Marek’s Take: Will fixed 5G be a broadband savior for wireless operators?

Marek's take

Hello again, FierceWireless readers, it has been awhile. After a two-and-a-half-year hiatus from FierceWireless to work for a startup, I’m currently taking some time off to travel the world and see some sights other than trade show convention halls. However, I’ll be checking in every now and then to provide you with my latest insights and observations on the telecom world. 

If you have been paying attention to the fourth-quarter 2018 earnings reports from the major wireless operators, you may have noticed a bit of backpedaling and strategy tweaking occurring on the 5G front. I guess it’s not surprising. After all, 5G is a very complicated network overhaul and no one seems particularly clear on what new services and applications will be the big game changers once these new networks are deployed.

What’s been particularly interesting to me is how the two major U.S. operators have waffled on their timelines and business strategies for fixed 5G vs. mobile 5G. In 2018 Verizon pushed hard to be the “first” operator to launch 5G and it was going to do so by offering a fixed wireless service. The company fulfilled that goal with its prestandardized fixed 5G service, called 5G Home, that it launched in four markets in October 2018. The prestandard version is based upon 5G specs created by the 5G Tech Forum, which is a group organized by Verizon and includes vendors such as Ericsson, Samsung, and Cisco.   

Initially the service, which many analysts said amounted to nothing more than a high-profile trial, was offered for free for three months. After that, the company is charging existing customers with a smartphone plan $50 per month. Non-Verizon customers will have to pay $70 per month.

Verizon has always maintained that it will upgrade its prestandard fixed 5G equipment to 3GPP-compliant gear as soon as its available. But now it appears that upgrade may not happen as quickly as Verizon had originally thought. In the company’s fourth-quarter 2018 earnings call with investors on Jan. 29, Verizon CEO Hans Vestberg explained that his company’s move to standardized fixed 5G hit a glitch because 5G NR chipsets for smartphones will take precedence over 5G NR chipsets for customer premises equipment (CPE), which is what is used in fixed deployments. “The first focus for the industry is actually to do chipsets for smartphones and then secondary the next generation of chipsets comes on the CPE side,” Vestberg told investors.  He said that the company now expects standards-based 5G Home gear to be available in the second half of the year and standards-based 5G smartphones to be available in the first half of the year.

This seems to imply that Verizon will be moving more quickly to a mobile 5G offering, while the expansion of its fixed 5G Home service may be delayed to later this year. 

This shift is notable because there’s still a lot of uncertainty about whether Verizon will be able to scale the 5G Home service (it currently requires a truck roll and a technician to set up the router). Vestberg didn’t provide further details on its 5G deployment plans or what markets it will launch next.

And Verizon isn’t alone in wondering whether it can scale its fixed 5G offering to residential customers and keep its costs reasonable. AT&T has also been wrestling with that issue as well.

Changing the tune

Back in mid-2018 AT&T CFO John Stephens told investors at a Cowen and Company Technology, Media & Telecom conference that AT&T didn’t think it was cost efficient to deploy fixed 5G wireless service to residences because it would take too much fiber and too many small cells to backhaul the traffic.

But now, AT&T appears to have changed its tune and is bullish on fixed wireless as a broadband replacement service. During AT&T’s earnings call with investors on Jan. 30, CEO Randall Stephenson predicted that fixed 5G wireless will have enough broadband capacity for consumers to access streaming video services similar to what cable broadband offers today. “I absolutely am convinced that we will have that capacity, particularly as we turn up mmWave spectrum,” Stephenson said. “That’s where the capacity and the performance comes from, and that’s where you’ll begin to see a true replacement opportunity for fixed line broadband.”

However, he did reiterate that the company will pursue standards-based mobile 5G first. 

In late 2018, AT&T launched mobile 5G service in 12 markets in the U.S. using millimeter wave (mmWave) spectrum in the 28 GHz and 39 GHz bands. It will continue to expand that mobile service and has said it will have nationwide mobile 5G by early 2020. 

What is behind AT&T’s about-face on fixed 5G as a broadband replacement? It might be that the company is now planning to use unlicensed Citizens Broadband Radio Service (CBRS) spectrum for at least some of its fixed 5G services. AT&T has said it will initially deploy LTE in the CBRS band and then it will migrate to 5G.  

But AT&T’s use of CBRS spectrum is still pretty preliminary. The company is currently evaluating the CBRS band. Last year it filed for an experimental license with the FCC to test gear in the 3.5 GHz band at several sites in the Redmond, Washington, area. And earlier this week applied for a six-month Special Temporary Authority (STA) to conduct tests in parts of Ohio and Tennessee.

Beyond the trials

There’s still a lot of unknowns when it comes to determining whether fixed 5G will be a viable residential broadband service. Verizon’s 5G Home may be a winner with some residential customers but for it to really be cost-effective the operator needs to get rid of the truck roll and get a bigger footprint. For AT&T, it needs to move beyond the experimental stage with its fixed wireless tests and see what real users think of the service.

Will 5G provide the capacity and performance necessary to create a viable residential broadband offering?  Perhaps. But before proclaiming that 5G is going to change the way consumers view the residential broadband market, let’s get out of the test and trial phase and get some real-world results. – Sue

Sue Marek has been reporting on the telecom and tech industries for more than 25 years. Most recently, she was editor in chief at SDxCentral, where she oversaw all of that site’s editorial content. Prior to that she was editor in chief of FierceMarkets' Telecom Group, where she managed a team of editors and was responsible for the content for several of the company’s websites, newsletters and live events. Sue is a frequent speaker at industry events and has moderated panels for the Consumer Electronics Show, the Competitive Carriers’ Show, The Wireless Infrastructure Show, 5G North America, DC 5G, Interop, and more. Follow @SueMarek on Twitter and find her on LinkedIn.