On October 1st, Verizon will launch the 5G home network service it promised, in four cities. The pricing for current Verizon wireless customers will be $50 and for others $70. This is a big deal, perhaps less for the fact that it gives 5G-hungry editors something to work with than that it’s a potential step toward a transformational change.
The new Verizon service will apparently be offered at a 300 Mbps baseline speed, with higher speeds possible where customer location relative to the 5G/FTTN hybrid sites is favorable. You could, they say, get up to a gig, which for those prices would be a revolutionary bargain in itself. Verizon’s own FiOS services can’t match that price, and that may be the onramp to the first development we can expect from the service.
It’s hard to see how Verizon could let their FiOS base languish with speeds down at 100 Mbps or below for about the same price (after promotional periods have expired). I think Verizon will be moving to normalize their pricing across FiOS and 5G, which could give Verizon users the best Internet bargain out there today. In addition, since it appears that the 5G broadband service is delivering anything from 300Mbps to a gig at the same price, it’s likely that the price curve for capacity on FiOS will be flattened over time. Some people have told me that Verizon may even baseline FiOS at 300 Mbps.
This is not good news for cable companies, particularly Comcast, for two reasons. First, and most obvious, the new Verizon service would significantly undercut cable broadband pricing, and perhaps even pressure cable operators to modernize their plant to deliver broadband at high speeds with less traffic interference from other users. A big build-out at a time when price points are falling isn’t what the cablecos want to see.
Perhaps a bigger problem is the fact that many new residential communities in Verizon’s area have signed deals with Comcast during their building phase, limiting the ability of other operators to come in. In my own town, some new residential communities can’t get Verizon because there’s a deal with Comcast that prevents running FiOS cable. Well, radio waves are no respecter of this kind of territorialism. I think Verizon could plant 5G microcells at the borders of these communities and offer competitive services without any Comcast restraints.
Comcast seems to understand that the game is changing here, not only for broadband but for video as well (see below). CEO Roberts told Wall Street that Comcast would be emphasizing connectivity, meaning broadband services, and relegating video to a supporting role. That’s a major shift from the prevailing theory that you can’t make money on home delivery services without the kicker of TV profits.
For everyone, the Verizon strategy has another revolutionary dimension. You can’t deliver linear TV over this new 5G home network, only broadband data. Verizon has at least a temporary deal with Google’s YouTube TV to offer customers television over IP, which could be great for Google and Verizon. The former gets a potential giant boost in market opportunity (it’s behind AT&T’s DirecTV Now today), and the latter gets IPTV without having to buy anybody. If they like what happens, they could shift FiOS to TVoIP too, and drop a lot of cost along the way.
Another angle to watch in the Verizon deal is the linkage between 5G home broadband and mobile broadband customers with unlimited plans. AT&T links DirecTV Now with mobile services (its Watch TV offering is free to mobile unlimited users), and so it’s possible Verizon is just responding to a rival. It’s also possible, based on how Verizon words its discussion about the 5G/FTTN hybrid sites, that Verizon may roll out mobile 5G at the same locations. In fact, some people tell me that they may use mobile-5G spectrum and technology even for some home users, where customer density isn’t high enough to make the shorter-haul mm-wave delivery optimal.
All this clearly impacts television delivery. 5G home broadband means TVoIP. Mobile linkage with home broadband encourages that same outcome. The fact that Verizon seems to be willing to take a partnership with YouTube TV to get TV to customers may be the most telling fact of all. Could Verizon now be saying that because of its high demand density, it can deploy broadband to the home profitably via 5G, and is intending to dodge the whole TV licensing and content ownership game?
What this might do to the networks, and to TVoIP competition, is also important. There are fewer barriers to market entry for TVoIP; you can ride any broadband network that can deliver enough bandwidth. We already have a half-dozen entrants in the space, and it’s possible that 5G home broadband, if widely available and expanded beyond just Verizon, could promote new competitors. These competitors could end up differentiated only on price, which puts pressure on them to try to focus their marketing by selecting channels more like a la carte. That’s something the networks have hated from day one.
On the flip side, from the perspective of the TVoIP services, a broader competitive market could impact the current trend to target these services a bit more on the youth and mobile-viewer side. If you look at today’s lineups, you see the channels in TVoIP are a combination of the big-name networks and youth-favored networks. Can that be sustained if everything is delivered on IP? That could be a factor for some of these specially targeted networks.
From an equipment/infrastructure perspective, the 5G home broadband shift could be equally revolutionary. You obviously need to push a lot of new fiber remotes out, you’ll need a lot of small-cell 5G RAN elements (pre-standard or not), and you’ll need a 5G home broadband antenna. You won’t need a set-top box or in-home CATV cable, and since broadband routers in the home can typically handle even gigabit speeds, you probably don’t need new routers either.
At the edge, we could expect major changes. As TVoIP gains traction, it’s sure to drive a need for deep caching and enhanced fiber connectivity to those deep caches. It’s more challenging to deliver live TV than streaming something from a library; too many viewing glitches force the provider to either run long and overlap the next show, or skip the areas of problem delivery and risk consumers missing something they think is important. TVoIP also promotes ad targeting, which means more caching still and logic to quickly pick ads to match viewer profiles.
You could even link this to the thing I’ve been calling “contextual services”. There’s no reason why people couldn’t share show links on social media, build conversational communities around them, and then have advertising that can provoke interest and even discussion. You could factor in, per viewer, shopping profiles and even website activity. All this adds up to smarter delivery, and If vendors and operators think this through, that could enhance and accelerate edge computing.
My model always said that TV and advertising was the earliest large-scale driver of carrier cloud, but things may be developing faster than I’d forecast they would. That’s important, because while there are a lot of things that could be done with carrier cloud, most of them don’t return enough on investment in the near term to jumpstart deployment. A driver like TVoIP could justify a lot of caching and ad selection logic near/at the edge, and that could preposition edge computing assets that other applications could leverage. These could then deploy with less ROI pressure.