|Image source: Qualcomm|
When it comes to next-generation 5G wireless service, U.S. operators spent most of 2018 in the bullpen warming up. But analysts say the ball game is now underway and will get more interesting as the industry moves deeper into the new year.
All four major carriers in the U.S. — AT&T Inc., Verizon Communications Inc., Sprint Corp. and T-Mobile US Inc. — plan to deploy new 5G mobile services in the first part of 2019. AT&T, which already launched next-generation mobility services in parts of 12 cities at the tail end of 2018, plans to quickly add seven more cities to its 5G roster in early 2019. Verizon, meanwhile, launched pre-standard 5G home broadband services in four markets in 2018 and plans to launch 5G mobile services in early 2019. Sprint has nine markets marked for mobile 5G deployment in the first half of 2019, while T-Mobile plans to launch 5G services in multiple cities this year and is targeting nationwide deployment in 2020.
Analysts say U.S. operators are off to a good start, and they are encouraged that carriers both in the U.S. and abroad have largely united around a set of international standards. Despite this progress, however, analysts predict both 5G deployment and consumer adoption will remain relatively limited in 2019 due to a number of factors, including operators' city-by-city rollout strategy and the limited number of 5G devices.
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5G mobility service promises to provide massive bandwidth and greater opportunities for connectivity, enabling the new era of the internet of things where billions of devices in homes and across cities will be connected at all times. When fully implemented, 5G is set to offer download speeds many times faster than today's 4G LTE networks and significantly lower latency times. Latency is the amount of time it takes to send a message from the device to the network and get a response.
Verizon in October 2018 introduced what it described as "the world's first commercial 5G service" in areas of Houston, Indianapolis, Los Angeles and Sacramento. The residential broadband service, dubbed 5G Home, promises typical download speeds around 300 Mbps and maximum speeds up to 940 Mbps. By comparison, Tutela Technologies Ltd.'s most recent Mobile Experience Report, published in November 2018, said Verizon's 4G mobile service averaged download speeds of just above 21 Mbps across the country.
Excluding an introductory promotion, 5G Home costs $50 per month for Verizon Wireless customers with a qualifying smartphone plan, while non-Verizon Wireless customers pay $70 per month.
To deliver the service, Verizon uses a combination of fiber and 28 GHz millimeter wave spectrum. This high-frequency spectrum offers a great deal of bandwidth, but the spectrum's shorter wavelengths limit the distance it travels and its ability to penetrate through various surfaces. The 5G Home service is also somewhat unique in that it relies on a pre-standard specification known as the Verizon 5G Technology Forum network standard, rather than the 5G New Radio global standard. Verizon plans to transition to the global standard in 2019 and also expand into mobility services this year.
AT&T, meanwhile, touted being "the first to bring both a standards-based mobile 5G network and a mobile 5G device to our customers" with its launch of 5G service in parts of 12 markets in December 2018. Based on a global standard, the service will support at least two Samsung Electronics Co. Ltd. smartphones in 2019, but currently only supports one device, a mobile hotspot from NETGEAR Inc. Like Verizon's 5G Home service, AT&T's initial 5G mobile network relies on high-frequency millimeter wave spectrum.
"This is the first taste of the mobile 5G era," AT&T Chief Technology Officer and AT&T Labs President Andre Fuetsch said in a December 2018 news release. "It's early on the 5G journey and we're ready to learn fast and continually iterate in the months ahead."
Testing the waters
Analysts said these early launches from Verizon and AT&T should be viewed as market experiments.
"Verizon's early launches are far too small to have an impact on anyone's results. Instead, their four-city deployment … should be thought of as only the next step in a series of market tests," MoffettNathanson analyst Craig Moffett said in a 2018 blog post, explaining that Verizon was using these initial deployments to test pricing and the potential for profit.
"It is this last area — whether they can earn a decent return — that holds the key to what happens next," Moffett said.
Similarly, Recon Analytics analyst Roger Entner, whose research focuses on the wireless experience, said it is still early days for AT&T's first 5G foray. He noted the service's sole device as of the end of 2018 was a not a phone but a mobile hotspot, and AT&T did not include average speed estimates in its announcement.
"It's the very first device, and it's $500," Entner said, adding that this price point would likely limit adoption.
While AT&T is initially offering select businesses and consumers its first mobile 5G device plus 5G data usage at no cost for at least 90 days, the NETGEAR hotspot will ultimately be sold for $499 upfront with a 15 GB data plan for $70 a month.
Top of the first
With these early launches, Will Townsend, a senior analyst at Moor Insights & Strategy who focuses on carrier equipment and equipment providers, said U.S. operators are "definitely out of the bullpen" in terms of 5G deployment.
"We may be at the top of the first [inning]. We're just scratching the surface," Townsend said, adding that things will begin heating up in the middle of the year as 5G phones become available.
"By the first half, as we exit June, I think we're probably in the third inning," Townsend said, adding it will be "interesting to see how aggressive the carriers drive this as we get into the second half of 2019."
Gartner technology analyst Mark Hung is generally bullish on the rollouts that have occurred thus far and on those slated to come. He compared the 5G rollout with the early days of 4G when two competing technologies — LTE and WiMAX — were battling for supremacy. LTE eventually won that battle but the operators that supported WiMAX, namely Sprint and Clearwire in the U.S., lost both time and money pursuing the rival technology.
"Given how aggressive some of the public announcements have been from both the device makers and telcos, I think 5G is actually off to a pretty good start," he said, adding that the next-generation technology "is really the first time in a long time where we have this cohesive development on the technology side" from different operators and different countries.
While Hung said he does foresee ongoing "economic challenges" as operators figure out pricing and business models, he nevertheless believes "this is one of the more promising starts to a new technology deployment in a long time."