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5G launch on Wednesday covers many years of hype, investment

Workers install equipment on a 5G cell tower in Salt Lake City, Utah, USA, on Tuesday, January 11, 2022.

George Frey | Bloomberg | Getty Images

On Wednesday, Verizon and AT&T turned on a major new segment of their 5G network, culminating in a years-long process in which both carriers invested billions in spectrum and equipment to upgrade their networks.

The networks that turned on Wednesday use wavelengths called C-bands to cover a large part of the country with wireless service that should be noticeably faster than the current 4G service.

Verizon says 90 million people will have access to the new 5G service this month in major cities, including New York, Los Angeles and San Francisco. AT&T said it plans to cover as many as 75 million people with its C-band network by the end of the year.

The rollout leads to large 5G investments from both companies. Verizon spent $ 45.5 billion at a public auction last year to secure the rights to the wavelengths it uses for its network. AT&T spent more than $ 23 billion Airlines have since spent billions more on actually building the networks and installing equipment on mobile towers.

"We've invested - just to get the spectrum, about $ 40 billion. And then we've also had to kick money into the kitten to help clear the spectrum. So you know, we're looking up to $ 53 billion, "Verizon CTO Kyle Malady told CNBC. Verizon will spend $ 10 billion over the next three years to continue building its network, he said.

The Goldilocks Band

Some forms of 5G were already available to wireless subscribers in the United States

Verizon and AT&T already offer two classes of services they market as 5G. Low-band service covers large areas, but only at roughly the same speeds as before, while millimeter-wave service offers much higher speeds, but only over small areas, such as street corners or sports stadiums.

T-Mobile, the third major carrier, has been offering "mid-band" 5G since 2020 using various spectrums on the 2.5 GHz band it acquired when it acquired Sprint. T-Mobile says its network covers 186 million people in the United States

But the C-band networks that go online on Wednesday are different. They use newly available wavelengths, between 2.7 and 3.98 GHz, which are both capable of traveling long distances and carrying enough data to provide faster internet connections.

The unique properties of these wavelengths led to their significant price at auction, and they were often called the "Goldilocks band" in the industry because they are perfectly placed for 5G services.

"It's excellent right in the middle. You have a large amount of bandwidth, it propagates well, and it goes through buildings," Malady said. "I give credit to the US government, they put a lot of spectrum on auction. This rarely comes. And that's why we were so aggressive at the auction to get this."

The C-band networks were supposed to be on in December, but the rollout was delayed twice due to concerns by the Federal Aviation Administration that their wavelengths could interfere with tools pilots use to land safely.

Verizon and AT&T both said Tuesday that they would delay the launch of the service near airports while the issues are resolved, but that their new network would be turned on everywhere else.

"We are frustrated by the FAA's inability to do what nearly 40 countries have done, which is to implement 5G technology safely without disrupting aviation services, and we urge it to do so in a timely manner," an AT&T spokesman said in a statement. a statement Tuesday. .

Now Verizon and AT&T need to show that these investments can pay off in the form of better wireless service to encourage customers to choose more expensive 5G plans and open up new markets, such as households replacing wired Internet access.

"Where is the return on 5G investment?" asked Credit Suisse analysts last October. "The generational shift from 4G to 5G has led to more efficient wireless networks, but the benefits to operators appear to be less than hoped (and less than hyped)."

"While 5G defensively helps networks keep pace with traffic and consumer expectations, it's not the factor that pulls consumers up in the ranks of operators," wrote Credit Suisse analyst Douglas Mitchelson.

Verizon announced new plans earlier this month that include 5G service with unlimited data. AT & T's unlimited plans also include access to 5G service.

Look for the 5Guw or 5G + symbol on your phone

Malady said Verizon's rollout could take as long as 12 hours as the network lights up from the east coast to the west coast.

People with compatible phones could see the network icon at the top of their smartphone screen change on Wednesday and access top download speeds 10 times faster than an LTE network, according to operators.

For Verizon subscribers connecting to the new network, they will see "5Guw," for 5G Ultra Broadband. AT&T subscribers will see "5G +."

Phones that can support the new network include Apple's iPhone 12 and iPhone 13, newer Samsung Galaxy phones, and Google's Pixel 6. Users must also have a subscription that includes 5G service.

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