Sometimes we do not give Verizon enough credit for knowing precisely what it has to do, capacity-wise, and for having a rational strategy to deal with those challenges. Observers have noted for years that Verizon “needs more spectrum.”
Verizon’s answer has been to use millimeter wave spectrum, small cells and spectrum sharing, in addition to acquiring new millimeter wave assets and refarming 3G spectrum. There is an unsaid ability to possibly augment with other assets as well, but Verizon is moving ahead on the assumption it must do so without spectrum asset acquisitions from other service providers.
“One of the most important features that I have talked about is of course the dynamic spectrum sharing that will come during next year, where you basically also can use, deploy wherever you are with 5G and then you don't need to allocate certain spectrum to certain technology,” said Hans Vestberg, Verizon CEO.
An important point is that there are a growing number of ways to increase effective bandwidth beyond buying spectrum licenses. Small cells, dense fiber networks, spectrum sharing and spectrum aggregation all can expand capacity.
That said, both AT&T and Verizon have committed to lots of new spectrum in the millimeter wave regions. Some have criticized such moves, arguing that volume production of radios and devices eventually be strong in the mid-band spectrum areas. There is some merit to such arguments.
But it also is true that future 5G capacity growth will have to come from the millimeter wave region, and that this will be a global trend, not something mostly limited to the United States.
Verizon realizes millimeter wave spectrum “is not the coverage spectrum,” Vestberg said. That is one reason why “spectrum sharing will be the next step for us to see that we have all the assets to deploy our strategy on 5G to meet the different type of use cases.”
No 5G service provider in the mobile business can escape an iron law of bandwidth, namely that lower frequency spectrum is better for coverage, while higher frequency spectrum is better for capacity, and mobile service providers need both.
That means operators always must balance coverage and capacity. But there are lots of moving parts. End user demand always changes, but most of the demand for capacity happens when users of smartphones are stationary, at home or at work. So most of the demand for capacity happens at home and at work.
“Remember, the majority of all the traffic is in dense urban areas, where we are now initially are focusing” its millimeter wave deployments, said Vestberg.
The point is that observers sometimes do not give Verizon strategists enough credit for having thought through capacity expansion alternatives and approaches.
New use cases might require significant amounts of additional bandwidth when users are fully mobile, but that will occur over time. For the most part, mobile bandwidth has to grow, but not at the same rate as “tethered but not moving” bandwidth demand. And that appears to be where spectrum farming and spectrum sharing will be crucial.
If Sprint and T-Mobile US do not talk as much about that, at the moment, it is because they face different challenges and own different assets.
AT&T and Verizon have heavily-loaded networks and require more bandwidth because they have more customers.
T-Mobile US and Sprint networks are relatively lightly loaded, and therefore can get by with less incremental bandwidth.
Service providers also tend to own distinct blocks of spectrum. AT&T and Verizon have more lower-band spectrum than T-Mobile US and Sprint, but that spectrum also is heavily loaded. T-Mobile has more flexibility in that area. Sprint has lots of mid-band spectrum, but not enough customers to justify aggressive deployment of those resources at the moment.
Some have noted that Verizon has less capacity per account than does AT&T, and “needs” more mid-band spectrum. Verizon technologists have run the numbers and concluded that small cell architectures--always a practical way to expand bandwidth--will do much of the job. Millimeter wave spectrum and spectrum sharing will help: the former with capacity needs, the latter for coverage.
Beyond that, there are additional mid-band resources potentially available. Dish Network’s spectrum remains a wild card. It always is possible that a T-Mobile US merger with Sprint is approved with significant spectrum sales. That remains a possible source of additional Verizon spectrum.
But none of that is essential. Every 5G service provider eventually has to supply both coverage and capacity. Capacity has to come in different ways than coverage. Verizon knows that.