Wednesday , November 14 2018

Verizon Won’t Accelerate 5G Rollout, Despite FCC Fee Reductions

 

506837-what-is-5g

Last month, the FCC issued an order that prevented local municipalities across the United States from levying $2B in fees and charges against the telcos working on 5G deployments. The stated rationale for this decision, according to the FCC’s Republican majority, was to “stimulate an additional $2.4B in infrastructure investment.” The FCC went on to claim that by limiting the ability of local governments to collect site rental fees and equipment installation charges would lead to the installation of dramatically more devices. The FCC claimed that this change would lead to 5G networks being deployed to cover 1.8M more homes, with 97 percent of that coverage dedicated to suburban and rural communities.

The ability of rural communities to connect to the internet at reasonable prices has long been a concern of this author, but there’s no evidence that the FCC’s decision has moved the needle on 5G deployments in the slightest. During its latest conference call, Verizon was asked if the FCC’s small cell pricing changes would allow Verizon to accelerate its 5G rollout. Verizon’s response by CEO Matt Ellis follows (a transcript is available here):

On the 5G rollout, certainly we were glad to see the FCC rules around the small cell adoption. Doesn’t necessarily increase the velocity that we see. Our teams have been engaged with municipalities across the country on getting permits to put up small cells, whether for 4G or 5G.

Certainly like the fact that they are providing a little more guidance for how quickly that should happen, but I don’t see it having a material impact to our buildout plans. We are going as fast as we can.

The Myth of Increased Investment

Under Ajit Pai, the FCC has repeatedly claimed that wireless carriers and telcos are in urgent need of relief from the federal government. Net neutrality was supposedly an enormous threat to a broadband investment — so much so, Pai identified it as the top reason to revoke the Obama Administration’s Open Internet order. The more recent decision on 5G services that saved major telcos billions of dollars was made for the same reason. There have been some corporate attempts to argue this has actually occurred, using amazing graphs like this one:

July 25 CapEx blog chart

Brought to you by US Telecom, the “premier telecommunications industry trade association”

When you actually put this graph on a chart with an appropriate zero-point at the y-axis, what you see is the following, using the midpoint of the expected $72 – $74B range for 2017:

Broadband-InvestmentThis data, properly constructed, shows no evidence for any increase in investment as a result of repealing net neutrality. It shows a slight (3.3 percent) decline in 2016 that we’d call a margin of error if it debuted in benchmark graphs. We must also note that we’re not aware of any telco or ISP ever claiming to investors that it would dramatically reduce its investment levels as a result of net neutrality or 5G rollout costs, nor that it would increase them after net neutrality was repealed or the 5G rollout costs reduced.

Verizon has announced that it has no plans to change its own 5G roadmap as a result of the FCC making it $2B cheaper to deploy 5G small cells. The question of whether you think municipalities should have more or less control over what they charge Verizon for 5G deployments is a complex one, touching on issues of local governance versus the utility of having a common framework for the deployment of a national service across the entire country. But on the question of whether ISPs are investing more in 5G rollouts or in their networks in general following the end of net neutrality, the answer thus far is simple and straightforward: No.

Now Read: In Violation of FCC Rules, Verizon Is SIM-locking the Google Pixel 3, Verizon Launches 5G Network That Isn’t ‘Real’ 5G, and US Mobile Download Speeds Shot Up in 2018, T-Mobile Beats Verizon

 

 

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