Top Wall Streeter follows the evidence. Verizon has said nothing about definite plans and refuses to confirm anything. I knew I was taking a risk last month when I reported they were going ahead on the largest 5G network this side of China. An error on something this big would really hurt my reputation. I went ahead because Lowell McAdam and team are experienced and very smart. Their actions are carefully planned.
Verizon would not be spending $4-7B on fiber backhaul unless they were putting $10's of billions of gear in the field. Moffett and Del Deo confirm that $1B spent of fiber implies an investment about five times greater when labor and other costs are added.
Verizon would have bought some spectrum in the auction unless they had alternate plans to add a great deal of capacity. One report has speeds on the Verizon network falling 14% since they went unlimited. Wireless growth had been falling, but with "unlimited" people aren't switching to Wi-Fi as much. The evidence is early but the trend pretty clear.
No one, not even Verizon, can offer reliable coast estimates on the 5G small cell build. There is simply no data.
Estimates range from 150-500 homes served per cell. Verizon intended a modest trial of mmWave in 2017, mostly in suburban areas in Massachusetts. Suddenly, a few months ago. Verizon expanded trials to 11 cities with very different building patterns. They need the information for planning.
We do know that the likely relative cost of a 5G network has gone down dramatically in the last 18 months or so. Inoe of NTT DOCOMO is a primary source. Using multiple antennas to focus the signal (beamforming) is working well. Ericsson has done some testing with impressive results.
What we don't know is whether the beamforming and other improvements yield an extraordinary increase in the number of homes that can be served. Chet Kanoja of Starry believes he can serve enough customers from each node to make a profit at $50 all included for 200/200 wireless service.That implies a high number of homes servable.
Even if we knew costs, the financial model will be very uncertain until we know how many customers will subscribe at what price. Verizon is telling the street they expect to win something like 30% of cable customers. That seems high to me, at east without prohibitively high customer acquisition costs. Cable is now 50-70 megabits for standard service, more than enough for most people.
Verizon can justify the network expense in many ways, including creating a bleak outlook for competitors. 5G mmWave is likely a competition killer. Verizon's biggest problem is competition is eroding the traditionally massive margins they and AT&T have maintained for almost a decade.
D/M raise doubts about the economics of building one mmWave network, much less threeor four.