Next-gen 5G technologies and standards are still in the development phase, but Verizon is already looking to deliver high-speed broadband speeds over wireless connections next year.
“We see the stars aligning very quickly when it comes to the 5G future,” Lowell McAdam, Verizon’s CEO, said Tuesday on the company’s Q2 earnings call, noting that the FCC has completed its radio specs, opening the door to testing of technical components.
Verizon’s work around 5G and millimeter wave spectrum is “preparing us for a fixed commercial wireless fiber launch in 2017,” he said, noting that the FCC’s recent approval of Verizon’s lease agreement with XO Communications provides a “clear spectrum path for 5G deployment.”
Update: Fran Shammo, Verizon's EVP and CFO, clarified later that Verizon views "2017 as a development year for 5G," but allowed that the FCC ruling allowing the use of leases "could accelerate" that timing. "But...to get to a commercial launch and actually start to generate revenue, I think that will come in either very late 2017 or early 2018," he said, noting that Verizon is not including any of that in its current financial guidance. .
“I think of 5G, initially as, in effect, wireless fiber,” McAdam said. “With wireless fiber, the so-called last mile can be a virtual connection dramatically changing our cost structure."
He noted later that about half the costs of deploying Fios is in the home, with the drop being the most expensive outside the home. Verizon isn’t providing hard numbers yet on 5G deployment, but McAdam noted the home routers cost the same but don’t need the ONT (optical network terminal) and that Verizon can add 5G “for very little incremental cost” as it densifies 4G networks with small cells.
“We expect there to be a significant cost reduction” with 5G, McAdam said.
Verizon has been testing 5G in Dallas (with Ericsson and Nokia) and in New Jersey and Virginia and has been seeing speeds above 1 Gbps at over 500 yards or less – more than enough capacity for up to six Ultra HD TV signal, six virtual reality units, and numerous tablets and other mobile devices.
McAdam said Verizon’s now in the process of moving that work into the field, where it can start to cover 200-home developments. It will also look at some rural environments.
Further out, Verizon will be pursuing mobile use cases for 5G that support “massive” scale for the Internet of Things and low latency services and apps, he said.
McAdam also offered updates on Verizon’s work with cities such as Boston, where it’s moving ahead with “one fiber strategy” initiative for wireless and Fios-based services. Verizon, he said, is in similar talks with other cities, including San Francisco.
“No longer are discussions solely about local franchise rights, but how to make forward-looking cities more productive and effective,” he said, adding that Verizon’s XO deal, which includes 40 metro fiber rings in major cities, is key to this strategy.
And while the recent work stoppage impacted Verizon’s Fios results in Q2, the rate of growth is expected to “return to a normal run rate in the third quarter,” Fran Shammo, Verizon’s EVP and CFO, said.
Q3 “will be a more positive quarter for us,” Shammo said, also predicting that Fios growth will be “back in stride by the fourth quarter.”
Verizon execs also added color to the company’s proposed $4.83 billion acquisition of Yahoo’s operating business, holding that it will help Verizon scale up and become a bigger player in mobile media.
Verizon sees “tremendous opportunity in the digital video marketplace” with that deal, McAdam said. “Content creators and advertisers are hungry for alternatives as the market expands for both in-home and mobile consumption…Verizon intends to be a significant player in this space."
He said there are opportunities in areas such as sports, where Verizon can stream games not just on Fios but also over AOL and Yahoo properties as well as via go90. “We view this as a waterfall of content moving down through our different properties.”
McAdam said Verizon’s not yet to put a hard figure on the synergies it expects to generate from the Yahoo deal. “They're meaningful; let me put it that way."