Most connections will be Wi-Fi or local. Very few require 5G high speeds or latency. Consumer IoT will come, but industrial is now leading the way. Those observations are from Linley Gwennap, one of the world's leading chip analysts. I listen closely to the chip guys, who often see trends several years ahead.
Wi-Fi is close to ubiquitous in every middle class home, so why pay a phone company to connect you in home or office? The vast majority of IoT apps are low speed and latency tolerant. Your air conditioner or washing machine doesn't need to communicate at megabits/second, much less gigabits. Adding Wi-Fi is just a couple of bucks and getting cheaper. 802.11ac is delivering a routine 500 megabits.
Promised: 10 year battery life;, very low power; 15 km reach; 50-meter ground penetration; not stopped by seven walls; doesn't need a spectrum allocation. It's also darned cheap. The performance is a dismal 0.3 kbps to 50 kbps but it still sounds impossible.
Little chipmaker Semtech seemed to be tilting at windmills until Bouygues turned on Grenoble and Paris. Bouygues plans 20 cities in France by the end of this year. France Telecom responded they will cover "the entire nation" by the end of next year. Now Tata, a $100B conglomerate, announced they will serve 400M people in India's cities. Swisscom and KPN have announcements.
Lowell was more polite, of course. Verizon didn't buy any spectrum in the last auction despite prices that were down by 50-60%. "We simply don’t need it," explains Chief Network Officer Nicola Palmer. Lowell McAdam told Morgan, "When you look at the spectrum and the cost of small cells versus the cost of spectrum in the old AWS auction sort of environment, it was clear to us that building the fiber infrastructure to densify via small cells was better than the alternative of a buying spectrum." CFO Matt Ellis explained to Craig Moffett, "Spectrum is one way that we can add that capacity, but it's not the only way,"
Technology allows adding relatively inexpensive capacity within existing spectrum faster than demand is growing. Verizon estimates the cost per bit is going down 40%/year; Telus estimates 55%. Verizon's capex has been flat to down but they now are offering new unlimited plans. McAdam expects capex to stay flat for the next decade, despite one of the largest 5G mmWave builds in the world.
"We have sufficient spectrum holdings below 1 GHz," says Chief Network Officer Nicola Palmer. "We have strong spectrum holdings in the 700, 850, 1900 megahertz (MHz)/PCS, AWS 1 and 3 spectrum bands. So why didn’t we bid on the 600 MHz spectrum? We simply don’t need it."
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