Cable or wireless

Raghu Gopal / CCS Insight

Last week, in a major development for adoption of 5G, Verizon claimed the world's first commercial 5G deployment by introducing a home broadband service using fixed wireless access.

Dubbed Verizon 5G Home, the service promises speeds of about 300 Mbps, reaching up to 1 Gbps in some areas, with no data caps. The service will go live on October 1, 2018 and initial roll-out is slated for parts of Houston, Indianapolis, Los Angeles and Sacramento. Customers can sign up from September 13 through a dedicated Web site aptly named FirstOn5G.com.

To lure people to the new service, Verizon will offer free installation (the service requires several pieces of stationary equipment to be installed, which can't be carried out without a technician), three months of complimentary service, a free Chromecast device or Apple TV 4K and three months of free YouTube TV. After this period, customers of Verizon's mobile services with qualifying plans will pay $50 per month and non-customers will pay $70 per month. The discount for existing subscribers means that Verizon is now bundling wireless and home services.

Verizon isn't new to the fixed-line environment. The company has a long history of supplying traditional telecom services and currently offers fibre-based connectivity packages in limited markets, mainly along north-eastern parts of the US. Its Fios broadband service reaches almost 6 million customers, accounting for about 25% of its total revenue but almost none of its profits.

This commercial launch is certainly an important step in the roll-out and adoption of 5G. However, being first out of the 5G gate is meaningless when it can only be achieved on a technicality. CCS Insight has previously addressed tenuous so-called 5G launches before (see, for example, The 5G Playground Squabble). Furthermore, Verizon is using its own 5GTF technology rather than official 3GPP standards, which were approved too late to prepare for this launch. This is one of the costs of deploying early. Verizon promises to upgrade all equipment to the official market standards in 2019 at no cost to customers but at a potentially sizeable investment to the carrier.

We expect that Verizon's 5G Home service will prove an attractive offering to consumers, particularly those who already subscribe to its mobile services. The carrier's sign-up Web site received 100,000 hits about 24 hours after going live, according to group president of Verizon Wireless, Ronan Dunne. The US is a saturated market so Verizon will, in all likelihood, pull in customers from other competitors. The largest providers of fixed-line services in the US are Comcast and Charter Communications, two companies that are already encroaching on Verizon's core business of wireless access, providing virtual operator services using, somewhat ironically, Verizon's network.

Cable providers are specialists in customer retention, and as Verizon brings its services to more markets, existing competitors will fight back. Furthermore, competition is a two-way street and cable companies are sending a message back about 5G: two can play at that game. In January 2018, Charter began testing 5G-based fixed-wireless services over 3.5 GHz spectrum. At Mobile World Congress Americas, AT&T announced that it will use shared spectrum in the 3.5 GHz Citizens Broadband Radio Service band to expand its fixed wireless network access solution in late 2019. It will launch on LTE initially before migrating to 5G.

Verizon's introduction is certainly creating excitement about the coming "5G economy". Global competition and the acceleration of standardization is raising 5G momentum. The next milestone will come with the arrival of the first truly mobile 5G network launches based on 3GPP standards, swiftly followed by supporting devices in the first half of 2019. Although hype could inflate consumer expectations in the near term, there's little question about the long-term potential, innovation and disruption that 5G will enable.

Raghu Gopal has more than 20 years' research and operational experience

This article originally appeared on CCS Insight

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