Gavin Patterson 230At Huawei's London MBBF, BT CEO Gavin Patterson went first, saying, "The business case isn't there." DT CTO Bruno Jacobfeuerborn, adding "For 5G, Deutsche Telekom still has no business models."  FT/Orange SVP Arnaud Vamparys followed with a second agreement.

3,000 miles away, Verizon was finalizing the announcement that they would rush to deploy ~30M homes of 5G mmWave. At NGMN and elsewhere, the top tech people share freely what they know. All are working with essentially the same understanding. How can we explain the different choices?

Verizon landlines cover only about 1/4th of the U.S. They need an offering to compete with cable and DSL.

They believe the new one gig wireless service will win 20-40% of the landline customers. AT&T is thinking the same way and will probably invest to keep up with Verizon.  

The Europeans have a landline offering throughout their territory. Almost all have more customers than the cablecos, which rarely cover the entire country. Verizon expects new revenue from fixed wireless to cover much of the deployment costs. The Europeans will have to pay for the mmWave network with just the mobile revenues.

BT, DT & FT are not alone in their hesitancy. Telefonica’s CTO, Enrico Blanco, didn’t address the subject directly but previously pointed out his “4G” network would do just fine for the expected “5G” applications. The Chinese press is reporting that China Telecom has made the same decision, although China Mobile is moving ahead with 10,000 cells by 2020.

All of these companies will begin deploying in 2019 & 2020 because it's a political necessity. Expect plenty of hype and pr. They also need to train their people and develop systems for when they do build. 

But the current plans of these companies is to go slow until 2022-2024,

 

dave askOn Oct 1, Verizon will turn on the first $20B 5G mmWave network, soon offering a gigabit or close to 30M homes. The estimates you hear about 5G costs are wildly exaggerated. Verizon is building the most advanced wireless network while keeping capex at around 15%.

The Koreans, Chinese, and almost all Europeans are not doing mmWave in favor of mid-band "5G," with 4G-like performance. Massive MIMO in either 4G or "5G" can increase capacity 4X to 10X, including putting 2.3 GHz to 4.2 GHz to use. Cisco & others see traffic growth slowing to 30%/year or less. Verizon sees cost/bit dropping 40% per year. I infer overcapacity almost everywhere.  

The predicted massive small cell builds are a pipe dream for vendors for at least five years. Verizon expects to reach a quarter of the U.S. without adding additional small cells. 

In the works: Enrique Blanco and Telefonica's possible mmWave disruption of Germany; Believe it or don't: 5G is cheap because 65% of most cities can be covered by upgrading existing cells; Verizon is ripping out and replacing 200,000 pieces of gear expecting to save half. 

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 5G Why Verizon thinks differently and what to do about it is a new report I wrote for STL Partners and their clients.

STL Partners, a British consulting outfit I respect, commissioned me to ask why. That report is now out. If you're a client, download it here. If not, and corporate priced research is interesting to you, ask me to introduce you to one of the principals.

It was fascinating work because the answers aren't obvious. Lowell McAdam's company is spending $20B to cover 30M+ homes in the first stage. The progress in low & mid-band, both "4G" and "5G," has been remarkable. In most territories, millimeter wave will not be necessary to meet expected demand.

McAdam sees a little further. mmWave has 3-4X the capacity of low and mid-band. He sees an enormous marketing advantage: unlimited services, even less congestion, reputation as the best network. Verizon testing found mmWave rate/reach was twice what had been estimated. All prior cost estimates need revision.

My take: even if mmWave doesn't fit in your current budget, telcos should expand trials and training to be ready as things change. The new cost estimates may be low enough to change your mind.