid-band and high-band spectrum the top layers to fill in where capacity is needed. McAdam said.
The FCC is also on the right track in trying to find ways to accelerate small-cell and other infrastructure deployment, McAdam said. It's moving forward on revised net neutrality rules, he said. “There’s a lot of controversy over net neutrality, but a level playing field spurs investment,” he said. “Over the last several months, everything in the regulatory framework is moving in the right direction and incenting us to make additional investments.”
New Chief Technology Officer Hans Vestberg told analysts: “We are in the beginning of the technical revolution … built on mobility, broadband and cloud services. From here, we will only see acceleration in technology. It will only go faster.”
Wells Fargo analyst Jennifer Fritzsche said she came away more certain that Verizon is on the right course. “Spaghetti not being thrown against the wall,” she wrote investors. “While near term (Q2) wireless service revenue will continue to remain under pressure and the new businesses will take time to be ‘needle moving’ to the whole revenue picture, [Verizon] management laid out a convincing case it is not sitting idle as the market evolves.”