This is the second part of a two-part series reflecting on Verizon’s 5G millimeter wave wireless home broadband service and how Wall Street complicates its potential. Be sure to read part one, “How a Wall Street Analyst Complicates AT&T and Verizon’s Upgrade and Investment Plans” for the full story.

“Put simply, the cost of building a second network is so high that its builder simply can’t earn a passable return based on the market share available to a second player,” Craig Moffett, an important telecom industry analyst working on behalf of Wall Street investors, argued over Verizon’s fiber to the home project dubbed FiOS. “Virtually every overbuilder, from telephone companies to competitive cable companies to municipalities, has learned this lesson the hard way; almost all such efforts have ended in bankruptcy. Verizon’s own FiOS network was an economic failure; there is no longer any debate about whether FiOS did or didn’t earn its cost of capital. It didn’t, and it wasn’t even close.”

Moffett’s philosophy about emerging broadband technology and competition is heavily influenced by his personal and professional belief that broadband competition is bad for business and investors. His distaste for Verizon FiOS, a plan to scrap old copper phone wiring in favor of fiber optics, was well-known across the industry and trade press. But Verizon kept going with the project under the leadership of then-CEO Ivan Seidenberg, who was a telephone man through and through. But by 2010, Seidenberg had decided to retire, and his successor, Lowell McAdam, had a very different perspective about Verizon’s future. McAdam spent almost his entire career from the early 1990s forward in the wireless business. In 2006, McAdam was named the chief operating officer and CEO of Verizon Wireless. When he succeeded Seidenberg in late 2010, Verizon had already announced it was winding down further FiOS expansion. That seemed to suit McAdam just fine, because under his leadership as CEO of Verizon, Verizon Wireless became the dominant focus of the company. Heavy investment in wireless continued, while Verizon’s landline network was allowed to deteriorate.

Moffett told his clients the end of FiOS expansion would be good news for cable companies because they would lose fewer subscribers as a result.

Verizon’s marketing machine carefully lays its business case for 5G home broadband

More than a decade later, Verizon’s decision to embark on another major technology upgrade requiring billions in new spending quickly raised eyebrows on Wall Street. This time, however, Verizon executives attempted to be better prepared to defend their 5G vision from the reflexive investor argument that it was too expensive and extravagant.

Moffett

“First, their fixed wireless broadband business will leverage investments that Verizon argues they will need to make anyway to support their wireless network,” Moffett wrote in a report to his clients, acknowledging Verizon’s claimed reasons for entering the wireless home broadband business. “Second, Verizon argues that it will be cheaper to connect homes wirelessly than it is to connect them with fiber, making it economic to deploy fixed wireless in markets where fiber to the home hasn’t been economically justifiable.”

Most of the expenses cited by Moffett relate to bringing fiber networks into neighborhoods to support the small cell technology Verizon is relying on for its 5G home broadband and mobile services.

Moffett also believes the only attractive market for 5G service will be in more upscale suburban rings around cities, not densely populated urban centers or rural areas. Moffett argues fiber providers are likely already providing service in urban areas and rural areas simply lack enough customers to justify the cost of either a fiber optic network or a small cell network. Ironically, that conclusion means the same suburban ring Moffett rejected 5-10 years ago as economically unsuitable for fiber service is now precisely the area Moffett argues is the only attractive market for fiber service, to bring 5G.

From a short-term results perspective, laying fiber optics is a costly proposition unlikely to return much revenue gain in a few short years. That reality has kept many investor-owned phone companies away from expensive network upgrades. These legacy telephone companies recognize they are going to continue to lose customers to faster technologies like cable, fiber, and perhaps, wireless. But managing an existing low-speed DSL business seems preferable to facing the wrath of investors upset over the prospect of shareholder dividends and share buybacks being curtailed to redirect money into a full-scale upgrade effort, even if it results in better returns and greater revenue a few years down the road.

Verizon is depending on its wireless division’s extremely high profitability to counter the usual objections to major upgrades, and by focusing on how 5G will enhance the wireless experience. It also benefits from media hype surrounding 5G technology, exciting some investors. But Verizon is also downplaying exactly what it will cost to lay fiber optic networks deep into neighborhoods to deliver it.

Moffett investigates Verizon’s first 5G city — Sacramento, Calif., and discovers alarming results

Moffett decided to bypass the traditional cost-benefit analysis of laying mile after mile of optical fiber and decided to test Verizon’s case for wireless 5G home broadband instead.

Six months after launch, Moffett investigated Verizon’s 5G millimeter wave network in Sacramento, examining how the service is initially performing. Moffett identified seven zip codes in Sacramento where service was most likely to be available, based on cell tower/small cell records. As of late February, Moffett found Sacramento had 391 Verizon small cells installed, with 273 used for millimeter wave 5G service (the rest are likely designed to bolster Verizon’s 4G LTE network).

Verizon has admitted small cell technology is vulnerable to distance, so Moffett relied on earlier purported claims of 5G coverage to limit the number of addresses to be sampled. Moffett’s team identified 45,000 out of 70,000 possible addresses, based on if those homes were located within a radius of 0.7 miles of a 5G small cell. Then, Moffett’s team devised a method of hitting Verizon’s 5G availability website with each of those 45,000 addresses to learn which ones Verizon qualified for 5G service.

The results, so far, are underwhelming:

• Only an average of 6% of the queried addresses were actually eligible to receive Verizon’s fixed wireless service. That could mean Verizon has installed 5G small cells, but some are not yet operational in all areas or the network is performing much worse than originally anticipated. Some zip codes did better than others, but not by much. The best offered just an 18% pre-qualified acceptance rate. Apparently Verizon’s qualification website also informs applicants if they already have service, which proved to be a good way of finding out how many addresses actually have signed up. Moffett claims only 3% of eligible customers have decided to subscribe to Verizon’s 5G home broadband service so far.
• Coverage appears to a problem. As Moffett checked addresses further away from each small cell, more and more were deemed ineligible for service. In fact, despite Verizon’s claims that its 5G signal reached customers more than 1,900 feet away, the company’s own website refused to actually sell service to customers that far away. Moffett found subscribers were deemed ineligible for service as little as 400 feet away from a small cell. At that distance, less than 50% of checked addresses could sign up. For those 700 feet or more away, almost no addresses were qualified for service.

With those results, Moffett was able to extrapolate some important numbers about how much Verizon’s infrastructure is being utilized:

• Each small cell serves approximately 27 eligible addresses.
• Verizon’s 5G home broadband has a 0.1% market share in Sacramento.
• Excluding areas where multi-dwelling properties dominate, Verizon has achieved a penetration of roughly one subscribed single-family home per 1.5 5G small cell.

“Our findings in Sacramento — limited coverage, low penetration — preliminary though they may be, suggest that earning an attractive return will be challenging, at best,” Moffett concluded.

Because Verizon has attracted so few subscribers thus far, the total cost per connected home for 5G wireless service could far exceed what it would cost to just lay down fiber to the home service to each customer, which might actually give Verizon more business.

“Our analysis suggests that costs will likely be much higher (that is, cell radii appear smaller) and penetration rates lower than initially expected,” the report explained. “If those patterns are indicative of what is 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.”

If Moffett’s estimate of 27 residences served per small cell was proven true, Verizon would have to deploy well over five million small cells to deliver 5G wireless service across America.

Verizon’s choice of cities to launch its 5G millimeter wave network may be partly designed to test the differences in topology, building density and foliage levels, and there may be dramatic differences between Houston, Sacramento, Indianapolis, and Los Angeles.

Moffett’s overall conclusion is that should Verizon move forward on rolling out 5G wireless home broadband to around 25% of the country, as it planned, reaching those 30 million homes “will take a very, very long time, and it will cost a great deal of money.”

AT&T customers with Samsung Galaxy 8 Active or LG’s V30 or V40 smartphones began noticing a new icon on their phones starting last weekend: an italicized 5GE, leading some to believe 5G wireless service has now reached AT&T’s network.

Not so fast, AT&T.

AT&T’s use of 5GE, which stands for “5G Evolution” in AT&T’s techie parlance, is another example of how wireless carriers exploit up and coming technology upgrades that are unprotected from overzealous marketing misuse. The actual 5G standard is different from 5GE, and customers using 5G on millimeter wave frequencies can expect very different performance in comparison to today’s 4G LTE experience. But with 5G being hyped in the media, AT&T is attempting to capture some of that excitement for itself.

The company’s marketing division managed to accomplish a speed and technology upgrade without spending millions of dollars on actual 5G network upgrades — just by changing an icon on customers’ phones and making them believe they are getting a 5G experience. In fact, 5GE is actually just the latest evolution of 4G LTE already known to Verizon customers as LTE-Advanced or LTE Plus on Sprint’s network — technology including carrier aggregation, 256 QAM, and 4×4 MIMO that has been in use on competing cellular networks in the U.S. since at least 2016. But just as Verizon customers saw significant speed improvements from Verizon’s updates to the 4G LTE standard, as AT&T deploys similar upgrades in each of its markets, customers should notice similar performance improvements.

AT&T claims 5GE is already live in 400+ markets with more to come. In the short term, the “upgrade” that was pushed to AT&T network devices last weekend only switched on the 5GE icon, which will mean little to AT&T customers already reached by 5GE and never knew it until this past weekend, and nothing to those still waiting for the upgrade to arrive.

Walter Piecyk, an analyst at BTIG Research, says AT&T’s latest spectrum deployments will matter more than whatever the company brands its latest upgrade, and could eventually allow AT&T to surpass Verizon Wireless in network performance.

AT&T’s recent effort to improve its network by deploying more wireless spectrum — up to 60 MHz in many areas, is not the 5G upgrade customers might expect, but it will deliver faster speeds and more performance on today’s smartphones.

AT&T calls its forthcoming actual 5G network 5G+, and the company is launching a modest but authentic 5G experience in limited “innovation zones” in Jacksonville, Fla., Atlanta, Ga., Indianapolis, Ind., Louisville, Ky., New Orleans, La., Charlotte and Raleigh, N.C., Oklahoma City, Okla., as well as Dallas, Houston, San Antonio, and Waco, Tex.

In a money-saving maneuver, AT&T’s combined spectrum upgrades include 20 MHz of FirstNet first responder spectrum (prime 700 MHz spectrum shared with AT&T customers except during emergencies) it received in 2017, 20 MHz of AWS-3 spectrum (1755-1780 MHz for uplink operations and 2155-2180 MHz for downlink) it acquired for $18 billion in 2015, and 20 MHz of WCS spectrum (2300 MHz) it acquired from NextWave for $650 million back in 2012. All of this spectrum is expected to be activated at the same time as technicians work to upgrade each AT&T cell tower. This dramatically cuts AT&T’s costs and truck rolls for incremental upgrades.

AT&T calls its improved 4G LTE network “5G Evolution”

“We’re turning up not only the FirstNet spectrum that we got, but all of this other spectrum that we’ve acquired over the last few years,” AT&T CEO Randall Stephenson told investors at a December conference. “So as we climb these cell towers, we turn up the spectrum. By the time we get to end of 2019, we will have increased the capacity on AT&T’s network by 50%. I mean, you just have to pause and think about this. The entire AT&T wireless network capacity is going to increase over the next 14 months by 50%. I mean, that’s huge.”

Some areas have already received partial upgrades, others may find newly improved rural coverage as AT&T meets its commitments to the government’s FirstNet platform, which calls for more robust rural coverage. Some areas that never had AT&T coverage before may get it for the first time.

AT&T’s biggest competitor, Verizon, has commanded a lead in 4G LTE coverage from 2010 forward after utilizing a considerable amount of its available spectrum for the faster standard. But Verizon has not been a robust bidder for new spectrum recently, except for the millimeter wave frequencies it bought for its emerging 5G network. It has some additional unused AWS-3 spectrum it can use for expansion, but Piecyk believes Verizon may already be using those frequencies in many markets where it is likely facing a spectrum crunch.

While AT&T lights up 60 MHz of additional spectrum, Verizon is primarily depending on the ongoing conversion of 10-15 MHz of existing spectrum it now uses for 3G service to LTE each year. But the company is reportedly running out of frequencies in areas where data demand requires that extra spectrum the most.

The only short term solution for Verizon, which is not participating in marketing hoopla like 5GE, is to make its current spectrum more efficient. That means more cell towers sharing the same frequencies to reduce the load on each tower, improved antenna technology, and using newly available spectrum in the CBRS and millimeter wave bands to manage network traffic. Verizon may even use unlicensed shared spectrum to handle some of the load. Unfortunately, smartphones equipped to take advantage of these new bands are not yet available and may not be until 2020.

For AT&T, improved network performance is seen as a key to resume robust growth in new subscribers.  After Verizon dramatically improved its LTE network in 2014, AT&T stopped growing its lucrative post-paid phone subscriber base, according to Piecyk. Now it may be AT&T’s chance to turn the tables on Verizon.

This AT&T produced video helps consumers understand what 5G, beam forming, small cells, and coverage differences between 4G and 5G are all about. Notice the 5G trial speed test showed download speeds topping out at around 137 Mbps. (4:26)

Vermont residents want better internet service and protection for universal access to phone service, even if customers have to pay a surcharge on their bill to make sure the traditional landline is still available in 100% of the state.

In contrast, some residents complain, Vermont regulators want to make life easier for a telecom industry that wants to abandon universal service, fails to connect rural customers to the internet, and has left major cell phone signal gaps around the state.

In 2017, Vermont commissioned two surveys that asked 400 business and 418 residential customers about their telecommunications services. It was quickly clear from the results that most wanted some changes.

Vermont is a largely rural, small state that presents a difficult business case for many for-profit telecom companies. Verizon Communications sold its landline business in northern New England, including Vermont, to FairPoint Communications in 2007. FairPoint limped along for several years until it declared bankruptcy and was eventually acquired by Consolidated Communications, which still provides telephone service to most of the state.

Many rural areas are not furnished with anything close to the FCC’s definition of broadband (25/3 Mbps). DSL service at speeds hovering around 4 Mbps is still common, especially in areas relying on Verizon’s old copper wire infrastructure.

Comcast dominates cable service in the state, except for a portion of east-central Vermont, which is served by Charter Communications (Spectrum). Getting cable broadband service in rural Vermont remains challenging, as those areas usually fail the Return On Investment test. Still, 85% of respondents said they had internet service available in their home. Vermont’s Department of Public Service (DPS) estimates about 7% of homes in Vermont have no internet provider offering service, with a larger percentage served only by the incumbent phone company.

The majority of residents own cell phones, with Verizon (47.5%) and AT&T (31.8%) dominating market share. Sprint has 0.6% of the market; T-Mobile has a 1.2% share, both largely due to coverage issues. But even with Verizon and AT&T, 40% of respondents said cell phone companies cannot deliver a signal in their homes. As a result, many residents are hanging on to landline service, which is considered more reliable than cell service. Some 40% of those relying on cell phones said they would consider going back to a landline for various reasons.

With the FCC ready to cut support funding for rural landline service, residents were asked if the state should maintain funding to assure continued universal access to landline service. Among respondents, 87.8% thought it was either “very important” or “somewhat important.” The study also found 51% would accept a general statewide rate increase to cover those costs, while 29% preferred rate increases be targeted to rural ratepayers only. About 16% did not like either idea, and 4% liked both.

When asked whether residents would be interested in having a fiber connection in their home, 80% of respondents said “yes,” but 30% were unwilling to pay a higher bill to get it.

Ironically, the state’s most aggressive residential fiber buildouts are run by some of the smallest community-owned internet providers, rural electric or telecom co-ops, and small independent phone companies. What makes these smaller providers different is that they answer to their customers, not shareholders.

Comcast and Charter are the two largest cable companies in Vermont.

Recently, the DPS released a 100+ page final draft of its 2018 Vermont Telecommunications Plan, setting out a vision of where Vermont should be a decade from now, especially regarding rural broadband expansion, pole attachment issues, and cell tower/small cell zoning.

The report acknowledges the state’s own existing rural broadband expansion fund is woefully inadequate. In 2017, the Vermont Universal Service Fund paid out $220,000 to assist ISPs with building out networks to rural areas.

“The amount of money available to the fund pales in comparison to the amount of funding requests that the Department receives, which is generally in the millions of dollars,” the draft report states. “With approximately 20,000 unserved and underserved addresses in Vermont, the Connectivity Initiative cannot make a meaningful dent in the number of underserved locations.”

Much of the report focuses on ideas to lure incumbent providers into volunteering to expand their networks, either through deregulation, pole attachment reform, direct subsidies, or cost sharing arrangements that split the expenses of network extensions between providers, the state, and residents.

A significant weakness in the report covered the forthcoming challenge of upgrading a state like Vermont with 5G wireless service:

Small cell deployment has been attempted along rural routes with very limited success and the national efforts to expand small-cell, distributed-antenna systems, and 5G upgrades have focused on urban areas. The common refrain on 5G is that ‘it’s not coming to rural America.’ 5G should come to rural Vermont and the state should take efforts to improve its reach into rural areas.

A small cell attached to a light pole.

To accomplish this, the report only recommends streamlining the permitting process for new cell towers and small cells. The report says nothing about how the state can make a compelling case to convince providers to spend millions to deploy small cells in rural areas.

Where for-profit providers refuse to provide service, local communities and co-op phone or electric providers often step into the void. But Vermont prohibits municipalities from using tax dollars to fund telecommunications projects, which the law claims was designed to protect communities from investing in ‘unprofitable broadband networks.’

The draft proposal offers a mild recommendation to change the law to allow towns to bond for some capital expenditures on existing or starting networks:

Vermont could use a similar program to help start Communications Union Districts as well as allow towns to invest in existing networks of incumbent providers. Limitations on the authority to bond would need to be put in place. Such limitations should include focusing capital to underserved locations only, limiting the amount (or percentage) of tax payer dollars allowed to be collateralized, and setting technical requirements for the service.

Such restrictions often leave community broadband projects untenable and lacking a sufficient service area or customer base to cover construction and operating expenses. Instead, only the most difficult and costly-to-serve areas would be served. The current law also prevents local communities from making decisions on the local level to meet local needs.

At a public hearing last Tuesday in Montpelier, the report faced immediate criticism from a state legislator and some consumers for being vague and lacking measurable, attainable goals.

“This plan does not appear to move Vermont ahead in a way that enables it to compete effectively,” said state Sen. Mark MacDonald (D-Orange). “It doesn’t seem to be moving forward at the pace we’re capable of.”

Clay Purvis, director of telecommunications and connectivity for the DPS, defended the plan by alluding to how the state intends to establish a cooperative environment for internet service providers and help cut through red tape. But much of those efforts are focused on resolving controversial pole attachment fees and disputes, assuming there are providers fighting to place their competing infrastructure on those utility poles.

Montpelier resident Stephen Whitaker was profoundly underwhelmed by the report.

“There is no plan at all here,” Whitaker said at Tuesday’s public hearing. “There is some new background information from the 2014 version, but there’s no plan there. There is no objective to reach the statutory goals.”

AT&T will complete its fiber buildout to areas designated to get fiber to the home service by mid-2019, according to AT&T executives.

John J. Stephens, AT&T’s chief financial officer, told investors on a quarterly conference call that AT&T is on schedule to complete expansion of its fiber to the home commitment to 12.5 million new customer locations, a regulator-required commitment imposed on AT&T in return for approval of its acquisition of DirecTV.

“We are getting near the end of our fiber build project, which is basically laying the foundation for stabilizing our broadband and TV business profits in 2019,” added AT&T CEO Randall Stephenson.

AT&T’s expansion has targeted millions of customer locations for fiber to the home service, replacing the fiber to the neighborhood technology AT&T used for several years to support its U-verse service. AT&T officials say its fiber network will reach more than one million new customers during 2018. That network is key to two AT&T initiatives – its emerging 5G wireless service, which requires fiber connections to cell towers, and AT&T Fiber and its broadband offerings — helping boost internet and online video revenue.

“This shift to fiber is beginning to drive IP broadband ARPU growth,” said John M. Donovan, CEO of AT&T Communications, Inc. “The strategic pivot we’re making with video, combined with our execution with fiber gives us the confidence that we will stabilize Entertainment Group [profitability] next year.”

AT&T Fiber is critical to the company’s ability to compete in the home broadband market against cable operators that have recently boosted internet speeds. AT&T’s hybrid fiber-copper U-verse system proved inadequate to match the significantly faster internet speeds many cable operators are rolling out. But AT&T Fiber will not reach all the company’s landline customers. Rural areas are unlikely to ever receive fiber upgrades and AT&T has had long-term plans to scrap its rural landline network, transitioning those customers to wireless voice and internet using AT&T’s 4G LTE network.

AT&T is continuing its 5G wireless trials in several cities around the country, attempting to determine if there is a business case for wireless home broadband offering speeds up to a gigabit on a shared, next-generation wireless network. While some trial participants are getting blazing fast speeds, some may be out of luck if their homeowner association or apartment owner bans outdoor antenna equipment from being attached to the side of buildings for aesthetic reasons.

More than a year ago, AT&T launched an enterprise 5G trial in Austin to learn more about millimeter wave spectrum and how it could be used to deliver very high-speed fixed wireless internet access. In late 2017, AT&T expanded 5G trials to Waco, Tex., Kalamazoo, Mich., and South Bend, Ind., to test whether the service would work in residential and suburban neighborhoods where tree-lined streets and yards could theoretically block the extremely high and very line-of-sight frequencies AT&T’s 5G service uses.

“My team spent countless hours collecting data and talking to real people who elected to join the trial,” wrote Melissa Arnoldi, president, technology and operations for AT&T, in a blog post. “What worked? What didn’t? What did we need to change? Why was this happening here and not there? Would mmWave spectrum really work to deliver 5G? Did we really just hit that speed in South Bend?”

Part of AT&T’s 5G wireless service trial is taking place in the River Park neighborhood of South Bend, Ind.

What AT&T also learned is to talk about the successes and keep the failures to themselves. In a more recent blog post, Arnoldi shared how the Rubbelke family is benefiting from AT&T’s 5G wireless service at their home in the River Park neighborhood, just to the southeast of downtown South Bend:

Well, for one – it’s providing them with ultra-fast wireless speeds. Just how fast?  At the Rubbelke household, they’re seeing peak wireless speeds nearing 1 Gbps and latency rates less than 20 milliseconds.

Using this emerging technology, Rebecca can easily stream their 3-year-old daughters’ favorite TV show on the tablet. Her husband, Michael, can download textbooks and research materials in an instant for his graduate program. And they can connect with family over video chat without noticeable buffering.

And they can use all of these bandwidth-heavy applications simultaneously and seamlessly—something that would be nearly impossible with current LTE technologies.

Arnoldi’s summary of AT&T’s experiences with 5G are all positive, all the time:

Waco, Texas
Participants: Small and mid-sized businesses

• Provided 5G mmWave service to a retail location more than 150 meters away from the cell site and observed wireless speeds of approximately 1.2 Gbps in a 400 MHz channel.
• Observed latency rates at 9-12 milliseconds.
  • Latency impacts things like the time between pressing play and seeing a video start to stream or hitting a web link and seeing a webpage begin to load. For context, MIT researchers discovered the human brain “latency” is 13 milliseconds.
• Supported hundreds of simultaneous connected users using the 5G network.

Kalamazoo, Michigan
Participants: Small businesses 

• Observed no impacts on 5G mmWave signal performance due to rain, snow or other weather events.
• Learned mmWave signals can penetrate materials such as significant foliage, glass and even walls better than initially anticipated.
• Observed more than 1 Gbps speeds under line of sight conditions up to 900 feet. That’s equal to the length of 3 football fields.

South Bend, Indiana
Participants: Small business and residential customers

• Observed a full end-to-end 5G network architecture, including the 5G radio system and core, demonstrating extremely low latency.
• Successfully provided gigabit wireless speeds on mmWave spectrum in both line of sight and some non-line of sight conditions.

But it isn’t all great news.

Line of Sight vs. Zoning and HOA Restrictions

AT&T’s millimeter wave trials are taking place in the 28 and 39 GHz bands that are way above even the 5 GHz Wi-Fi your home router may be equipped with. Anyone who has compared the older 2.4 GHz Wi-Fi band with the newer, but less congested 5 GHz band knows that while 5 GHz can deliver faster speeds with less interference, it is also more distance sensitive than the lower frequency alternative. The more obstacles between your Wi-Fi enabled router and your wireless device, the poorer the results.

A simulated small cell antenna as part of a light pole. (Image courtesy of Crown Castle)

AT&T claims its beta tests are showing “better than expected” results from its 5G service in both line of sight and non-line of sight conditions, but won’t say how much speeds are affected in more marginal reception conditions. AT&T’s 5G antennas are located outdoors, which should offer a clearer path between the transmitter and the receiver, and AT&T claims the signal “performs well” despite foliage and buildings blocking the line of sight between the antenna and a subscriber’s home.

But AT&T itself must not be totally satisfied with the results, because the company told Ars Technica it has begun testing adaptive beamforming and beam tracking to “enable non-line-of-sight 5G services in our trials.” ‘Enable’ in this context suggests that without these adaptive technology add-ons to overcome foliage and building blockages, 5G service did not work well.

Other blockages, those AT&T cannot outwit with technology, are zoning controversies over small cell antennas and homeowner association agreements that restrict outdoor antennas, even though fixed wireless antennas are protected by a FCC ruling allowing them. Despite the fact these antennas are small and unobtrusive — usually installed on an exterior wall near the roof-line — some requests have created controversy in neighborhoods for aesthetic or dubious health and safety concerns.

Even more controversial are the small cell antennas that must be installed inside neighborhoods within 200-800 feet of customers. Some local authorities and homeowner associations may object less to the antenna than to its power supply and battery backup equipment, usually housed inside large-sized metal cabinets placed nearby on the ground or on the pole itself.

In South Bend, AT&T Fiber is on the way in many parts of the city, offering wired gigabit speed service without the limitations of marginal signal reception or fussy HOA agreements and paranoid neighbors. That fact has not been lost on AT&T’s executive management, who remain uncertain about the business case of offering fixed 5G wireless home broadband in areas that will also be served by AT&T Fiber, the company’s fiber to the home service.

In the case of South Bend, AT&T’s trial is taking place in a relatively dense city neighborhood that would normally be a prime target for AT&T Fiber. The cost to provision fiber to the home service in areas already wired for AT&T Fiber may prove a better value for AT&T than contemplating the cost of installing nearly 60 small cells to serve each square mile of South Bend.