Verizon Takes 5G National, Still Committed to High-Band Spectrum
Verizon is starting to fully deploy 5G and now covers more than 200 million people in the U.S., as broadband phone connections increased, said CEO Hans Vestberg said on a Q3 call Wednesday. it's the first of the major U.S. carriers to report. At a Competitive Carriers Association conference, T-Mobile President-Technology Neville Ray contrasted its approach to 5G with Verizon’s focus on high band.
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“We launched the 5G nationwide last week, and I’ve said through the whole year that we’re going to launch the network when it commercially makes sense, and it made sense last week when the iPhone 12 was launched,” Vestberg said. Verizon's company stores are coming back “to full operations, of course with new procedures and processes,” he said. Engineers are back “in full force in the field to make installations,” he said. The company appears well positioned to compete in the December C-band auction, with year-to-date operating cash flow of $32.5 billion, up $5.7 billion from last year. Since the quiet period has started, officials didn’t comment on the auction.
Verizon added 283,000 postpaid phone subscribers in Q3, which beat expectations. It had 139,000 Fios net adds, compared with 30,000 in Q2. The carrier lost 61,000 Fios video customers. Profit dropped to $4.5 billion, from $5.34 billion in the year-earlier quarter. Revenue was $31.5 billion, below expectations partly because of softness in upgrades. Verizon offered improved guidance and now expects 2020 earnings growth of 0%-2%, compared with an earlier prediction of -2% to 2%.
Vestberg said the new iPhone 12 includes the high-band spectrum used by Verizon. “We’re creating a competitive advantage" with millimeter-wave, he said. "You can see that all the partners we're lining up are really excited.” He said the carrier has already deployed five times more mmWave base stations this year than in all of 2019.
Samsung is likely the primary beneficiary of Verizon’s high-band deployment, with Ericsson also getting some of the business, Raymond James told investors: “Verizon sees the inclusion of millimeter support in new iPhones as validating its strategy.” Verizon said capex for the year will be at the upper end of $17.5-18.5 billion, which is “consistent with our prior estimate,” the firm said.
New Street’s Jonathan Chaplin considered the results mostly positive but has continuing concerns. “Verizon still lacks the requisite spectrum assets to maintain their network leadership over time,” he told investors: “They may acquire these assets when C-Band comes to market, but it will be expensive, and they will have to wait until 2022 (at earliest) to see the benefit.”
T-Mobile has been proven right in its decision not to base its 5G network on high-band spectrum, Ray said. He thought mmWave "has its place, but given the economics and physics, you simply don’t build a large scale 5G network with it“ and "you build 5G with a foundational layer of low-band, providing connectivity and coverage. We’re doing this with fresh 600 MHz spectrum, and we’re piling on top of it a deep high-capacity layer of 2.5 GHz.”
T-Mobile holds 319 MHz of sub-6 GHz and more than 1,100 MHz of high-band spectrum, Ray said. “We know that the more spectrum we have, the better able we are to compete.” T-Mobile’s strategy is built on clear spectrum, “not by a dependency on dynamic spectrum sharing that forces the sharing of mid-band resources between 4G and 5G,” he said.