Suddenly, it's possible and happening. Costs are down; performance and reach up; "commercial deployments" moved to 2019 by Verizon and AT&T; mobile may be ready for 2020. Engineers like NTT CTO Seizo Inoe are moving up their forecasts for time to revenue. Tests are going better than expected. Most of the challenges holding back big telcos are being solved.
Nothing is certain, but many top engineers are close to convinced. I believe McAdam at Verizon has decided to go full speed ahead. Six months ago, then CFO Fran Shammo told Wall Street not to put 5G into their capex models for several years. He wanted to see the test results in 2018 before going ahead. Since then, Fran's been replaced by Matt Ellis. Verizon changed 2017 test plans from a few homes near their Boston research labs to 11 cities around the country. They've made a firm commitment to a "commercial deployment" of fixed in 2019.
Verizon engineers are enthused about what they've seen in testing around the world.
Verizon in particular needs the capacity, must reinforce a reputation as the best, wants a lever for regulators, and needs a dramatic recovery from their worst quarter in a decade. Cable is killing them in the half of their territory without Fios. Customers are hemorrhaging to Sprint and especially T-Mobile. Don't cry for Lowell McAdam; they still made $3.5B in this "worst quarter." These are the factors I see particular to Verizon.
- The cost has come down and mmWave technology improved so much in the last year it's now clearly practical.
- Verizon's entire business model is based on providing much better service at a higher price. T-Mobile and AT&T have come so close to Verizon quality most people won't see any difference. Being the first in the world to 5G mmWave will be great for their image. Even if they spend $5B more than seems rational today, it's worth it for the pr and marketing.
- Speeds went down 14% when they were dragged kicking and screaming to offer "unlimited." They put a brave face on but really weren't ready. The T-Mobile/Ookla data claim they are now slower than AT&T. Traffic growth on wireless had been plunging from 100% in early smartphone days to 40-45%. Cisco (and I) predicted further falls. That reversed with "unlimited" in Q4 2016. They'll get some breathing room with 4x4 MIMO, 256 QAM, and adding two bands of LTE in the 40 MHz they have fallow. But they soon will need capacity they hadn't planned for. They will need capacity. The small cells going in will have Gig LTE as well as 5G fixed, doubling capacity in a smaller area. They will be upgraded to 5G mobile as soon as ready (?2020-2021.) After the upgrade, they will have far more capacity than anyone else.
- Lowell knows it can be done because a decade ago he built the largest mobile network in the world. He was CEO of Verizon Wireless when they built 4G LTE to 97 % of the U.S. from 2009-2012. When they started, no one else was confident in the technology. The risk paid off. It was installed on time and on budget. They had a glorious run as AT&T took two years to catch up and T-Mobile took five. Many worldwide have passed Verizon since and some of the gear is now outdated. By 2015, T-Mobile built an almost comparable network in half the time for half the price. Time to jump ahead again.
- AT&T has begun going out of territory with wireless to the rooftop. This will allow VZ to counter in AT&T territory and discourage T in VZ territory.
- Lowell McAdam wants to leave a legacy. Predecessor Ivan Seidenberg ran fiber passed 17M homes, still the largest fiber home network in the West. Seidenberg also led the entire company in 2009 when they built LTE to 97% of the U.S. Eight years later, BT hasn't covered even 75% of the U.K.
- 5G mmWave will be a powerful competition-killer. A year ago, Verizon was enthusiastic about 5G but uncertain even one mmWave network would be profitable.Now, I believe they and AT&T will both likely build. The combined market cap is over $400B, enough to invest $40B each spread over 6 years. Sprint's total stock value is less than $40B and T-Mobile only a little more. Even if they could finance the deal, it's almost impossible for three 5G networks to make it, much less the four to seven usually needed for competition to work well.
"mmWave is an incumbent's game," a CTO confirmed to me in private. As Verizon is losing customers, they have more incentive than ever to force out others. Washingtonians, both Democrat and Republican, are burying their heads in the sand on this. We need policy that will work when wireless competition is cut almost in half. We may have ten years but problems could become acute in five.