Verizon shifts 5G buildout from coverage to satisfaction, revenueVerizon shifts 5G buildout from coverage to satisfaction, revenue

Verizon's top executive said that, starting last year, the company shifted its midband 5G network buildout strategy from a coverage play to one that will emphasize customer satisfaction and revenues.

"We already have changed our strategy in '23, so the deployment of our C-band [midband spectrum] is based on customer satisfaction and on revenue generation," Verizon CEO Hans Vestberg said Monday at an investor event. "Even though we're going to cover almost all the population [with C-band], that is not the main driver and the priority right now."

Vestberg explained that Verizon set aside $10 billion in 2021 for a three-year project to upgrade its network to 5G technology using its new midband C-band spectrum holdings. That initial project focused on covering as many people as possible, primarily by installing 5G C-band radios in densely populated urban areas.

Today, though, that program is over, so now Verizon is installing C-band radios in locations where it can improve its customer satisfaction rates, or where it can generate more revenues through services like fixed wireless.

"Right now our deployment is much more about getting it to where we need better customer satisfaction. It might be densification, or people have moved to a certain area, or how do we create even quicker revenue from our investment," Vestberg said.

Vestberg added that, in markets where Verizon offers C-band connections, the operator sees a greater portion of customers selecting its more expensive service plans than in markets where it doesn't offer C-band. He said Verizon also generates more gross customer additions in such markets and counts fewer customer defections.

"The user experience on C-band is way, way better," he said.

T-Mobile officials recently disclosed a similar 5G network buildout strategy. T-Mobile's networking chief Ulf Ewaldsson said in October the operator now uses AI technology and billions of data points to determine exactly how and where to upgrade and expand its network. Company representatives call the effort "customer-driven coverage."

Expanding and improving

Verizon spent more than $50 billion to acquire nationwide C-band spectrum in an FCC auction in 2021. It also paid satellite operators like SES and Intelsat, which previously used that spectrum, to get access to those licenses more quickly.

To add that spectrum into its network, Verizon is buying 5G C-band radios from Samsung and Ericsson and installing them on top of macro cell towers.

And, starting earlier this year, Verizon also began deploying small cells that can support C-band spectrum. Small cells are essentially mini macro cell sites that sit atop street lights or rooftops. Verizon's small cells previously only supported the company's millimeter wave (mmWave) spectrum holdings.

But Verizon hasn't yet put all of its C-band spectrum into use. The company is primarily deploying C-band radios on top of its existing macro cell tower footprint, which was initially built to support its deployment of AWS spectrum in the 4G era. Verizon expects to add C-band capabilities to around 70% of its AWS sites by the end of this year and will increase that to 80-90% by next year.

Verizon recently increased its capital expenses (capex) to around $17 billion this year – above analysts' expectations – in part to reach that C-band buildout goal.

Finally, Vestberg said Verizon can add additional capacity to its C-band network by deploying additional spectrum within that band. He said that, today, Verizon's C-band deployments sit inside chunks of 80-100MHz of spectrum, but that Verizon owns on average 161MHz of C-band spectrum nationwide.

"Some of the technology we're buying right now cannot handle 161MHz because there are so many radios," he said.

The context

Wireless network operators like Verizon have rushed to deploy 5G in midband spectrum like the C-band because transmissions in such spectrum can dramatically increase users' speeds while at the same time covering wide geographic areas.

Importantly, midband 5G spectrum can support services like fixed wireless access (FWA). By offering FWA across wide swaths of the US, Verizon, AT&T and T-Mobile have garnered millions of FWA customers and gobbled up much of the growth in the US broadband market.

In the US, T-Mobile's midband 5G network works in C-band and 2.5GHz spectrum. AT&T's midband 5G network, meanwhile, works in C-band and 3.45GHz spectrum. Verizon's midband network is solely built on C-band spectrum.

Vestberg, the Verizon CEO, said the operator's huge investment into C-band spectrum will support the operator's 5G ambitions for years to come.

"We will have ample capacity," he said. "There are multi, multi, multi years left on the C-band."