Verizon's McAdam on 5G: Fixed deployment 'gives you all the return on capital that you need'

Verizon (NYSE: VZ) CEO Lowell McAdam said that the carrier's 5G tests in its Basking Ridge, New Jersey, headquarters have shown speeds of up to 1.8 Gbps, and he hinted that the range of that service could reach up to 1,000 meters. And McAdam said that a fixed deployment of 5G technology could be profitable enough to provide the carrier a complete return on its investment in the technology, irrespective of a mobile 5G service.

"There's a distinction between 5G in a fixed wireless environment versus a mobile environment," McAdam said in a keynote appearance at the 44th Annual J.P. Morgan Conference. "And those that are working on standards say that mobile is more of a 2020 phenomenon. I wouldn't argue with that."

But McAdam said fixed 5G services will be profitable enough for Verizon to pursue regardless of an eventual move to mobile 5G. "The use case for me that gets you over the hump on investing in the technology is the one that's right in front of us right now and that's a fixed wireless play," he said. "That gives you all the return on capital that you need to invest in that technology, and the rest is going to be gravy."

McAdam said that connecting consumers and businesses to a fiber network is expensive, and that it's possible to reduce that cost by getting a fiber connection within 1,000 meters of a building and then connecting that building to the fiber network wirelessly via a 5G router on the outside of the building. "Half of our cost to establish high-speed data, whether that's consumer or business, is inside the four walls of the business. Once you go wireless, you don't have to run coax, you don't have to do any of those high-labor-intensive activities. So you light up service overnight."

Added McAdam: "The pricing models can change dramatically."

And McAdam said that Verizon won't limit its fixed 5G deployments only to the areas where it currently offers its fiber FiOS service. "I don't know why there would be any limitation on where we would take it," he said, explaining that Verizon could run fiber from its cell towers in order to deliver fixed 5G services, including in rural areas. "Limiting ourselves to the FiOS footprint … there's no reason you need to be limited."

And on the broader topic of the wireless industry's move to 5G, McAdam said he will work to ensure Verizon is on the cutting edge. "I think the leap from 3G to 4G was a bit more of a leap of faith than the leap from 4G to 5G," he said. "There's another big surge coming. There's no doubt in my mind. … We're going to lead on 5G and we're probably going to lead on 6G whenever that comes."

Verizon CFO Fran Shammo last month said the company aims to be the first in the U.S. to roll out 5G wireless technology and pledged to launch an initial pilot of fixed 5G services starting in 2017. Indeed, Verizon and its partners have been applying for temporary experimental licenses to conduct 28 GHz tests in markets across the country. Last month, Verizon filed paperwork with the FCC to get special temporary authority (STA) to test equipment with vendors like Nokia (NYSE:NOK), Ericsson (NASDAQ: ERIC), Intel, Qualcomm (NASDAQ:QCOM) and Samsung in the 28 GHz band. 

For more:
- see this Verizon webcast

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