Verizon on 5G
In this series, we will look at some of the key points that Fran Shammo, Verizon’s (VZ) executive vice president and CFO, highlighted during the Deutsche Bank Media, Internet & Telecom Conference on March 8, 2016. During the event, Shammo talked about the availability of 5G. Shammo said, “Well, commercial availability is going to be all hinged on the FCC and licensed spectrum grants. So I think the industry could be ready to go in 2017 because the technology is there, the technology is operating in Japan and Korea.”
He also mentioned, “We have had the FCC to our Basking Ridge headquarters to look at what we actually have Samsung at our headquarters who is demonstrating the 5G capability with a van that they are driving around the a parking lot. So the FCC saw the demonstration of that and saw that the speed is there and that this technology can work.”
As per an article by Recode, the anticipated theoretical peak download speed of 5G is ten Gbps (or gigabits per second). Moreover, as per that article, the latency for the technology is expected at ~1 millisecond. Additionally, the theoretical peak download speeds and latency of 4G are ~1 Gbps and ~50 milliseconds, respectively.
Now let’s look just at the 3G and 4G speeds in the US. The top four US wireless carriers are Verizon, AT&T (T), T-Mobile (TMUS), and Sprint (S). As you can see in the above chart, and as per Cisco’s (CSCO) VNI (visual networking index) forecast, in the US, the average speeds of 3G connections and 4G connections were ~2.9 Mbps (megabits per second) and ~19.4 Mbps, respectively, in 2015.
For diversified exposure to select telecom companies in the US, you may consider investing in the SPDR S&P 500 ETF (SPY). The ETF held a total of ~2.4% in AT&T, Verizon, CenturyLink (CTL), Frontier Communications (FTR), and Level 3 Communications (LVLT) at the end of December 2015.