Verizon, the country’s leading provider of millimeter wave 5G wireless broadband, is promising to expand service nationwide, but admits it will only service urban areas where the economics of small cell/fiber network infrastructure makes economic sense.

At the Mobile World Congress conference in Barcelona, Spain, Verizon’s vice president of technology planning told PC that when it launches its mobile 5G network later this spring, home wireless internet service will come along for the ride.

“It is one network, based on 5G, supporting multiple use cases,” Verizon’s Adam Koeppe said. “Enterprise, small/medium business, consumer, mobility, fixed. When the 5G network is built, you have a fixed and mobile play that’s basically native to the deployment you’re doing.”

That means Verizon’s millimeter wave 5G network is designed to be shared by everyone and everything, including businesses, residential customers, cell phone users on the go, Internet of Things applications like smart meters and intelligent traffic systems, and more. But that network will not be everywhere Verizon or Verizon Wireless currently provides service.

“Our deployments of millimeter wave are focused on urban centers. It’s where the people are, where the consumption is,” Koeppe said.

Verizon faces significant costs building out its 5G wireless network in areas where it does not already offer FiOS fiber to the home service. Verizon’s 5G network is dependent on a fiber optic-fed network of small cells placed on top of utility and light poles at least every few city blocks. That means Verizon is most likely to get a reasonable return on its investment placing its 5G network in urban downtown areas and high wireless traffic suburban zones, such as around event venues, large shopping centers and entertainment districts. The company has chosen to deploy 5G in some residential areas, but only within large city limits. So far, it has generally steered clear of residential suburbs in favor of older gentrified city neighborhoods with plenty of closely-spaced multi-dwelling apartments, condos, and homes, as well as in urban centers with converted lofts or apartments.

Koeppe

Rural areas are definitely off Verizon’s list because the millimeter waves Verizon prefers to use do not travel very far, making it very expensive to deploy the technology to serve a relatively small number of customers.

Other carriers are not committing to large scale 5G deployments either.

At a debate held earlier today at Georgetown Law’s Institute for Technology Law & Policy, former FCC commissioner Mignon Clyburn, now a paid lobbyist for T-Mobile, warned that unless T-Mobile was allowed to merge with Sprint, its deployment of 5G will only happen in “very limited areas.”

Sprint has plans to introduce its own flavor of 5G, which won’t use millimeter wave frequencies, by June in nine U.S. cities. T-Mobile has talked about deploying 5G on existing large cell towers, which means one tower will serve many more customers than Verizon’s small cells. But with more customers sharing that bandwidth, the effective speed customers will see is likely to be only incrementally better than T-Mobile’s existing 4G LTE network. AT&T is initially moving in the same direction as T-Mobile, meaning many customers will be sharing the same bandwidth. That may explain why AT&T’s current 5G hotspot service plan also comes with a 15 GB data cap.

Verizon says its millimeter wave network will, by geography and design, limit the number of people sharing each small cell, making data caps unnecessary for its 5G fixed wireless home broadband replacement, which delivers download speeds of around 300 Mbps on average.

“We engineer the network to give the customer what they need when they need it, and the results speak for themselves,” Koeppe said.

Verizon is already selling its 5G service in limited areas for $50 a month to Verizon Wireless customers, $70 a month for non-customers. There are no data caps or speed throttles.

Based on the plans of all four major U.S. carriers, consumers should only expect scattered rollouts of 5G this year, and only in certain neighborhoods at first. It will take several years to build out the different iterations of 5G technology, with millimeter wave taking the longest to expand because of infrastructure and potential permitting issues.

In the last three months of 2018, Frontier Communications reported it said goodbye to 67,000 broadband customers, lost $643 million in revenue year-over-year, and had to write down the value of its assets and business by $241 million, as the company struggles with a deteriorating copper wire network in many states where it operates.

But Wall Street was pleased the company’s latest quarterly results were not worse, and helped lift Frontier’s stock from $2.42 to $2.96 this afternoon, still down considerably from the $125 a share price the company commanded just four years ago.

Frontier’s fourth quarter 2018 financial results arrived the same week Windstream, another independent telephone company, declared Chapter 11 bankruptcy reorganization. Life is rough for the nation’s legacy telephone companies, especially those that have continued to depend on copper wire infrastructure that, in some cases, was attached to poles during the Johnson or Nixon Administrations.

Frontier Communications CEO Dan McCarthy is the telephone company’s version of Sears’ former CEO Edward Lampert. Perpetually optimistic, McCarthy has been embarked on a long-term ‘transformation’ strategy at Frontier, to wring additional profit out of the business that provides service to customers in 29 states. Much of that effort has been focused on cost-cutting measures, including layoffs of 1,560 workers last year, a sale of wireless towers, and various plans to make business operations more efficient, delivering mixed results.

McCarthy

Frontier’s efforts to improve customer service have been hampered by the quality and pricing of its services, which can bring complaints from customers, many who eventually depart. Frontier’s overall health continues to decline, financially gaining mostly through rate increases and new hidden fees and surcharges. In fact, much of Frontier’s latest revenue improvements come almost entirely from charging customers more for the same service.

McCarthy calls it ‘cost recovery’ and ‘steady-state pricing.’

“One of the things that we’ve been focused on really for the better part of two years is …. taking advantage of pricing opportunities [and] recovering content costs — really dealing with customers moving from promotional pricing to steady-state pricing, and then offering different opportunities for customers both from a speed and package perspective,” McCarthy said Tuesday. “The quarter really was about us targeting customers very selectively and really trying to improve customer lifetime value.”

By “selectively,” McCarthy means being willing to let promotion-seeking customers go and being less amenable to customers trying to negotiate for a lower bill. The result, so far, is 103,000 service disconnects over the past three months and 379,000 fewer customers over the past year. A good number of those customers were subscribed to Frontier FiOS fiber to the home service, but still left for a cable company or competing fiber provider, often because Frontier kept raising their bill.

Frontier can boost speeds on its acquired fiber to the home networks, which offer almost unlimited capacity upgrades.

Frontier Communications is America’s feast or famine broadband provider, today announcing speed upgrades for its acquired Frontier FiOS and Vantage Fiber service areas while the company continues to pile up hundreds of complaints about poor quality DSL service in the northern U.S. where fiber upgrades are unlikely to ever happen.

Frontier today announced gigabit service (1,000/1,000 Mbps) is now available in its FiOS (California, Texas, Florida, and parts of the Pacific Northwest and Indiana) and Vantage Fiber (primarily Connecticut) service areas. The company also unveiled new plans offering 200/200 and 300/300 Mbps speed options in Indiana, Oregon, and Washington.

“Frontier is pleased to now offer a 200/200 Mbps service, the fastest, most efficient introductory broadband service available in our markets, plus eye-popping speed and capacity with our FiOS Gigabit for the home,” said John Maduri, executive vice president and chief customer officer at Frontier Communications. “Speed and reliability are hallmarks of FiOS Fiber broadband service. Two-way speeds over our all-fiber network make Internet tasks faster and more efficient, regardless of the time of day, while also enabling the many connected devices and streaming services in the home to work simultaneously and smoothly.”

Frontier’s fiber networks are only found in certain regions of the country, including 1.4 million homes in the Tampa Bay/six-county region along the central west coast of Florida, parts of Southern California, Dallas, and individual communities in Indiana, Oregon, and Washington that used to be served by Verizon.

Frontier’s Vantage Fiber network was largely acquired from AT&T’s U-verse service area in Connecticut, with more recent limited rollouts in North Carolina and Minnesota. Life for the unfibered masses in the rest of Minnesota is less sunny, with nearly 500 complaints against Frontier filed by frustrated consumers stuck with a company they feel has forgotten about them.

City Pages notes no company affirms the notoriety of a bad phone company like Frontier Communications, which still relies on a deteriorating copper wire network in most of its original (a/k/a “legacy”) service areas. Complaints about mediocre internet access, missing in action repair crews, and Soviet era-like delays to get landline service installed are as common as country roads.

City Pages:

The grievances read like a cannonade of frustration. They speak of no-show repairmen. Endless waits on hold. Charges for services never rendered. Outages that last for days.

“I have never dealt with a more incompetent company than Frontier,” writes one customer on Google Reviews. “I have no other choice for internet or phone service in my area…. It took me over three months just for Frontier to get to my house to even connect my service…. They also canceled multiple times for installation without calling. They just didn’t show up.”

These maladies aren’t exclusive to the outbacks. They also extend to Watertown Township, in the exurbs of Carver County.

“Frontier Communications is my only option for internet,” Kathleen McCann wrote state regulators. “My internet service is worse than dial-up…. As a dentist, I am not able to email dental X-rays. It took me 47 minutes to upload one small photo to Facebook recently.”

Frontier vice president Javier Mendoza at least admits most rural Minnesotans will be waiting for upgrades forever.

“The economic reality is that upgrading broadband infrastructure in the more rural parts of the state is not economically viable,” he says.

That leaves customers hoping some other entity will step up and serve the critical digital needs of one of America’s most important agricultural states. If not, the future is dismal.

“Those people are screwed,” Christopher Mitchell of the Institute of Local Self-Reliance, a Minneapolis nonprofit, tells the newspaper. “People who make business or real estate decisions are not going to move to that area.”

With that bleak assessment, several rural Minnesota communities are doing something remarkable — building their own public broadband networks. Even more surprising is that many of those towns are led by hardcore Republican local governments that have very different views about municipal broadband than the national party.

Life is rougher for Frontier’s legacy customers that depend on the company’s decades-old copper wire networks.

Some have joked they could change the mind of big city Republicans that are openly hostile to the concept of public broadband by making them spend two weeks without adequate internet access.

In the Minnesota backcountry, in the heart of Trumpland, broadband is about as bipartisan an issue you can find. Ten cities and 17 townships in Renville and Sibley counties went all-out socialist for suitable, super high-speed fiber optic broadband. RS Fiber, the resulting co-op, delivers superior internet access with fewer complaints than the big phone and cable companies offer in Minneapolis-St. Paul.

Public broadband is no more a “big government” takeover than municipal co-ops were when they were formed to bring electric and phone service to rural farms during the days of FDR. Waiting for investor-owned utilities to find adequate profits before breaking ground came second to meeting the public need for reliable power and phone service.

Today, part of that need is still there, even with an incumbent phone company delivering something resembling service. Frontier DSL is internet access that time forgot, with customers comparing it to the days of dial-up. Speed tests often fail to break 1 Mbps. Cable companies won’t come anywhere near most of these communities, many inconveniently located between nothing and nowhere.

As long as Frontier remains “checked out” with make-due internet access, rural Minnesota won’t ever benefit from the kinds of fiber fast speeds Frontier is promoting on the fiber networks that other companies originally built. Frontier is not in the business of constructing large-scale fiber networks itself. It prefers to acquire them after they are built. That makes Frontier customers in legacy service areas still served with copper envious of the kind of speeds available in California, Texas, and Florida.

Investors continue to pressure Frontier to reduce spending and pay down its debts, piled up largely on the huge acquisitions of Verizon and AT&T landline customers Frontier effectively put on its corporate credit card. For Wall Street, the combination of debt repayments and necessary upgrade expenses are bad news for Frontier’s stock. The company already discontinued its all-important dividend, used for years to lure investors. A growing number of analysts suspect Frontier will face bankruptcy reorganization in the next five years, if only to restructure or walk away from its staggering debts.

Super monopoly?

Some Wall Street analysts are pondering ideas on how to limit forthcoming 5G wireless home broadband, suggesting providers might want to set up local monopolies, keeping competition to a minimum and profits to a maximum.

Verizon’s presentation at its annual Analyst Day meeting drew little praise from analysts and investors in attendance, “landing like a thud” to quote one person at the event.

The issue concerning Wall Street is what impact 5G wireless broadband will have on the internet access marketplace, which is currently a comfortable monopoly or duopoly in most American cities. That may radically change if the country’s four wireless companies each launch their own 5G services, designed to replace wired home broadband services from the cable and phone companies.

This week Verizon formally announced Sacramento would be the first city in the country to get its forthcoming 5G service, with an additional four of five unnamed cities to follow sometime next year.

Verizon will advertise 1,000Mbps service that will be “priced competitively” with current internet providers in the market. But Verizon intends to market itself as “a premium provider,” which means pricing is likely to be higher than one might expect. Verizon claims they intend to roll out 5G service to 30 million households — 25-30% of the country, making Verizon a prominent provider of fixed wireless home broadband service.

But analysts panned Verizon’s presentation for raising more questions than the company was prepared to answer. Barron’s shared the views of several analysts who were underwhelmed.

Notably, Craig Moffett from Moffett-Nathanson was particularly concerned about how to rate 5G service for his investor clients, and more importantly to them, how to forecast revenue and profit.

Moffett

The biggest problem for Moffett is the prospect of additional competition, and what that will do to each current (and future) provider’s share of customers and its revenue. If every major wireless carrier enters the 5G home broadband business, that will raise the prospective number of ISPs available to consumers to six or more — four wireless carriers competing with the phone and cable company. That is potentially very dangerous to big profits, especially if a competitive price war emerges.

“Let’s assume that AT&T is just as aggressive about this opportunity as Verizon,” Moffett told his investor clients. “Will they enter the same markets as Verizon, or different ones? […] If multiple players enter each market, all targeting the same 25-30% [where 5G service will be sold]. Well, what then? Let’s suppose the 30% market share estimate is right. Wouldn’t it be now shared among two, three, or even four [5G fixed wireless broadband] providers?”

Moffett gently proposes a concept where this profit-bruising competition can be abated by following the cable television model — companies agree to stay out of each others’ markets, giving consumers a choice of just one 5G provider in each city instead of four.

“There’s a completely different future where each operator targets different markets […] Let’s say that AT&T decides to skip Sacramento. After all, Verizon will have gotten there first,” Moffett suggests. “If the required share of the [fixed wireless] market is close to Verizon’s estimated 30%, then there is only room for one provider. So AT&T decides to do Stockton, about 40 miles to the south. Verizon would then skip Stockton, but might do Modesto, twenty miles further south… and then AT&T would then skip Modesto and instead target Fresno… unless Sprint or T-Mobile got there first.”

But Moffett is thinking even further ahead, by suggesting wireless carriers might be able to stop spending billions on building and expanding their competing 4G LTE networks when they could all share a single provider’s network in each city. That idea could work if providers agreed to creating local monopolies.

“That would create a truly bizarre market dynamic that is almost unimaginable today, where each operator ‘owned’ different cities, not just for [5G] but also for 4G LTE. If this kind of patchwork were to come to pass, the only viable solution might then be for companies to reciprocally wholesale their networks. You can use mine in Modesto if I can use yours in Fresno. To state the obvious, there is almost no imaginable path to that kind of an outcome today.”

The reason providers have not attempted this kind of “one provider” model in the past is because former FCC commissioners would have never supported the idea of retiring wireless competition and creating a cable monopoly-like model for wireless service. But things have changed dramatically with the advent of Chairman Ajit Pai, who potentially could be sold on the idea of granting local monopolies on the theory it will “speed 5G deployment” to a large number of different cities. Just as independent wireless providers lease access on the four largest carriers today (MVNO agreements), AT&T, Verizon, T-Mobile and Sprint could sell wholesale access to their networks to each other, allowing massive cost savings, which may or may not be passed on to customers.

But it would also bring an end to network redundancy, create capacity problems, and require every carrier to be certain their networks were interoperable with other wireless companies. The federal government’s emergency first responder program also increasingly depends on a wireless network AT&T is building that would give them first priority access to wireless services. How that would work in a city “designated” to get service from Verizon is unclear.

Restricting competition would protect profits and sharing networks would slash expenses. But such prospects were not enough to assuage Wall Street’s insatiable hunger for maximum profits. That is why analysts were unimpressed with Verizon’s presentation, which “lacked the financials” — precise numbers that explain how much the network will cost, how quickly it will be paid off, and how much revenue it can earn for investors.

A small cell attached to a light pole.

Verizon did sell investors on the idea 5G will put an end to having to wire fiber optics to every home. The service will also keep costs to a minimum by selling retail activation kits customers will install themselves — avoiding expensive truck rolls. Billing and account activation will also be self-service.

Verizon also announced a new compact 4G/5G combined antenna, which means 5G service can be supplied through existing macro/small cell 4G equipment. Verizon will be able to supplement that network by adding new 5G nodes where it becomes necessary.

Investor expectations are that 5G will cost substantially less than fiber to the home service, will not cost massive amounts of new investment dollars to deploy in addition to maintaining existing 4G services, will not substantially undercut existing providers, and will allow Verizon to market 21st century broadband speeds to its customers bypassed for FiOS fiber service. It will also threaten rural phone companies, where customers could easily replace slow speed DSL in favor of what Verizon claims will be “gigabit wireless.”

Despite that, Instinet’s Jeffrey Kvaal was not wowed by Verizon’s look to the future.

“Verizon’s initial fixed wireless implementation seems clunky and it withheld its pricing strategy,” Kvaal told his clients. He believes fixed wireless broadband will cost Verizon an enormous amount of money he feels would be better spent on Verizon’s mobile network. “Verizon glossed over 5-10x LTE upgrades that are already offering ~100Mbps of fully mobile service at current prices to current phones without line of sight. A better 5G story might be to free up sufficient LTE capacity to boost the unlimited cap from 25GB to 100GB for, say, a $25 premium. The ‘cut the cord’ concept was successful in voice, in video, and should be in broadband.”

With many cable operators reporting a need to double network capacity every 18-24 months to keep up with customer traffic demands, the industry is spending time and money contemplating how to meet future needs while also finding ways to cut costs and make networks more efficient.

Top technology executives from five major cable operators answered questions (sub. req’d.) from Multichannel News about their current broadband networks and their plans for the future. Some, like Mediacom, are aggressively adopting DOCSIS 3.1 cable broadband upgrades for their customers while companies like Cox and Comcast are deploying multiple solutions that use both traditional hybrid fiber-coax network technology and, on occasion, fiber-to-the-home to boost speed and performance. But at least one cable company — Charter Communications — thinks it can continue operating its existing DOCSIS 3 network without major upgrades for several years to come.

Cable Broadband Traffic Can Be Handled

“We’ve been on a pretty steady path of doubling our network capacity every 18-24 months for several years, and I don’t see anything that makes me think that will change,” said Tony Werner, president of technology and product at Comcast. “We’ve been strategically extending fiber further into our network to meet customer demand, and that effort, combined with our commitment to deploying DOCSIS 3.1 has given us a network that’s powerful, flexible, and ready for what’s next.”

J.R. Walden, senior vice president of technology at Mediacom was more aggressive.

“We have completed the removal of all the analog channels. That was the big step one,” Walden said. “Step two was to start transitioning high-speed data over to DOCSIS 3.1, so we’re not adding any more 3.0 channels, and reuse spectrum for 3.1, which is a bit more efficient. The whole company is 3.1, all the modems we’re buying since June have been 3.1, so we’ve begun that next transition.”

Walden added Mediacom is also trying to improve broadband performance by reducing the number of customers sharing the same connection.

“We average about 285 homes to 290 homes per node as an average,” he said.

Mediacom is also scrapping older technology on the TV side to open new bandwidth. The cable company is getting rid of MPEG-2-only set-top boxes so the company can transition its video lineup to MPEG-4. But even that won’t last long. Walden admits the company will then quickly start moving less-viewed channels and some premium networks to IP delivery.

Traditional cable broadband service relies on a hybrid fiber-coax network.

In its European markets, Liberty Global has adopted Converged Cable Access Platform (CCAP) equipment across its footprint. CCAP technology saves cable operators space and operates more efficiently, and supports future convergence of technologies that cable operators want to adopt in the future. CCAP has helped Liberty Global deal with its 45% traffic growth by making upgrades easier. The company is also using advanced features of CCAP to better balance how many customers are sharing a connection. The next step is adopting DOCSIS 3.1.

“Seventy to 80% of our plant will be DOCSIS 3.1 ready by the end of next year, giving us a path to even greater capacity expansion allowing us to continue to increase the available capacity across our access network, upstream and downstream,” said Dan Hennessy, chief architect of network architecture for Liberty.

Charter is prioritizing maximizing performance on the network it already has.

“Our priority is to constantly balance capacity against demand. It’s a never-ending quest,” said Jay Rolls, Charter’s chief technology officer. “We watch it very closely, and we’re very pragmatic about it — the volume of tools, metrics and ways to see what’s really happening, and invest accordingly, is really deepening in ways that matter.”

Is Fiber-to-the-Home in Your Future?

While some cable operators like Altice’s Cablevision are scrapping their existing hybrid fiber-coax networks in favor of fiber-to-the-home (FTTH), America’s largest cable operators are not in any hurry to follow Altice.

Comcast has expanded its fiber network closer to customers in the last few years, but sees no need to convert customers to FTTH service.

“I feel pretty strongly that the best path ahead is to leverage the existing coaxial network and DOCSIS resources to the fullest, then inch towards FTTH, over time Why? Because we can. We don’t have to build an entire network just to turn up one customer.”

The next generation of cable broadband service may depend on CCAP – technology that will cut operator costs and lay the foundation for changing the way video and other services are delivered to customers.

Cox has a 10-year Network 2.0 plan that will bring fiber closer to customers, but not directly to every home. More important to Cox is having the option to support symmetrical speeds, which means delivering upload speeds as fast as download speeds. In the meantime, network cabling Greensboro can improve your current connectivity and reliability, preparing your network for high-speed internet.

“We’re also thinking about the fiber investment and fiber deep as it relates to our wireless strategy, enabling some of our customers with a small cell strategy but also positioning ourselves to take advantage of that in the future, as well as thinking about fiber deep to benefit both residential and our commercial customers simultaneously,” said Kevin Hart, Cox’s executive vice president and chief product and technology officer.

Liberty/Virgin Media’s Project Lightning is bringing cable broadband and TV service to places in the UK that never had cable service before.

In Europe, Liberty Global’s “Project Lightning” network expansion initiative is building out traditional cable service in the United Kingdom. Most of the UK never adopted cable service, favoring small satellite dish service instead. Now Liberty Global is putting cable expansion on its priority list. But decades after most North Americans got cable service for the first time, today’s new buildouts are based largely on fiber optics — either fiber to the home or fiber to the neighborhood, where coaxial cable completes the journey to a customer’s home.

Charter admits the technology it will use in the future partly depends on what the competition is offering. Rolls says the company can eventually roll out DOCSIS 3.1, take fiber deeper, or offer symmetrical download/upload speeds presumably targeted towards its commercial customers. But he also suggested Charter’s existing network can continue to deliver acceptable levels of service without spending a lot on major upgrades.

“It’s a rational approach, where we’re trying to balance the needs, the available technologies, and the costs,” Rolls said. But he also suggested DOCSIS 3.1 isn’t always the answer to upgrades. “DOCSIS 3.1 has some pretty remarkable capabilities, but it’s not necessarily a hard-and-fast reason to not take fiber deeper, for instance [allowing for additional DOCSIS 3 node splits]. Different situations drive different capacity decisions.”

Walden agreed, and Mediacom customers should not expect more than DOCSIS 3.1 upgrades for the near future.

“[Fiber deep] is a bit further out, at least as a large-scale type of project,” Walden told Multichannel News. “I think fiber deep for multi-dwelling units, high-density areas and some planned higher end communities doing deeper fiber or fiber-to-the-home [is happening]. But as a wholesale [change] and going to node+0 kind of architecture, I don’t see that in the next two years.”

Are Symmetrical Speeds Important for Customers?

Verizon’s fiber to the home service FiOS uses symmetrical broadband speeds to its advantage in the marketplace.

Many fiber to the home networks offer customers identical upload and download speeds, but cable broadband was designed to favor downstream speeds over upstream. That decision was based on the premise the majority of users will receive much more traffic than they send. But as the internet evolves, some are wondering if cable broadband’s asymmetric design is now outdated and some competitors like Verizon’s FiOS fiber to the home service now use its symmetrical speed advantage as a selling point.

Cox Communications does not think most customers care, even though its network upgrades are laying the foundation to deliver symmetrical speeds.

“It’s a little but further out on the horizon,” said Hart. “The upstream growth rate is ticking up a couple of notches, but not to the tune that we would need significant additional capacity and/or a complementary need for symmetrical bandwidth. [A]t this stage, the symmetrical is a nice-to-have for residential and definitely will be a good option for our commercial customers.”

Rolls isn’t sure if symmetrical speeds are important to customers either and Charter has no specific plans to move towards upload speed upgrades.

“The world of applications and services continues to evolve, obviously, but so far we’ve been able to meet those needs with an asymmetrical topology,” Rolls said. “That said, things like real-time gaming, augmented and virtual reality, and the Internet of Things — some of those will likely drive more symmetry in the network. It remains to be seen.”