Verizon’s Network Has Attracted Customers and Consumed Airwaves
(Bloomberg) -- Verizon Communications Inc. takes network quality seriously, so when a report this week showed how the company is facing an airwave capacity crunch in some cities, executives got a little defensive.
Wall Street analysts at LightShed Partners wrote a report saying Verizon had used up most of its available airwaves in several cities, including Miami and Chicago. Such airwaves are the life blood of the wireless business, the invisible pathways that carry all our Netflix shows and Instagram stories.
“They have used spectrum to fuel capacity growth and improved speeds, and now they have a limited amount left,” LightShed analyst Walt Piecyk said. The firm used its own research and information from Opensignal, a mobile-testing firm that collects data from millions of phones.
The shortage is a byproduct of success. Verizon has the most subscribers of all U.S. wireless carriers, about 116 million, after adding 1.25 million last quarter. And with that kind of popularity comes high network traffic volumes. Just as crowded highways could use more lanes, busy mobile networks need more airwaves.
“That’s only half the story -- it doesn’t cover all the things we do,” Matt Ellis, Verizon’s chief financial officer, said in an interview Thursday. Verizon has been applying technology to the task, he said. By doubling up on cell sites and aggregating all available spectrum, engineers have been able to squeeze more capacity out of the company’s radio waves.
“I’ll put money on our engineering team every day of the week, and their track record is second to none,” Ellis said on an earnings call earlier Thursday. “So we are very, very confident that we have the spectrum we need to continue to grow the business.”
For years, Verizon has been collecting some of the highest marks for network quality from wireless-industry researchers. That run continued this month with new reports from RootMetrics and Opensignal. The performance has enhanced Verizon’s reputation and is always the centerpiece of its advertising. Sunday’s Super Bowl broadcast is expected to carry a Verizon ad showing how network quality for first responders can be a matter of life or death.
Ellis said on the earnings call that the company has put airwave-license purchases at the top of its priority list.
Verizon is increasingly focused on the next leg of the race: 5G.
The company is sitting on a large swath of so-called millimeter-wave spectrum that it has been using for new 5G service, now in 34 cities. This added capacity covers limited areas but offers blazing speeds.
Verizon is competing against rivals T-Mobile US Inc. and AT&T Inc. to be the first to hook new customers on the new service as 5G phones arrive in the coming months.
Whatever the concerns are about 4G capacity and Verizon’s track record of solving it, Chief Executive Officer Hans Vestberg has already set his sights on the future.
“It’s not hindering our strategy right now to deploy a great 5G network and be able to capture the market on 5G,” Vestberg said on the conference call.
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