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[wirelessman77]

AT&T, Verizon’s 5G Will Be a Cable Killer First, Say Cowen

http://www.barrons.com/articles/at-t-verizon-cowen-ponders-the-path-to-5g-1494278083?mod=yahoobarrons&ru=yahoo&yptr=yahoo

http://videos.cowen.com/detail/videos/recent/video/5421979431001?autoStart=true

Cowen & Co.’s telecom analyst Colby Synesael today offers up some thoughts on what the impending arrival of so-called 5G wireless services means for AT&T (T), Verizon Communications (VZ), in the form of a 25-minute video.

I thought I'd bring you the highlights, though you're welcome to watch the entire 25-minute video at Cowen’s Web site if you like.

One of the first uses of 5G, opines Synesael, will be to try and surpass cable networks for broadband into the home -- watch out Comcast (CMCSA):

There is clearly a business model for fixed wireless; there is a very clear to be made for how will AT&T and Verizon actually make money off on these services; ultimately what they’re going to do is go after the large market share which is currently being held by the cable companies in the form of broadband services which you and I receive in our houses.

In the realm of cellular, Synesael thinks 5G will be “game-changing” and a “disruptor,” but mostly because it will “disrupt inefficiencies that are here in this world,” rather than making the phone faster.

He refers to “new business models” being enabled, alluding to things such as “vertical” markets, and “all-in-solutions” for industries.

Things such as faster smartphone downloads will take some time. Faster speeds will probably arrive sometime late next year or at the beginning of 2019, he says, but “True 5G mobile offerings in the market are still arguably a few years away,” so “more of a 2020-plus event."

5G will bring the “original vision of big data to fruition,” because it will create a world with “sensors just about everywhere we go” that will “be taking information on a constant basis,” which will be used to “create service offerings that you and I will hopefully find of value."

5G will be focused in “first world” countries for the first several years, he opines.

On the technical side, Synesael notes the giant cost savings that could come with 5G. For example, while today’s networks cost $2.13 to provide a gigabit per second of bandwidth. With 5G networking, all that could come down to 24 cents per gig.

Synesael also looks at the regulatory angle, which is intriguing with the bidding war for Straight Path Communications (STRP).

As he notes, the recently concluded FCC auction of public airwaves in the 600 megahertz band saw an average value per megahertz of 93 cents, while Straight Path has generally been valued at less than a penny per megahertz. (To be clear, that’s megahertz per “POP,” or potential customer.)

The value of Straight Path, however, has gone up “significantly” of late, he notes. Synesael thinks 5G will “initially” use the kinds of “millimeter wave” spectrum that Straight Path has, but that down the road, it will probably use all available frequency blocks.

Synesael notes that Verizon and the others will have to put up hundreds of thousands of “small cells” around the country to server 5G. They can’t simply rent space with American Tower (AMT) for each of those small cells they way they do today for the regular cell towers. So, they’ll probably need to seek ways to bring down the cost of fiber optics, which is the single largest expense of a cell site, he writes.

The carriers will probably invest in fiber of their own because there are lots of uses for that fiber, so it’s easier for the carriers to “sweat the asset” to get a proper return on investment. The carriers will probably repurpose some existing fiber routes, he writes, such as the fiber currently being deployed for enterprise data services, but also new investments. He notes Verizon’s decision to purchase from Corning (GLW) 12.5 million miles of fiber cabling each year through 2020.