Always nice to see the typically vague, ignorant hype being debunked.
"MoffettNathanson also notes that right now, Verizon's evaluations of
eligibility for most potential subscribers require a visit by a technician.
That constitutes a "truck-roll" in industry parlance. The costs of truck rolls
add up real fast. Verizon vows that 5G fixed wireless broadband will someday be
a self-install process. Easier said than done; there's a whole sub-industry
dedicated to reducing truck rolls."
And that would be THE expense saved, eventually, with 5G fixed broadband. The
rest of the infrastructure costs remain essentially unchanged, compared with
FTTH. For example:
"MoffettNathanson analysts calculate that one Verizon small cell covers only 27
eligible homes.
"'It would be cheeky to suggest that, at 27 homes per cell, it would take
something like 5.1 million small cells to bring FWBB to all of America,'
MoffettNathanson cheekily wrote. '[O]r even that it would take 1.1 million to
cover the 30M homes Verizon has indicated is their addressable market, but...
well, the numbers are the numbers.'"
Exactly. Just the kind of detail the press hype glosses over. Both for
propagation reasons AND for channel capacity reasons, the "innocent" have a way
of ignoring what really matters. The result is a dense forest of cells,
meaning, lots of infrastructure. Not considered here is the RF energy density
homes will be exposed to.
"So as a practical matter, based on everything that has actually happened to
date, the rush job that Verizon and AT&T put on 5G has served one purpose, and
one purpose only. It convinced the Federal government and some state
governments to undermine municipal governments' ability to charge fair fees."
Could be. Although I can't imagine why it would take anything related to 5G to
achieve this. Those fees apply to any pole attachments, whether these are for
fiber, coax, or small cell transceivers.
Eventually, the truth has to come out. Finally, it is doing so.
Bert
------------------------------------------
https://www.eetimes.com/document.asp?doc_id=1334496
Fixed Wireless Broadband is a Loser
By Brian Santo , 03.29.19 1
Verizon has said little about its introduction of 5G fixed wireless broadband
service, so the good folks at MoffettNathanson Research traveled out to
Sacramento to see what they could find for themselves. Their conclusions after
a "laborious process" of evaluating Verizon's first commercial 5G service are
that Verizon installed minimal infrastructure, the cells it did deploy are
disappointing in terms of coverage, and customer take-rates are miserably low.
Everything it saw in Sacramento could improve, but in MoffettNathanson's final
assessment, it believes it is going to be "challenging" for anyone to make
money with 5G fixed wireless broadband (FWBB) for some time to come.
The report focuses entirely on Verizon's commercial trial in just one market,
but the report's findings are discouraging for any company planning on rolling
out 5G services any time soon, and disappointing for any wireless customers who
let themselves be caught up in the industry's relentless 5G hype the past few
years.
The top line summary of MoffettNathanson's report reads: "Our analysis suggests
that costs will likely be much higher (that is, cell radii appear smaller) and
penetration rates lower than initially expected. If those patterns are
indicative of what's to come in a broader rollout, it would mean a much higher
cost per connected home, and therefore much lower returns on capital, than what
might have been expected from Verizon's advance billing."
Pattern Recognition
The report allows that those patterns might not be indicative of what's to
come. For example, Verizon embarked on this rollout, installing equipment it
knew was not standards-compliant. It placed that equipment in parts of
Sacramento and three other cities (Indianapolis, Los Angeles, Houston), then
announced it was holding off on further deployments until it could get
standards-compliant gear. So, for example, the new stuff might work much better
than what's in place now. Verizon will eventually also deploy more
infrastructure, will certainly start marketing more aggressively, and may very
well attract a higher percentage of potential customers. The patterns can
change.
According to MoffettNathanson's evaluation, the patterns would have to change a
lot. As of now, 5G fixed wireless broadband looks like a bad business.
Verizon is being extremely conservative when it comes to determining whether it
can offer fixed wireless broadband service to homes nominally in the radius of
one of its cells. That said, the number of eligible homes per cell is very,
very low. (Source: MoffettNathanson Research)
But that is news only inasmuch as the analysis confirms what A&T told the world
almost a year ago: it is going to be hard to make money with 5G fixed wireless
broadband.
During AT&T's 2018 first quarter conference call with analysts in May of last
year, AT&T CFO John Stephens said, "With regard to the fixed 5G wireless, if
you will, our tests have shown it can be done. We can do it. The opportunity
there is something that we have to prove out. We're not as excited about the
business case. It's not as compelling yet for us as it may be for some."
On the other hand, it's possible that Verizon knows something AT&T doesn't
about 5G fixed wireless broadband, and that's why it bulled ahead. But
MoffettNathanson's report belies that.
Patchy Coverage
Verizon's coverage in Sacramento includes only patches of some neighborhoods. A
separate analysis found that Verizon has covered less than 10% of the city,
according to local reports. MoffettNathanson reports that Verizon considers
only 6% of residential addresses as eligible, and fewer than 3% of those homes
have subscribed, which MoffettNathanson notes translates into: "a market share
of something like one tenth of one percent penetration." It also translates
into roughly 1.5 homes served per small cell deployed.
Take rates are a critical factor in calculating the economic viability of FWBB.
The service is supposed to be cheaper than fiber-to-the-home (FTTH), a business
that Verizon and AT&T have both tried, and which neither wants to invest much
in anymore. But wireless broadband won't be cheaper than FTTH if take rates are
low; low adoption rates will mean the total cost per connected home will be
high. According to MoffettNathanson, Verizon FWBB is currently far more
expensive than FTTH.
Whether or not Verizon considers a home eligible for service depends first on
whether or not there's a small cell installed nearby. Then Verizon takes into
account distance from the cell, possible obstructions (including foliage), and
other factors. MoffettNathanson grants that Verizon is being very conservative
with all of that.
MoffettNathanson also notes that right now, Verizon's evaluations of
eligibility for most potential subscribers require a visit by a technician.
That constitutes a "truck-roll" in industry parlance. The costs of truck rolls
add up real fast. Verizon vows that 5G fixed wireless broadband will someday be
a self-install process. Easier said than done; there's a whole sub-industry
dedicated to reducing truck rolls.
Variable Cell Strength
This all leads up to what MoffettNathanson called its least splashy but most
important finding: cells using millimeter wave spectrum aren't limited just in
terms of propagation and reach (compared to 4G cells), their radii are
extremely variable because every cell is going to be situated in a unique local
environment randomly filled with a variety of obstructions.
MN finds that as a practical matter, each cell tends to have an effective
radius of about 700 feet. Compare that to Verizon's boasts that its cells have
an effective radius of 1,900 feet, MoffettNathanson noted. The analyst's report
states that with mmWave 5G, a carrier can't evaluate eligibility, it can only
factor in the probability of eligibility. There is no optimum spacing, and
that's going to make scaling the service difficult.
MoffettNathanson analysts calculate that one Verizon small cell covers only 27
eligible homes.
"It would be cheeky to suggest that, at 27 homes per cell, it would take
something like 5.1 million small cells to bring FWBB to all of America,"
MoffettNathanson cheekily wrote. "[O]r even that it would take 1.1 million to
cover the 30M homes Verizon has indicated is their addressable market, but...
well, the numbers are the numbers."
The average reach of the small cells that Verizon is using is disappointing.
This diagram suggests that beyond 300 feet roughly half the homes that should
be reachable by the cell won't be eligible for service. (Source:
MoffettNathanson Research)
Just about every technological condition MoffettNathanson found in Sacramento
has been widely anticipated for years. Furthermore, more than a year go, AT&T
did the math and figured out that FWBB was a bad business. It's hard to believe
Verizon didn't or couldn't make the same calculations as AT&T. So why would
Verizon go ahead with a FWBB rollout?
The company promised to begin introducing 5G services in 2018 - as did AT&T.
Both companies were hyping a global race to 5G that the United States just had
to win. Their supposedly dire need to introduce 5G services in 2018 was why
they browbeat the rest of the industry into accelerating the 5G standards
process to finalize the 5G standards by 2018, instead of the original target
date of 2020.
The rest of the industry knew long before 2018 rolled aroundthey wouldn't be
ready by 2018. That's why they originally scheduled 5G standards ratification
for 2020.
And sure enough, when 2018 arrived, despite the 5G standards having been rushed
to ratification, there was no equipment ready. There was some hope that
manufacturers could work morning, noon, and night and produce some 5G cells and
mobile handsets by November or December of 2018, but that was an outside shot
at best, everyone in the industry knew it, and of course it didn't happen. Not
only was 5G telephony off the table for 2018, it was never legitimately on the
table. The only thing required to prove it was time.
Perhaps that's just as well. What can 5G wireless phone service deliver that is
so substantially better than 4G that the average user will pay for the
difference? Nobody has a good answer for that. Downloading a movie really,
really quickly 1 minute before your flight takes off instead of just merely
quickly 15 minutes before your flight takes off does not seem like a profoundly
compelling use case.
The AV/IoT Fizzle
But what about the commercial industrial/enterprise 5G services that are
intrinsic to 5G standards?
These use cases tend to be placed in generalized categories - low-latency
applications, or high-bandwidth applications, for example. That said, there
were some specific applications that mapped to those categories that wireless
carriers were whipping up excitement about. Providing connectivity for
autonomous vehicles is a prominent example. Another is connecting together any
number of innovative Internet of things ... things.
But none of those uses cases have materialized yet. The automotive industry is
barely interested in using 5G, in large part because 5G coverage is so far from
the required ubiquity that it isn't even close to a practical option (except,
perhaps, for the narrowest of applications). Most IoT applications make do with
4G, Wi-Fi, or some other existing connectivity option.
The bottom line is that if Verizon and AT&T wanted to deliver on their promises
to provide 5G in 2018, if they wanted to justify the "global race" hype, they
had few choices for actual services to roll out. AT&T chose to introduce
wireless telephony based on what it called "5G Evolution" - something everyone
else correctly identified as advanced 4G - and it got mocked heartily for it.
Literally the only potentially mass-market thing a wireless carrier could do in
2018 with 5G was what Verizon did - roll out FWBB - a service Verizon had to
have known was going to be "challenging" because AT&T knew it. Unless Verizon
wants to argue it isn't as perceptive as AT&T?
The Neglected Question
All the focus on the nitty-gritty details about propagation of millimeter waves
and the take rates on FWBB - those are the trees. What does the forest look
like?
As of today, 5G is a solution in search of a problem, and that's all it might
be for a few years yet.
And since AT&T and Verizon knew this, it all begs a question: what was the
hurry? Why did AT&T and Verizon push for early ratification of standards, even
though the industry knew at the time that even with ratified standards in hand
in 2018, the technology would not be ready?
Was it the global race to 5G? That make little sense. AT&T and Verizon compete
with US-based carriers, including T-Mobile, Sprint, and each other. There is no
international competition, except perhaps for bragging rights. Who remembers
who was first with 3G?
Perhaps Verizon and AT&T are claiming there's a global race among 5G equipment
suppliers? Well, there is, but what's that to AT&T and Verizon? What's that to
the US? There are few major, market-leading 5G equipment suppliers
headquartered in the US.
And yet AT&T and Verizon are still beating that drum. The "global race"
rhetoric is breathlessly passed along by FCC commissioners and the President of
the United States, with no more rational explanation than AT&T or Verizon have
provided.
Hurry Up and Wait
So again: why the rush?
Solely in terms of what has happened - disregarding anything written or said by
Verizon or AT&T - as a practical matter - the only thing the rush has
accomplished thus far is inducing Federal and state governments to impede
cash-strapped municipalities from charging wireless carriers a fair price for
their use of municipal assets. Specifically, the Federal government and some
states have adopted measures that restrict the abilities of cities and towns to
charge wireless carriers for the right to attach cells to municipal
infrastructure - pole attachment fees.
This is no small thing. Wireless carriers are going to have to install many
more 5G cells than 4G cells to get the same coverage. Estimates have ranged
from four times as many to 30 times as many; MoffettNathanson in its recent
report calculated it is likely to be at least seven times as many.
Whatever the actual number is, that number is roughly the factor by which the
pole attachment fees that wireless companies are subject to would have
increased.
AT&T and Verizon knew 5G was coming, and roughly when it would be coming, for
more than 10 years; the 3GPP, which manages the global wireless industry
standards process, has a very clear roadmap complete with dates. If that was
somehow not enough, once AT&T and Verizon told the US they'd buy millimeter
wave spectrum, they've known they'd be using millimeter wave spectrum. And of
course they knew the propagation characteristics of millimeter waves, which
means they had a very, very good idea a long, long time ago that they would
need to install more 5G cells than 4G cells.
In other words, US wireless carriers had plenty of time to prepare to negotiate
pole attachment fees with every municipality in which they do business. They'd
already done it for 4G.
The only thing that was going to change was the cumulative price tag.
The Actual Bottom Line
So as a practical matter, based on everything that has actually happened to
date, the rush job that Verizon and AT&T put on 5G has served one purpose, and
one purpose only. It convinced the Federal government and some state
governments to undermine municipal governments' ability to charge fair fees.
The wireless industry has documented that many municipalities are attempting to
charge unreasonable, perhaps even extortionate, pole attachment fees. Is that a
legitimate excuse to undermine the ability of all municipalities to charge
reasonable fees? And again, wireless companies have negotiated such fees in the
past, and the cable industry has been doing it on an ongoing basis for half a
century. It's possible.
So Verizon and AT&T may not be making any return on their 5G investments yet,
but they've successfully limited expenses.
MoffettNathanson provided a copy of its report, Fixed Wireless Broadband: A
Peek Behind the Curtain of Verizon's 5G Rollout," to EE Times on the condition
we not share the full report. It is available from the company.
----------------------------------------------------------------------
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