Draft for comment: more thorough and accurate version to come. Improvements and disagreements welcome.

Verizon has decided to spend $20-25,000,000,000 on 5G millimeter wave to 30-40,000,000 homes, I believe. This is not a test, trial, or “part of 11 cities” deployment. This will be the largest new network in the western world.

1/3rd to 1/2 of the U.S. will be covered. In 2019 - if all goes well - they will begin installing between 100,000 and 300,000 small cells. They hope to finish this phase in 2022 or 2023.

Each cell will have a 4G/5G upgradable radio and will immediately add capacity to LTE, right where it’s most needed. That’s why Verizon didn’t buy any spectrum in the auction; LTE & LAA will provide what’s needed, even with an “unlimited” offering.

 

5G mmWave mobile now looks to be important in 2020 rather than the 2022-2023 previously expected by the pros. Verizon will have 2 gigabits to 5 gigabits wherever deployed, 10X as much capacity as today serving fewer users per cell.

They intend to use that bandwidth to blow away T-Mobile and Sprint, currently stealing customers at a ferocious rate. mmWave is close to a natural monopoly because all those cells and backhaul cost so much. By mid-decade, Verizon hopes to raise the ante to play in this market. AT&T, it seems, has decided to almost match them. Others may very well have to fold.

Even two networks will be hard to support; four will be almost impossible. I’ve been a lone voice warning that competition will break down in the mmWave era; the policy people have been burying their heads in the sand.

They will begin this year to install the $1B of fiber they just ordered from Corning. The fiber build alone will cost $4-7B; the actual fiber is just a small part of the cost. This to me was the proof point. It just doesn’t make sense to spend ~$5B on fiber unless Verizon intends to put cells nearly everywhere.

Until the last few months, pros like NTT CTO Seizo Onoe didn’t believe millimeter wave for mobile would be ready for volume until 2022-2023. Inoe made a dramatic speech at the Brooklyn 5G; he now believes 5G mmWave Mobile will be ready in 2020.

5G fixed will be there from the beginning. Verizon carefully is saying “Only 5G fixed until mobile is ready.” This is researched but I do not have any inside information from the top of the company. Much is by inference. Nothing like this has been announced although they have been dropping hints to Wall Street.

I believe I’m first with this conclusion but I expect a bandwagon to build over the next few months.  After 18 years, I don’t think this will destroy my reputation if I have it wrong or they change their mind. I considered the evidence carefully.

The mission can be aborted until 2019, when investments become large. If the trials hit unexpected problems, they could drop the whole thing. If they make a big deal, like buying Charter, things will evolve. Deals are unlikely; none look to make economic sense.

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dave askOn Oct 1, Verizon will turn on the first $20B 5G mmWave network, soon offering a gigabit or close to 30M homes. The estimates you hear about 5G costs are wildly exaggerated. Verizon is building the most advanced wireless network while keeping capex at around 15%.

The Koreans, Chinese, and almost all Europeans are not doing mmWave in favor of mid-band "5G," with 4G-like performance. Massive MIMO in either 4G or "5G" can increase capacity 4X to 10X, including putting 2.3 GHz to 4.2 GHz to use. Cisco & others see traffic growth slowing to 30%/year or less. Verizon sees cost/bit dropping 40% per year. I infer overcapacity almost everywhere.  

The predicted massive small cell builds are a pipe dream for vendors for at least five years. Verizon expects to reach a quarter of the U.S. without adding additional small cells. 

In the works: Enrique Blanco and Telefonica's possible mmWave disruption of Germany; Believe it or don't: 5G is cheap because 65% of most cities can be covered by upgrading existing cells; Verizon is ripping out and replacing 200,000 pieces of gear expecting to save half. 

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 5G Why Verizon thinks differently and what to do about it is a new report I wrote for STL Partners and their clients.

STL Partners, a British consulting outfit I respect, commissioned me to ask why. That report is now out. If you're a client, download it here. If not, and corporate priced research is interesting to you, ask me to introduce you to one of the principals.

It was fascinating work because the answers aren't obvious. Lowell McAdam's company is spending $20B to cover 30M+ homes in the first stage. The progress in low & mid-band, both "4G" and "5G," has been remarkable. In most territories, millimeter wave will not be necessary to meet expected demand.

McAdam sees a little further. mmWave has 3-4X the capacity of low and mid-band. He sees an enormous marketing advantage: unlimited services, even less congestion, reputation as the best network. Verizon testing found mmWave rate/reach was twice what had been estimated. All prior cost estimates need revision.

My take: even if mmWave doesn't fit in your current budget, telcos should expand trials and training to be ready as things change. The new cost estimates may be low enough to change your mind.