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Verizon Finally Gets Serious About Midband

Mar. 01, 2021 9:30 PM ETVerizon Communications Inc. (VZ)T, TMUS81 Comments


  • The US carriers have all pursued different 5G strategies. Verizon has focused on mmWave, while T-Mobile focused on midband.
  • As predicted by many, including me, T-Mobile's midband-first has proven to be the winner for right now, and Verizon has a lot of catching up to do.
  • While Verizon is catching up, they will be adding more debt to their already extraordinarily high pile.
  • They have long been the mobile brand of “Best Network” in the US, but T-Mobile has a chance to steal that from them.

What Does “5G” Even Mean?

“5G” is a marketing term, so what it means is in the eye of the marketing executive. Android Authority made this graphic that very simply describes the radio wave frequencies we are talking about:

Broadly speaking, three flavors of 5G have emerged:

  • “mmWave.” These are the very high bandwidth frequencies that provide the super-high speeds and very low latency that has really propelled the marketing of 5G. You see that in the 24-100 GHz range in the graphic. This has been Verizon’s (NYSE:VZ) main focus.
  • Multichannel LTE: This is AT&T’s (T) “5G Evolution” product that has caused a lot of consternation, because it is the same bandwidth as “4G,” which was also a marketing term in the eye of the beholder.
  • In between those two, and overlapping with the 4G frequencies, is what’s come to be known as “midband.”

This has resulted in a ton of consumer confusion in the US, and some broken promises from a few years ago that have mostly been forgotten. To understand the divergent strategies the carriers have pursued, we need to understand a few basics about radio waves. The best way to explain it is AM and FM radio, far lower frequencies than we are talking about with cellular.

AM was the first broadcast radio technology, eventually settling on bandwidths in the 530 kHz to 1700 kHz in the US. These were very low frequencies that could only carry a mono audio signal, so only a small amount of analog data. But if you’ve ever driven through the flat parts of the US, you know that these AM signals can travel for hundreds of miles, and even pass through physical obstacles like concrete.

FM came later, and was at higher bandwidths, 87.5 to 108.0 MHz, part of what was known at

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Trading Places Research is a macroeconomics specialist with decades of experience identifying geopolitical factors that lead to market trends. With a focus on technology, he focuses on where the sector is headed as opposed to where investments are currently.

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Comments (81)

simsjr17 profile picture
How can VZ make such an obvious error as to avoid mid-band and invest in mm-wave? Will the C-band put them on par with T-Mobile in terms of 5G reach and availability? If so, how long will that take?
Trading Places Research profile picture
@simsjr17 Hi. I am hardly an expert here. I have a contact at a comms construction company who VZ uses, but he wasn’t about to talk about a customer regarding these sorts of questions. Fair enough.

My best guess is that VZ is putting down the gas pedal, and maybe something like H1 2023 they can reach parity? They are already doing much better here in LA where I live. When I wrote this article in May, there were still giant holes in their coverage maps in heavy traffic areas, and that’s much better now.

Regardless of the time frame, T-Mobile has a window here to steal “best network” as their brand. If you look at their marketing, they are trying.
simsjr17 profile picture
@Trading Places Research I am no expert either, but just started a deep dive into VZ. I'm curious on how well they can implement the C-Band, and from what it sounds like they are focused on '5G Home' as a new product.. will need to take more time studying this
Trading Places Research profile picture
@simsjr17 I’m not a fan of the 5G Home product. Not sure who’s going to choose it.
Trading Places Research profile picture
New data from OpenSignal on mmWave. Just brutal

@Trading Places Research , It just keeps treading water.
Trading Places Research profile picture
More midband spectrum on auction. More $ for $VZ

@Trading Places Research , Thanks for the active link.
Is all this midband spectrum really necessary? Verizon owns AOL and Yahoo. This includes the Huffington Post.
For all of you believing the propaganda of 5G wireless being critical to the future of telecom and all things wireless, I think you need to rethink your position. This dream of self driving cars operating on 5G mmWave wireless networks is pure fantasy. None of these companies can afford to build a network that would allow someone to drive any great distance without fear of losing signal or some technological mishap leaving them stranded on the side of the road. Same with this fantasy of operating rooms being able to use wireless technology. Me personally, would never want to be on the table in that operating room. Because as Texas just discovered, sh*t happens and next thing you know you have dead people and basic needs can't be met. Technology is great when it lives up to the hype and is dependable. But there in lies the problem. People are not going to pay for and trust technology they can not rely on and which fails to live up to the hype. Building out a high speed 5G that everything thing can run on and which people and lives can depend upon is going to be so cost prohibitive that it makes no sense to even attempt to build the network to its optimal capacity. 6G will eventually come along, which will offer even more utility than 5G, and then these wireless companies will once again have to build out a vast new network at enormous expense without having ever earned full ROI on their 5G strategy.
@Sprint Family , I'm waiting for 7G before I do anything.
@Sprint Family - I remember the exact same thing being said about nationwide 4G. Stream videos and play games on your phone? That's a fantasy! They'll never build a 4G network anywhere other than in major cities, and there won't be enough demand to justify the cost!

It's funny how the present often rhymes with the past.
@coroscant72 actually, it is a fantasy if you're not pretty close to a cell tower. Try driving across New Mexico and streaming a movie. It's a fanstasy. Now, imagine it's a life or safety critical application.
@Trading Places Research Author Sir, I respectfully suggest your hold your bearish PoV loosely and in your quiet time lay out the range of C-Band due to power allowances versus the range of 2.5 & 3.5Ghz which both have location-based power caps. 3.5 has a higher power option and potentially an even greater 3rd tier power in some rural installations if FCC allows a proposed ruling. C-band also has a range and power advantage. That power and range are keys to coverage and thus ROI. A clever engineer could establish mmWave as front/back haul to those rural C-band cells and speed network build. I suggest VZ and QCOM engineers are well acquainted and the improved mmWave coverage is a big step to making ROI for C-Band network design too.
I know you ‘get’ how power overcomes frequency limits.
I commented on the old WiMax build here on SA seekingalpha.com/... ‘Orange: Resilience Amid Uncertainty - Chetan Woodun“
I avoided commenting on “Making sense of the record-breaking 5G spectrum auction
Feb. 28, 2021 By: Jason Aycock, SA News Editor” to permit the public sentiment and dust settle. seekingalpha.com/...
Since PRC is several years ahead of us on C-band terrestrial deployment there are likely fabs, ODMs, suppliers and a supply chain in place now to speed the economics of this rollout at good ROI economics. We’ll see how ASEANs support this, but I offer that a rising tide of Indus sources is a good sign for this band of service. And, it looks to me like a rich vein of income for PRC IP royalty and patent holders. If hardware can be secured, we might not object to paying those royalties just as we don’t object to TDD-LTE when it is applicable. 2.5ghz is TDD and was subject to a big mud-fight, now settled it seems. PRC should see fairness in our behavior if and when they play fair.

IMO it’s not a good idea to imply that the sharps at VZ are delinquent in their homework.
Trading Places Research profile picture
@frmrlyVZguy LOL on WiMAX, I lost much coin on that years ago.

But to your point, if you are telling me that having 9.5% of customers covered and slower speeds than TMUS in 2021 when every handset manufacturer is making and promoting 5G phones, and they have relentlessly promoted Ultra Wideband was all part of a plan, I will tell you they are not that sharp.

Spending $45b in 2021 on bandwidth is admission of failure. They are down a rabbit hole.
@Trading Places Research I believe it is fair to observe that the P2P tech of mmWave has well-known economic fences and AT&T’s attempts were a well-known case study of those limits. The ‘cherry-picking’ cases for 5GUW have hit a real headwind called CV19 and the idea of national coverage for 5GUW was never real in any professional officer’s mind. 
Notice that projections for 2&3G sunset haven’t stayed on schedule either. These details affect OPEX and thus CAPEX too.
I have often written of the ‘hairy backbone’ design that 5GUW allows and the latest chip from Q enhances that.
If you are saying VZ failed with 5GUW I would deny the outright fail and argue pace of deployment and the ‘win’ in supporting its MVNO partners at Comcast and Charter. Delayed ROI isn’t yet a fail, but it isn’t rich either. Masa failed to deploy 2.5 widely and it took TMUS to sweep in with the win. ROI takes scale.
Spend on C-band spectrum will have a payback modeled or there won’t be spend. CBRS didn’t get the same spend and I expect it is a power and coverage calculation. Smart guys deal with real-world conditions. Bloggers just deal with what they know.
The case is nuanced. FCC execution has also affected build-outs and ROI. Such details are hard to model. The foot-dragger is gone now.
If an investor needs a richer SP gain or divvy, ... who would object to their looking? Not me.
I use TMo at home due to coverage. VZ network design isn’t a ‘fail’, just at my address it is weak.
@frmrlyVZguy , Buy a booster.
cyrano13 profile picture
I guess Buffet was wrong again?
Very useful overview, thanks. I've never been clear on why the world needs 5G, and my conclusion was that it's the telecoms/carriers that need 5G, not so much customers! And the best part is not the super-low latency or super-high customer bandwidth, it's super-high carrier bandwidth, so the network doesn't saturate. If that's true, it may just be that ATT has the optimal strategy. Or that there is no optimal strategy, they each win and lose across different scenarios.
@Just Some Guy , Does that mean Verizon is a buy?
Insouciant Investor profile picture
I don't own any telecoms currently. However if I did I would rather own AT&T than VZ or TMUS.

Telecom is a nice business but it is no growth, stagnant, and pretty much impossible to grow organically and not possible to grow inorganically, within country, due to anti-trust.

Both AT&T and VZ are up to their ears in debt (and TMUS also has a lot of debt compared to ebitda, don't be fooled into thinking they are not also broke), but at least AT&T has WarnerMedia which gives them the possibility of growth outside of telecom and outside of the US. VZ just spent a fortune on spectrum which isn't going to bring in any new revenue.

Nobody needs 5G, at least on the consumer side. The speeds we had with 4G were already good enough to play movies. There is no consumer application that needs one gig speeds.

Some may say that they can now sell fixed wireless bandwidth and compete with the cable companies, but that is a losing game. The cable companies will just lower their prices to retain market share. Also, soon we will have low earth orbit satellites competing in the same markets. Its going to be great for the consumers. Prices on broadband are finally going to go down, but as a business opportunity it will be crap.

IMHO, the entire telecom sector is un-investable until lots of debt gets paid down. If you still want to buy one then I guess buy AT&T. At least there you have the possibility that HBO Max can supplant Netflix and Disney globally.
@123098567432 Of all the companies to recommend investing in you choose the most debt laden after complaining about debt lol. It's great and all that $T has other business segments that they're operating in, not too sure that matters when their main source of cash stands to perform quite poorly though. With the state of the playing field it's going to take years for $T and $VZ to catch up to where $TMUS stands today, and by then they'll just be even further along the implementation of their plan for 5G. You may scoff at the thought of fixed wireless internet as a business path for telco companies, but with wireline companies like AT&T leaving their copper customers hanging out to dry, it creates an opportunity for T-Mobile to swoop in and provide a much better alternative than slow/costly copper lines. You simply cannot mention growth in the Telecom sector (organic or inorganic) without mentioning $TMUS.
Insouciant Investor profile picture

Its better to look at the debt to ebitda ratio instead of just debt. If you look at debt to ebitda then AT&T is better off than a lot of companies in the TMT sector. AT&T is going to pay off debt faster than VZ because they have more free cash flow. A year from now AT&T will have less debt than VZ and that gap will grow wider every year.

TMUS is a one trick pony and will never make much money. All they have is wireless which is going to continue to commoditize.

The companies that make the real money free load off of the investments that telecom makes/made and continue to pay maintenance on every year. AT&T is smart for getting into media as that business gets to free ride off of its competitors. AT&T will be laughing to the bank when TMUS and VZ offer high speed internet to rural areas and AT&T can leech off of that and sell HBO Max to those people.

Telecom spends billions on spectrum and guess who really benefits from it. It will be Amazon, Facebook, Google, etc. The best way to make money off of the massive telecom investments is not be in the telecom business. Telecom investors are the bag holders and it will never change because this is what the government wants (a.k.a. net neutrality).
@123098567432 , Are you saying Verizon is a sell?
rt94103 profile picture
Good article. I still don't worry about VZ debt as they are a cash-flow monster, but if interest rates rise as is feared of late, all bets are off.

I watched an upgrade of a single 4G pole to 4G/5G here in SF next to our dog park. I was amazed that it took over a week, and dumbfounded when they came back two more times. That's nuts. The contractors seemed happy though...

(I have a large VZ position from them buying my STRP shares in their lust for spectrum. THAT was a thing of beauty.)

FWIW, VZ is now advertising their Home 5G here in SF:  

@rt94103 , The Long bond rose today inching down interest rates.
A few technical details aside, this is a very well written summary on the current position and historic strategy of the big 3 carriers. My favorite parts were 1)"It’s a little hard to describe anything AT&T is doing as a coherent strategy, but they are behind T-Mobile in midband, and behind Verizon in mmWave." and 2) Regarding VZs bid on the C- Band Spectrum, "On the one hand, this is good news because it’s finally some sort of acknowledgment from Verizon that they made a big strategic error on their biggest future opportunity." This of course assumes mmWave deployment was a strategic decision. I believe it stemmed more from the fact that VZ already owned those frequencies and the bean counters figured spectrum is spectrum. You're not getting anymore until you use what we have. 3 years and billions of dollars later, they FINALLY realize this was a mistake.
Trading Places Research profile picture
@Robotechx20 You’re right, I may be giving them too much credit. Which tech details were wrong?
@Trading Places Research "Distance and penetration are more on par with 4G, but at much higher speeds than 4G." It's not the technology type that determines the distance/penetration but, the frequency on which it is deployed. 5G will be deployed on most if not all frequencies that are currently being used for 4G. Just like many of the frequencies that are currently being used for 4G were once used for 3G/2G/Analog. Speed is a factor of both 5G technology and the amount of bandwith available for aggregation.
Trading Places Research profile picture
@Robotechx20 That was the point I was trying to make, I guess poorly.
Do we really need 5G? 4G is good enough for most of handhold consumer devices. 5G may be only useful for industry purpose but not everyday life. If could, I would prefer bet on SpacX starlink. As long as it's ready, it could replace the data roaming service to serve Tesla cars. When that date comes, 5G loses another important industry scenario.
@kavenbc - What network do you think Starlink is going to connect to?
@kavenbc Automation requires low latency, which is the exact weak point of satellite.
@coroscant72 starlink is the network
Nice. Very well explained. Two counterpoints:

1) WB owns Apple and he just invested in VZ. Maybe he has insider information that the mmwave problem will be solved.
2) Verizon has 5G nationwide is all the spots where people will and can afford to pay for high speed 5G. They do not need high speed nationwide coverage right NOW.

I don't think VZ is in as much trouble. On the other hand 5G is where the strong will become stronger and weak will perish. T and DirectTV will likely perish/weaken
@ding dong Look how much VZ bid on that C-band spectrum. They know mmWave deployment was a huge mistake and acknowledged it in the form of a $40B check they're about to write just for the spectrum. That doesn't include any of the heavy lifting that still needs to happen such as new radio heads, antennae etc. that will have to be deployed at every site.
@ding dong Having 5G in "all the spots where people will and can afford to pay for high speed 5G" isn't exactly a positive when a competitor offers a far superior truly nationwide 5G network for no extra cost compared to 4G. $TMUS currently is, and will continue to dominate 5G.
@ReDread , Are you saying TMUS is a buy today?
Can you be anymore negative to AT&T?
Trading Places Research profile picture
@linkzter I could talk about the DirecTV acquisition. That gets ugly.
@Trading Places Research how about cash flow, can you talk about that? ;)
@Trading Places Research - What about long term though? 5G is eventually going to be about automation such as self driving cars etc. This is going to require the high bandwidth low latency frequencies. Yes T-Mobile has the intermediate advantage (next 3 years or so) but in the long term, its strategy does not seem to be building the network that will be used.

What do you see as the T-Mobile strategy when actual 5G is in demand and it doesn't have enough of the right spectrum?
Trading Places Research profile picture
@coroscant72 TMUS has years to do mmWave. They have the spectrum, at 28 GHz and 39 GHz, but getting midband right is far more important. VZ is years behind on what is important now. In the meanwhile, they are going to have lots of customers wondering why they bought a 5G phone

I’m still not convinced that mmWave will ever be reliable enough for self-driving applications.
@Trading Places Research - It will. It's just initially going to be used on the roads though. Think of it like light polls that you see now but that connect to fiber instead of just providing light. Living near a highway will actually have some benefit, as you will be able to put some equipment on your roof that has line of sight to the receiver "light polls" on the highway. Have mmWave type connection for wifi in your house.

The C-ban auction, from my point of view, is to fill the gap between now and mmWave 5G network buildout that is going to take the better part of a decade to build. Your discussion on the marketing value of "5G" had value to me as I've constantly been arguing with others that a 5G network is not going to be "Nation Wide" by any stretch of the imagination anytime soon. One of the main reasons for this is that there isn't a demand/use for it yet.

I do think we differ on where the value is going to be in the future. I still fondly remember my first 28.8 baud modem that was twice as fast as my previous 14.4 that I thought was blazing fast. This was followed a few years later by my first 1GB hard drive that I thought i'd never fill. Both are basically useless now. The C-Band is the 28.8 baud modem when compared to 4G. Is blazing fast by todays standards, but will only be slightly more useful in 15-20 years than a 28.8 baud modem is today. Yes it can be the backup or useful in extremely rural areas where it's uneconomic to build out mmWave, but most devices will barley function on it.

Who makes the most profit along the way is a guess though. Might be why i own T, VZ, and TMUS (as well as AMT, UNIT, LUMN and NPA). I would prefer CAPEX to be largely targeted to mmWave buildout though, as I think first mover in the space will have a significant advantage when the demand does arrive, which is inevitable. As such, I've only been adding to my VZ shares recently.

Thanks for the article. I always enjoy your work. Why no positions if you don't mind me asking?
@Trading Places Research self driving technology will not depend on a cell phone signal. It won't need it. Maybe some features will use it if available, but it will never be in the core (i.e. safety critical) feature set.
Great article, still like VZ in the long run
Thanks for the informative article.
Tanar Pensionar profile picture
Thank you for this well written and thought article, gave me the opportunity to refresh my knowledge. I would say that while T is looking like a confused giant they still have other ways to "sweet" any deal for their customers while Verizon must do an all-in.
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