A combination of sparse coverage and low service penetration rates early on in Sacramento suggest that Verizon's relatively new 5G Home broadband service will have a tough time achieving an attractive return on capital, MoffettNathanson found in its study of the service's rollout.
MoffettNathanson's study, based on a sample of nearly 45,000 Sacramento addresses (out of about 70,000), concluded that Verizon faces a "steep climb" in its efforts to scale up the deployment and economics of 5G Home, a service that today is using millimeter wave spectrum to deliver typical speeds of 300 Mbit/s at a price starting at $50 per month.
Just 6% of residential addresses in the parts of Sacramento covered by the study are currently deemed "eligible" for 5G Home. Roughly six months after 5G Home was launched, Verizon has signed up less than 3% of the eligible single-family homes in the sample region, the study found, noting that overall penetration would likely be higher if customers in multiple-dwelling units were included.
"[O]ur findings in Sacramento -- limited coverage, low penetration -- preliminary though they may be, suggest that earning an attractive return will be challenging, at best," Craig Moffett, analyst with MoffettNathanson, wrote in the research firm's analysis of Verizon's 5G Home rollout there.
The core questions about 5G Home, the reports holds, is not the technology or the physics of millimeter wave spectrum, but the economics and whether Verizon can secure a "passable return" on capital.
And even if fixed wireless broadband is less expensive than FTTP to construct, the total cost per connected home could actually be more if the penetration rate for the new wireless service is not comparably high. The low penetration rate Verizon has seen thus far for 5G Home in Sacramento isn't nearly enough to achieve economics that are better than a typical FTTP network example, the report found.
Verizon is also offering 5G Home and testing how it operates in different topologies and foliage levels in three other markets -- Houston, Indianapolis, and Los Angeles -- so it's possible that Verizon could be getting better (or worse) results in those markets.
But startup will need to finalize its satellite design, secure more funding and cut through the regulatory red tape before its vision to rival terrestrial fiber networks can (literally) get off the ground.
In this insightful Light Reading radio show, Kurt Raaflaub, Head of Strategic Solutions Marketing, will outline the key service provider challenges, deployment considerations, next-gen Gigabit technologies, and service models to win market share in the rapidly growing MDU market.
Tuesday, May 21, 2019 11:00 a.m. New York / 4:00 p.m London
Win MDUs: Playing With Loaded 9-Sided Dice (archive available soon)
The MDU market continues to face fierce competition among service providers due to tech-savvy residents (i.e., millennials), demand from building owners and management companies, plus the favorable economics of bulk contracts. However, no MDUs are the same, so service providers must use multiple technologies and inconsistent deployment models, increasing operational complexity and rollout costs.
The MDU market itself is evolving as residents adopt smart-home technologies, generating rising demand for smart apartments with built-in connected thermostats, keyless entryways and doors, and video doorbells. This evolution presents both new challenges and opportunities. In other words, service providers must consider innovative service-delivery strategies to compete and win.
In this Broadband World News and ADTRAN webinar, Kurt Raaflaub, Head of Strategic Solutions Marketing, will highlight emerging MDU broadband Internet trends and challenges. In addition, Kurt will outline the next-generation service creation and delivery platform, built on open standards, that allows service providers to connect millions of underserved MDUs, enables creation of user-driven services, and reduces operational complexity and costs.
Plus, special guest, Alice Lawson, Broadband and Cable Program Manager for the City of Seattle, will discuss Seattle’s B4B-Build For Broadband initiative that addresses best practices in planning for MDU telecommunication infrastructure.