Verizon has long maintained that it will eventually expand its 5G Home fixed wireless service to a total of 30 million households, or roughly 25% of the United States. However, Verizon executives don't appear to be standing behind that number anymore.
"We still believe that... fixed wireless access is a great opportunity for us for expansion and growth. But clearly, we're also going to see how we roll it out," Verizon CEO Hans Vestberg said yesterday at the company's investor relations event.
He added: "What we are learning from our proprietary standard is that we can do the 30 million." But Vestberg did not say that Verizon was definitely going to reach its 30 million target.
Vestberg was responding to a question from an analyst at the event about Verizon's 30 million target. The question was sparked by comments from Verizon's CTO, Kyle Malady, who discussed the operator's fixed wireless plans during his presentation on the company's overall network efforts. (See Verizon's 5G Details: 30 Mobile 5G Markets in 1H19, MEC Launching This Year and Verizon's Home-Grown 5G Arrives Today.)
"I could get to 30 million homes in 5-8 years," Malady said, pointing to the company's learnings from its rollout of its 5G Home fixed wireless service so far. The company launched 5G Home, working on its proprietary 5GTF transmission standard, in parts of four US cities last year. The offering essentially blasts a high-speed wireless connection (Verizon promises at least 300 Mbit/s with speeds up to 1 Gbit/s) from a cell site to nearby homes and offices -- Verizon installs receivers inside or outside customers' locations, which connects to WiFi routers inside the locations. The offering is notable in that Verizon is directly challenging wired Internet service providers like Charter Communications and Comcast with the offering. (See 5G Fixin' to Become 'Largest Existential Threat' to Broadband Providers – Analysts and Broadband Incumbents Should Be 'a Little Bit Nervous' About Starry – Analyst .)
In his presentation, though, Malady prevaricated on whether Verizon would actually reach the company's 30 million buildout target. "It's hard for me to give a specific number on where we're going to be at some period of time," he said, explaining that 300 Mbit/s speeds would be more than enough for some US markets, but would be too slow to be competitive in other markets. "We're going to focus on our capabilities, where we invest money, what's going to be the best return on investment, and that's what you're going to be hearing from us going forward, not necessarily trying to chase some household number."
But in discussing the topic, Verizon's CFO Matt Ellis signaled a positive outlook on 5G Home. "There is absolutely no reduction in our belief," he said of the offering. "In fact, if anything what we've seen since we've launched the product is further believe that fixed wireless access will be a core component of our revenue stream in a 5G world."
Wall Street analysts who attended the event came away with more questions than answers.
"The company seemingly backed off the 30MM household ambition," wrote the analysts at Wall Street firm New Street Research in a note to investors. "The company declined to re-iterate the target, and said that they will build 5G nationwide over time, and determine optimal use cases and go to market on a market-by-market basis (notably, they said that speed offering will impact ability to 'cover' homes... i.e., can 'cover' more homes offering 100Mbps than 1Gbps, suggesting that they are thinking about the trade-off between using capacity for mobile and FWB). One other tidbit I picked up: they've been having commercial troubles in Sacramento with cable competition, similar to what Google Fiber experienced (cable upping speeds, offering discounting with contracts on local basis)." (See Google Fiber: A Timeline of the Good, the Bad & the Ugly .)
The analysts at Wall Street research firm Cowen & Co. also wrote that Verizon appears to be backing off the 30 million household buildout target. "In our view this is more of a reflection of the unknown on timing and what it ultimately wants to bring to market, but long-term we continue believe 5G FW [fixed wireless] will emerge as a truly competitive solution for a material sub segment of today’s in-home wireline broadband market," they wrote.
But the analysts at Deutsche Bank Research wrote that "we do not believe the company is abandoning its 30mn home target; in fact, if the company is targeting a national 5G footprint over time, it may well be the case that fixed wireless service is offered across a much broader footprint (VZ already has national advertising/distribution via its Wireless business). But, we believe the main message here was that it is not building a 5G network solely to target 30mn homes with fixed wireless (as it may have done with its FiOS build a decade ago)."
Regardless, the main headline coming out of Verizon's investor event was its mobile 5G plans. Verizon said it plans to launch mobile 5G services in at least 30 markets in the first half of this year. And the company said it will launch a Multi-Access Edge Compute (MEC) platform by the end of 2019.