Count U.S. Cellular -- the fifth-largest wireless network operator in the United States in terms of customers -- as another player on the 5G landscape. The company announced plans to launch commercial 5G service sometime in the second half of 2019, making it the largest Tier 2 wireless company in the US to announce 5G launch plans.
U.S. Cellular said it will purchase equipment from Ericsson for the 5G launch. That's not a total surprise considering U.S. Cellular tested 5G technology with Ericsson way back in 2016, recording speeds up to 9 Gbit/s using 15GHz spectrum. Ericsson is also a major 5G supplier to the rest of the nation's top carriers, including Sprint, T-Mobile and Verizon.
"We value our long-standing relationship with Ericsson and are impressed with their 5G-ready portfolio. We also know Ericsson is committed to meeting our deployment timeline in order to bring 5G to our customers in the second half of 2019," Michael Irizarry, the operator's CTO, said in a release.
So how exactly will U.S. Cellular deploy 5G? Apparently, the company's entire brain trust attended Mobile World Congress in Barcelona, Spain, this week, and therefore the company was unable to answer any questions about its 5G plans, including the value of the provider's new deal with Ericsson, the spectrum it will use for 5G, the coverage it expects to provide via 5G, and the 5G devices it plans to offer.
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However, U.S. Cellular provided some insights into its 5G plans during its quarterly conference call with analysts last week. According to a transcript of the event, here are some key insights into U.S. Cellular's 5G plans:
U.S. Cellular will initially launch 5G on its 600MHz spectrum and then expand that effort into other spectrum bands (U.S. Cellular spent $328 million on 600MHz spectrum licenses during the FCC's 600MHz spectrum auction in 2017). U.S. Cellular is also one of the registered bidders in the FCC's upcoming 24GHz auction, and could use that spectrum for future 5G services. "The deployment of 5G technology will require substantial investments in spectrum and U.S. Cellular's networks to remain competitive," the operator warned in a recent filing with the Securities and Exchange Commission.
During the operator's quarterly conference call, Irizarry said U.S. Cellular would launch commercial 5G services in 2020. However, in the company's press release with Ericsson, Irizarry said U.S. Cellular would launch commercial 5G services in the second half of 2019. Again, the company was unable to answer any questions around its 5G efforts.
U.S. Cellular said it will use 5G technology to expand and improve its existing fixed wireless services. The operator is currently using LTE technology to beam Internet services to a receiver inside customers' homes, primarily those in rural areas -- an offering designed to create a new revenue stream for the operator. U.S. Cellular's executives said the operator would expand those efforts, partly through the deployment of 5G technology, into new locations with faster speeds. The executives added that the operator would also look to use fixed wireless equipment that could be installed on the outside of customers' locations, thus supporting faster speeds and a wider coverage area. U.S. Cellular's current fixed wireless service uses a receiver placed inside a customers' home or office.
Apart from fixed wireless services, what else might U.S. Cellular use 5G for? "Oh, you're asking me to tell you -- kind of throw a dart here," answered CEO Kenneth Meyers during the company's conference call. "The fact of the matter is that how dense high use areas I think are what are going to be the first to move. So I think about our footprint and all the universities that we have, the arenas that go with those universities, those are probably some of the early fertile grounds."
To fund the construction of its 5G network -- as well as to install improvements into its LTE network like 4x4 MIMO, LAA, 256-QAM and LTE M -- U.S. Cellular is significantly boosting spending on its network. The operator spent roughly $515 million on its capital expenditures in 2018, a figure that the operator said will rise to between $625 million and $725 million in 2019. "This is a substantial increase in the pace of activity for our engineering organization. And given potential supply chain issues and competing industry wide demand, it may turn out to be not fully achievable this year. Accordingly, we'll be monitoring it closely, and we'll plan to update you each quarter," said company CFO Steven Campbell on U.S. Cellular's earnings call.
And why are these network upgrades necessary? Partly to address the increase in data traffic on its wireless network, U.S. Cellular executives said. Specifically, Meyers said data usage on the provider's network grew 46% year-over-year in the fourth quarter of 2018.
U.S. Cellular isn't the only operator racing to 5G, nor is it the only operator deploying 5G on 600MHz spectrum; T-Mobile, AT&T, Verizon and Sprint have all disclosed 5G buildout plans, and much of T-Mobile's planned buildout will rely on the operator's 600MHz spectrum.
U.S. Cellular counts roughly 5 million US mobile customers. The company runs a wireless network in a handful of US states, including parts of Texas, Washington state, Maine, Kansas, Nebraska, Iowa, Tennessee and elsewhere. Its customers use its network roughly 90% of the time, but roam onto the networks of other providers when they travel outside of U.S. Cellular's relatively modest coverage area.
— Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano