30M homes servable, 35% penetration in five years, significantly raising earnings. Brett Feldman made a gutsy call today. Brett has been accurate in the past about Verizon plans; he's the only other person who in Spring 2017 projected 30M. Brett's assumptions are.
- Verizon will add 5G millimeter wave to all their existing cell sites. (I estimate 60,000-70, 000.) This brings about 30M homes out of incumbent territory within 2,000 feet. He expects that to be mostly completed by 2022.
- Verizon has demonstrated a gigabit at 2,000 feet, although I believe VZ has provided no data on what percent of customers within 2,000 feet will actually be gigabit capable.
- Based on a large rollout in 2019 going forward and matching the 35% to 40% take rate for Fios, he calculates a likely 7.9M subscribers for 2023. Verizon today has only 7M broadband customers.
- Feldman expects Verizon mostly to upgrade existing cell sites rather than build many new ones in this period. He sees little increase in capex. I calculate that will allow Verizon to reach ~40% mmWave coverage, including incumbent territory. They will have "Gigabit LTE" elsewhere delivering speeds in the hundreds of meg.
- $50/month is the most likely price but he expects Verizon to experiment.
If these presumptions prove true, mmWave fixed will be a profitable service to any wireless carrier who does not have a decent landline broadband offering. Nearly all European carriers and most Asians disagree, as I confirm in my report for STL Partners.
Making similar assumptions for AT&T, they would reach almost half the U.S. because they have a larger incumbent territory. For now, AT&T is apparently undecided. The engineers are ready to go big but the CFO is unconvinced.