The drive towards faster next generation wireless networks took a step forward on Monday, as Verizon opened commercial service for a consumer 5G home Internet service in parts of four cities. But the wireless industry still has a long way to go, with nationwide coverage and services for mobile devices and major business uses still a few years away.
Verizon kicked off its new $70 per month high-speed 5G home Internet service by signing up customers in Sacramento, Houston, Los Angeles, and Indianapolis. Customers who already subscribe to Verizon wireless for phones pay only $50 for the service. With promised speeds of 300 megabits per second, and the chance of reaching 1 gigabit per second in some areas, the 5G wireless service is meant to compete with the very fastest wired home Internet offerings from cable and telecom companies. At 1 Gbps, a customer could download a high-definition movie in under a minute.
But to get the service out to customers at this time, Verizon had to use gear that doesn’t meet the newest industry-standards for 5G. Some competitors are waiting for compatible equipment, and Verizon is already promising that it may replace customers’ non-standard routers in the future if necessary. The service also isn’t mobile, as the first 5G compatible smartphones won’t hit the market until next year and Verizon is just at the start of upgrading its wireless networks around the country.
“We’re not just waiting for the future, we’re building it,” Ronan Dunne, Verizon’s head of wireless, explained to Fortune about the decision to move ahead with non-standard gear. By instigating earlier trials, Verizon helped inform and speed up deliberations of the groups that made the standards, he said. “5G is such a big thing, we really should get together and accelerate the momentum to bring 5G to market… Today, globally, the industry is ahead of where it would otherwise have been.”
The wireless industry could use some added momentum. Revenue growth has stalled in recent years, amid a saturation of smartphones and aggressive price-cutting over new data unlimited plans. Verizon and rivals AT&T, T-Mobile and Sprint hope that 5G will offer not just the same old services at higher speeds, but also open up new business opportunities, like the play for home Internet connections. Verizon’s (VZ) stock price has risen less than 5% this year and AT&T’s (T) shares have lost 10% while the Standard & Poor’s 500 Index has gained 9%. T-Mobile (TMUS), which is trying to merge with Sprint (S) in part to accelerate its 5G efforts, is up 10% and Sprint has gained 11%.
Apple and Samsung and most other major brands have yet to announce when they will offer 5G-compatible phones. Lenovo’s Motorola unit released a new 4G phone in August called the Moto Z3 that will be able to upgrade to 5G with an add-on pack coming next year.
Like AT&T, Verizon is also planning to build a host of smaller cloud computing centers across its network. In combination with 5G, the more geographically dispersed group of data centers will be able to take over some of the computing functions currently included in smartphones. That will allow a new breed of much cheaper phones that rely on the data centers for the calculating power needed to run apps and games.
“The device cost might be one-tenth of what would otherwise be the case,” Dunne said.
